Ready, Steady, Legalize: German Government Issues Update About Cannabis Reform

The first step, widely expected and also widely doubted, creates an effective decriminalization scheme, while the second will create model projects

Despite widespread German pessimism about whether cannabis reform will actually happen (in part to the perceived weakness of the current ruling coalition), the government has now issued a question and answer overview of what comes next.

The Two Pillar Model

The Cannabis Act will legalize private cultivation by adults for personal consumption as well as non-profit cannabis clubs. This was passed in late June, despite a decide lack of fanfare about the same.

The second pillar will create regional pilot projects with commercial supply chains. The bill is expected in the second half of 2023 and will be submitted to the European Commission for review.

What this means is that possession of up to 25 grams of cannabis will be effectively be decriminalized by the end of the year.

What Comes Next?

Cannabis club planning is well underway in many cities and towns across Germany. They are expected to look much like the Canadian, American, South African and Spanish models. Depending on how well the government has drafted the legislation, expect a period of transition and even, unfortunately, a round of arrests as local groups get this wrong. Further, expect in-fighting and patient-nabbing. This is not necessarily as straight-forward as advocates want to believe it will be.

Beyond that, the looming recreational trial projects will also attract those with a commercial bent.

Regardless, this is the beginning of a free-for-all in cannabis entrepreneurialism in the country.

What About Medical Cannabis?

Despite the optimism at a government level about the new reforms about speeding up the time that insurers must approve medical patients’ claims (to two weeks), unfortunately what this actually means is that patients will just get turned down faster.

However, what the proposed Cannabis Act will also do is move cannabis from a restricted narcotic of last resort to a more widely used drug. This may also help in applications, although those with bigger prescriptions are still likely to face a difficult path in getting insurers to pay.

That said, it may also be that patients with larger needs may also be allowed to cultivate larger amounts at home with special permission. It remains unclear how such individuals will be treated under the new law.

Hopefully patients with a prescription will be allowed to grow more than three plants.

A Boost For Industry and Home Users

No matter what, the news is bound to be a shot in the arm to the industry in Germany, which has been a rut for the last year. The entire specialty distribution business is also in a turmoil, with discussions afoot everywhere about sales, mergers and partnerships.

What Does This Mean for CBD?

The current CBD flower market is likely to get back to business, however, it is also likely that for now, it may be forced into the clubs. Beyond that, however, expect this to be a boost for part of the industry that has clearly lagged as a result of the bickering, although not all problems have been solved on this front either. This will need to be clarified in the new law also, given the last federal legal decision on the same last December in Germany.

What Does This Mean for Extracts?

This market is unlikely to develop commercially until the recreational trial projects. Clubs will probably be restricted to flower only. Until the meantime, the only extract with legs is in the medical market (see Dronabinol). On that front, just about everyone is engaged in a race to bottom price war for a product that has long been far overpriced in the wholesale market.

What About Edibles and Novel Food?

Much like Switzerland has done, Germany (plus Luxembourg and the Czech Republic) will effectively sidestep Novel Food regulation on the THC front with the planned recreational model projects, the clubs, and home grow. There is no relief in site on the CBD front, where this war has been been waged first and formally. Perhaps this hard barrier will begin to fall, however, with the back door around the same per the model projects.

So here is the good news. Things are moving forward. How all this will play out exactly, is still unclear. The entire vertical is in the doghouse with investors who have lost and lost large so far in the canna revolution. The news that Canopy Growth was announcing (another) $3 billion in losses doesn’t help matters.

However, what does appear to be on the horizon is a final reform of a law that needed to be changed. And where Germany goes, there are sure to be other European countries, at this point, who will follow.


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