Germany’s ‘quasi legalization’ cannabis law approved; medical boost expected

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Interior view of plenary hall, where Germany's Bundestag meets

The plenary hall, where Germany's Parliament, the Bundestag, convenes. (Photo by katatonia/stock.adobe.com)

(This story has been updated with the vote tally.)

Germany’s chief legislative body on Friday approved a landmark recreational cannabis bill that’s being simultaneously hailed as a generational milestone and “quasi legalization” because the new law stops short of implementing a framework for the distribution and retail sale of adult-use products.

The law – approved in the Bundestag by a 407-226 vote – generally decriminalizes cannabis, allows for home growing and lays the legal groundwork for so-called “cultivation social clubs” – nonprofit organizations where members can acquire marijuana for recreational use.

The law is expected to go into effect April 1, but it still needs to be read in the Bundesrat, the upper house of Parliament.

The Bundesrat will examine the bill, but its “consent” – which is different from approval – is not required.

If the upper house convenes the Mediation Committee, however, meeting the April deadline is less likely.

Niklas Kouparanis, co-founder and CEO of Bloomwell Group, a German cannabis company, told MJBizDaily the country is ushering in a new era of progressive drug policy.

But the new law is expected to have a limited economic impact – at least in the adult-use market.

“Some suppliers will be able to sell the clubs equipment and material, provide services or rent property and facilities for the clubs,” Kouparanis said.

“But aside from these sorts of ancillary activities, new business opportunities from the cannabis clubs will be very limited.”

The law is being called “quasi legislation” because it maintains a general prohibition on recreational marijuana with some exceptions.

Konstantin Grubwinkler, an attorney at Reubel Grubwinkler Rechtsanwälte, a German firm specializing in criminal law, said possession of cannabis will remain illegal with the following exceptions:

  • The possession of up to 25 grams (0.9 ounces) in public and 50 grams at home.
  • The private cultivation of up to three plants at home.
  • Adults will be allowed to grow cannabis in social clubs together.
  • Members will be entitled to up to 50 grams per month from cannabis clubs.

“The new law is only a partial legalization because it’s far away from complete legalization,” Grubwinkler added.

For example, he noted, there will be no points of sale.

The law that the central legislative body passed Friday is significantly watered down from the original plan.

Germany had intended to fully legalize cannabis, but lawmakers decided on a lighter, two-pillar approach after running into resistance from the European Commission – the European Union’s executive branch.

The timing of the second pillar isn’t completely clear, but it would focus on regional pilot projects with commercial supply chains.

“Our ultimate goal in Germany remains to legalize the entire value chain for a full-fledged adult-use market,” Kouparanis said.

“I hope that we will see progress on the European level one day.”

Cannabis cultivation social clubs

Germany’s first cannabis clubs could open as soon as this summer.

The clubs will be subject to strict rules governing membership, location and how they operate.

For instance, the law says a club’s members may be supported in the cultivation process only by adults engaged in “minor employment” by the association – meaning workers earning about 538 euros ($581) per month.

Instead, the government wants cultivation and processing duties to be collectively shared among each club’s 500 or so members.

According to the law, “The members of the cultivation association must actively participate in the collective cultivation of cannabis. Active participation is particularly evident when members of the cultivation association personally contribute to collective cultivation and activities directly related to collective cultivation.”

Clubs will be allowed to hire workers for tasks not directly related to cultivation, such as accounting or law.

Club membership fees will offset production costs, but clubs won’t be allowed to sell cannabis to nonmembers.

Biggest winners: medical companies and patients

German executives reached by MJBizDaily expect the biggest winner – at least from a business perspective – to be the country’s already thriving medical cannabis market.

Medical cannabis in Germany will no longer require a narcotic prescription form; standard prescriptions will be sufficient.

“That simplifies things for doctors, but also for the supply chain,” Alfredo Pascual, executive director at Seed Innovations, told MJBizDaily.

“That means it’s going to be easier to prescribe cannabis.

“When comparing with Israel, the German medical cannabis market still has ample room for growth.”

On its own, “quasi legalization” means a larger medical cannabis market. But how much larger?

“The question is the (economic) interaction between the reforms to the medical rules, home cultivation and sales for club members,” Pascual said.

“It’s already relatively straightforward to get a prescription – especially if paying for the medicine out of pocket, with retail prices for medical cannabis already at about the same level or even below the illicit-market prices.

“And getting a cannabis prescription is about to become even easier.”

The new law might result in opportunities to export more medical cannabis to Germany – at least in the short term.

The German government allows only a handful of companies to cultivate a small amount of medical cannabis within the country, forcing the industry to fill the significant supply shortfall with imports.

Stephen Murphy, managing director at United Kingdom-based Prohibition Partners, told MJBizDaily that domestic cultivation will be an issue to watch as the process evolves.

“If (the German government) changes regulations around domestic cultivation, this will have a major impact not just on German businesses reliant on imports but also international cultivators who see Germany as the great hope for their international expansion plans,” Murphy said.

In 2022, the most recent full year of data, Germany imported roughly 25,000 kilograms (27.6 tons) of cannabis for medical or scientific purposes, an increase of 19% over the 20,769 kilograms imported in 2021.

Insurance reimbursements for medical cannabinoid products in Germany suggest the country already is home to one of the largest federally regulated medical marijuana markets in the world.

Reimbursements reached roughly 50.9 million euros ($55.6 million) in the January-March 2023 quarter, according to the latest data from Germany’s National Association of Statutory Health Insurance Funds (GKV-Spitzenverband).

Germany’s reimbursement data does not account for prescription sales paid for out-of-pocket, meaning the German marijuana industry is actually much larger.

For comparison, Canada’s regulated market recorded medical cannabis sales of 98 million Canadian dollars ($72 million) in the same January-March 2023 period, according to Statistics Canada data.

Next country to legalize?

Some experts are warning against expectations of a cannabis legalization “wave” across Europe in the near term.

They cite several factors, including:

  • Upcoming European Union elections, which might tilt toward conservative parties historically not aligned with cannabis reform.
  • Most of the countries closest to legalizing cannabis already are locked into multiyear “pilot programs,” some of which only recently started. Meaningful reform is unlikely until those pilot programs run their course.
  • Germany isn’t always a bellwether for European public policy.
  • No country to date has followed Canada’s lead after it fully legalized cannabis in 2018.

But that doesn’t mean it won’t happen someday.

Pascual believes it will be country-by-country, as limited by European Union law.

“Other European countries do not always blindly follow Germany – especially on controversial issues,” he said.

A key question remains about whether the situation in Germany could change how the European Union looks at the drug.

“It will depend, to a large extent, on the results of the European elections, which are in the near term. It doesn’t look like cannabis-friendly parties will have many lanes (to being elected),” Pascual said.

“Actually, it looks like more conservative parties, which are generally more anti-cannabis legalization, are going to be the ones winning more seats.”

Still, the walls of prohibition are crumbling outside North America – if slowly.

Recent examples of notable adult-use liberalization include:

“The speed at which countries will be forced to take a position that better supports public health through drug reform is accelerating as the topic becomes more prevalent at the highest level,” Prohibition Partners’ Murphy said.

“The EU will be dragged into this subject more and more, as what is often overlooked is the impact this will have on each nation’s ability to protect the integrity of its border, whilst respecting the Schengen Agreement,” which impacts 27 countries that have abolished passports and other controls at mutual borders.

The draft law can be found here.

More documents on the bill can be found here.

Matt Lamers can be reached at matt.lamers@mjbizdaily.com.