Germany may rely on domestic cannabis cultivation, leaked paper suggests 

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Germany’s recreational cannabis market should impose a cap on potency and rely on domestic cultivation, according to preliminary proposals for the planned recreational market by the country’s Ministry of Health.

The publication RedaktionsNetzwerk Deutschland published details of the ministry’s suggestions earlier this week.

Notably, the ministry argues that imports might violate international treaties, so Germany’s draft law should allow only domestic supplies, RedaktionsNetzwerk Deutschland reported.

The draft law is expected to be published in the coming weeks.

Whether Germany will allow recreational imports has been a focus for the sector, as doing so would open the door to cultivation opportunities outside the country.

However, limiting the market to local cultivation could prolong the runway needed to launch the industry.

Only heavily fortified indoor cultivation is currently permitted in Germany, and experts say much time and capital would be needed to lay the groundwork for mass-scale production.

“This is one of the bigger questions to answer,” Constantin von der Groeben, managing director of Berlin-based cannabis company Demecan, previously told MJBizDaily.

“Currently, I think Germany will have to breach the (United Nations’ 1961 Single Convention on Narcotic Drugs) at least for some time. This will probably mean that all recreational cannabis must come from within Germany as imports will be restricted.”

Pablo Zuanic, managing director at New York-based investment banking firm Cantor Fitzgerald, noted that cannabis would no longer be a narcotic under the ministry’s proposal, “which would mean greenhouse growth would be allowed.”

“As rec cannabis would not be considered a narcotic, producers would not need to grow cannabis in indoor facilities with 40(-centimeter) thick concrete walls, and apparently greenhouses would be allowed. We think this would speed up new licensees getting up and running, and lower production costs,” he wrote in a note to investors Thursday.

Allowing greenhouse cultivation “would reduce costs and considerably lower the timeline for facilities to be up and running.”

Zuanic expects 10-15 cultivators would be needed to satisfy local demand, and Canadian cultivators Tilray Brands and Aurora Cannabis have a leg up on competitors because they already have cultivation established in Germany.

However, cannabis producers have already spent hundreds of millions of dollars expanding cultivation footprints in countries like Portugal and Denmark.

If Germany follows through with not allowing imports, that could be detrimental to those facilities as the international import market for medical marijuana remains extremely small.

Germany is the biggest importer of marijuana in the world, at only 20,589 kilograms (45,391 pounds) for medical and scientific purposes last year.

Canada is the biggest supplier to Germany.

Industry sources expressed concern that Germany is weighing a cap on potency.

The proposal suggests a 15% THC limit for consumers older than 21, while those 18-20 years old would be limited to 10%.

The leaked paper also suggests Germany could issue licenses for adult-use stores in addition to allowing pharmacies to sell recreational marijuana.

Online sales would also be allowed.

Like Canada, Germany would impose an outright ban on advertising cannabis products.

The Ministry of Health also proposes allowing home cultivation of no more than two plants per household.

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