Germany has been the country to watch this year on all things canna-reform. On January 19, 2017, the lower house of Parliament unanimously voted to legalise medical use. Legislators also agreed that cannabis would be rescheduled. More stunning still is that it will be covered under national health insurance. 90% of Germans are impacted by this momentous decision.

The upshot? Cannabis is about to go mainstream there. Further, it will do so in a way unseen anywhere else. That includes Canada. It is going to be brought firmly under pharma regulations. That is going to profoundly shape this market.

During the ICBC in Berlin, the German government issued its first tender bid for domestic cultivation. Both the timing and the tender bid details were a canny positioning on the part of the government.

The requirements more than miffed a few prominent German hopefuls. However, this is clearly a watershed moment for reform in both Germany and across Europe. The downstream impact could well affect regulations globally.

germany legalisation canna-reform domestic cultivation

THE BROAD STROKES

There are ten licenses up for grabs. What constitutes a “legal grower” is still very much an amorphous concept. Further, more than a few of these licenses will go to firms who could best be described as “importer,” or even “distributor.” The government apparently wants to view this much like pornography. In other words “you know it when you see it.” It is clearly building as much latitude for itself as possible.

The reason? There are currently only 1,000 “legal” German patients. Official estimates here expect patient growth now to be in the range of 5-10,000 patients per year. This would track the Canadian situation. Patients there have increased about 10% a month for the past several years.

However, Germany is different. From the beginning, German public insurers are going to be required to cover as much as 5 ounces (roughly 125 grams) of cannabis flower a month per patient (and of still uncertain if not undefined potency and makeup). Out of pocket patient cost? About 10 euros per month. There is nowhere on the planet where the weed has met such a functional health system. Germany represents a shining new level of medical acceptance.

This means, ultimately, that supply could increase gradually or explode. That next issue depends on how activists, doctors and others manage to spread the word.

The government is well aware of all of these implications. In fact, Dr. Ingo Michels, former head of the office of the Federal Drug Commissioner, did not speak as scheduled at the ICBC. No doubt he wanted to shirk the ire of quite a few peeved activist-growers. It also means the government is being deliberately mum to generate as much “creativity” as possible for itself downstream.

That said, the timing of the tender was obviously no accident. The ICBC conference was a unique gathering of top people in the Canadian, American and German vertical. It is obvious that the government wants to keep its options open.

At present, there are about 12 different brands distributed here. They come from Bedrocan and the Canadian coalition under which Tweed and Canopy Canada operate via their German partner MedCann. Tilray is also lining up for a German license. The company currently imports extracts to Europe.

WHO CANNOT APPLY

The biggest reason the Germans in attendance at the ICBC were annoyed is that the regulations were obviously deliberately written to exclude most of them. People who have been busted for growing are out. So are people who have grown crops in any way that is not registered and compliant with established regulations. That also includes all domestic growers with the exception of some industrial hemp producers. Even they would be well advised to partner with an external strategic consultant. The government is clearly seeking growers with experience to meet regulatory requirements of the federal kind.

By definition, this means any licensed grower from Canada is in the front row seats for a potential partnership with a domestic partner. That partner could bring money, land, or other expertise. The tender bid requires that respondents prove they can deliver a minimum annual quantity (200kgs per year between 2010 and 2022). They also must show that they have been able to produce at least 50kgs a year for the past three years in some legal jurisdiction.

That said, for such qualified firms, a German grow in the future to meet such specs can be theoretical. So can the mix of cannabis delivered. More importantly, the government is leaving the way open for those who are willing to deliver cannabis extracts at 100% potency.

This means that extractions companies may be in the best position right now to partner with Canadian firms who can provide either the raw bud or processed oils.

un cannabis federal agency deutschland

MEDICAL MEDICAL MEDICAL

What does this mean for other parts of the market? It is clear that Germany is going to try to set up its domestic market under the aegis of UN guidelines. This includes the establishment of a federal cannabis agency. That initial organization is also ongoing now.

That also means that the tender bid itself will be graded by people who are just being hired in a new agency in the federal government. Many of those people will be of a medical bent if not actual doctors. The government is also already seeking doctors and other experts for cannamedicine education. That means there is a huge potential in the very near future, for at minimum creative education about the drug here. Further, the focus is going to be on medically approved uses. That means a focus on science and trial data. All the kinds of scientific interpretations the Germans are both good at and used to.

THE FUTURE OF GERMAN HOMEGROW

This is one of those areas where there is still some grey. German legislators moved as quickly as they did on medical legalisation for several reasons. The first was that they are watching U.S. developments very closely. Not to mention Canada, Israel and Australia. Further, in Germany, just like in Mexico, patients have led the way challenging the constitutional basis for prohibition. Over the last few years, those challenges ended with five patients suing the federal government over free access. At the time, this meant that three of the plaintiffs got an unofficial pass to grow as much as they needed at home. How they will be normalised into the new system is another question. They might be given provisional licenses to establish non-profit clubs where the government enrolls people in the now legal streams of access. They might be engaged in other capabilities.

What is clear is that their unlimited right to grow plants is about to come to an end.

What is very likely in the near to longer term future is that cities like Bremen, Frankfurt and Berlin will also move to establish a sort of decriminalised status for the drug – even for “recreational” users. Patients themselves cannot sustain themselves on the kinds of mini-grows seen in other places with similar issues. For example, a five-plant maximum for those of age would be enough to deter the kinds of “experiments” the Germans hope to deter. This starts with disincentivizing a developed and profitable black market.

Down the road, this could actually be a boon for the home grow world. In fact, what this could do is spark a very sophisticated connoisseur market for upscale and rare breeds. Deutschland is a place where people still love to grow things. One of the distinguishing features of many German cities is the abundance of grow space.

The police are clearly not interested in busting this kind of activity. Scratch the surface in fact, and most German police want this issue to go away. They are clearly on the front of regulation. If they can get lower level dealers off the street and out of the way via legalisation, they are all for it. Truth be told, many cops smoke. They just don’t admit it to journalists.

legalisation cannabis regulation Germany donmstic grow

INTERNATIONAL COALITIONS ARE FORMING

What does this mean for cannapreneurs? If you have legit experience, find a partner.

There are already several initiatives underway.

What is also clear is that this is also only the first tender bid the government will issue. It will not be the last. This opportunity represents a unique jobs program and the government is not immune to such logic. There will be room in the market for both innovation and entrepreneurial activity.

It is also clear that the German market is morphing into a real federal medical use model.

Germany, in other words, may in fact, lead the world in the next step of cannabis research. It may also lead pharma development. Its legalisation plan will certainly contribute to greater understanding of the power of the plant.

That is a win for everyone, no matter the outcome of the country’s first tender bids for cultivation.

 

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