Germany is poised to become the marijuana industry’s next market, but with more than 20 cannabis-related companies striving to achieve growth, many are wondering whether their business is the right fit for the country. So far, the answer seems to be yes.
It’s no secret that the United States has a large or even international appetite for marijuana. In fact, despite efforts to stop it, the United States is still the largest legal market for the drug, and the second largest market in the world behind Canada. But compared to the United States, Germany’s medical marijuana program is minuscule, and you can forget about trying to find a marijuana product that isn’t produced by a big corporate farm.Commercial cannabis growers in Neumünster, Germany, recently celebrated the first legal marijuana harvest. The plantation, owned and operated by Canadian company Aphria RX, produces a 50-kilogram (110-lb) batch of cannabis. In a DW statement, the company said it plans to ramp up production to about a ton in the next 12 months.
Aphria RX’s indoor cannabis facility is subject to strict security measures and grows plants behind high concrete walls with barbed wire. Indeed, the use of marijuana for medical purposes in Germany is still subject to the Medicines Act, which is supervised by the Institute of Medicines and Medical Devices (BfArM).
The first supplies from Neumünster have been dispatched to pharmacies throughout Germany and will be provided on prescription to patients suffering primarily from pain, spasticity or anorexia.
The use of cannabis for medicinal purposes was legalized in Germany in 2017. In 2019, the BfArM Institute has selected three growers to provide the national offering – two of them, Aurora Cannabis and Aphria RX, are based in Canada, and one is a demecanine startup from Germany.
The safety requirements for cannabis cultivation in Germany are high, forcing growers to cultivate the plant behind barbed wire.
So far, however, only the Aphria RX is on the German market, while the other two suppliers remain vague in their statements to DW about the start of production. Aurora has stated that it is currently importing cannabis from Canada, so it is not possible to estimate when the first shipments will occur.
Demecan plans to commission its local production unit in the third quarter of this year and hopes to harvest its first crop as soon as possible thereafter. The formal handover of the Demecan plant will take place on the 15th. July takes place.
The 2017 cannabis legalization plan required producers to provide homegrown marijuana by the end of 2020. However, during the COVID-19 pandemic, supply problems occurred, forcing the contracting companies to postpone production.
So the recent 50-kilogram harvest of Aphria RX was more symbolic, said Alfredo Pascual, a cannabis market analyst at investment firm Seed Innovations. Production in Germany has been delayed several times and we have no guarantees on the amount of cannabis that will be harvested or delivered in the coming months, he told DW, adding that it will be interesting to see if the contractors keep their promises.
Many companies sniff out multi-million dollar business opportunities
In addition to operational delays, the introduction of German cannabis was initially delayed by regulatory issues. In 2018, a court halted the tendering process for companies to grow and supply cannabis because the process was conducted in too short a time frame.
Demand for cannabis is increasing
It is a positive sign that people are finally starting to grow cannabis here. This will allow more doctors to become familiar with cannabis treatments, says Jürgen Neumayer, director of the German cannabis industry association (BvCW). In an interview with DW, he noted that cannabinoids are still a niche product, but that demand for them has steadily increased since the legalization of medical marijuana.
In Germany, statutory health insurance companies do not publish data on the number of patients who are prescribed medicinal cannabis. However, industry analysts estimate that the number could be around 90,000. Neumayer doubts that German manufacturers alone will be able to remove the current bottlenecks and argues that imports will increase.
In 2020, according to the BfArM, a record 9 249 kilograms were imported into the German market. Total contracted production is 10,400 kg over four years, but the contracts contain a clause allowing the three competitors to increase their production in Germany by 10% during this period.
Since medical marijuana in Germany is grown at the request of the government, the government sets the price. Before the start of 2019, reports indicated that Canadian exporters were selling unprocessed cannabis in Germany for 8.80 euros ($10.44) per gram. However, the BfArM has now set the wholesale price of medicinal cannabis grown in Germany at €2.30 per gram.
Stefan Kramer, managing director of pharmaceutical wholesaler Heyday, thinks there will be pressure on prices, but not a price war, as Germany develops its domestic production.
Retail cannabis prices will decline over the next 12 to 18 months, he told DW via email. Increased imports from abroad will also exert downward pressure, as the cost of operating a marijuana farm abroad is much lower, he added. The CEO of Heyday, which imports cannabis products mainly from Portugal, appreciates the southern EU country’s lower labour costs, ideal climate conditions and low regulatory requirements.
Seed Innovations analyst Alfredo Pascual said it would be a significant development if German domestic production made up about a quarter of the national market, as previously expected. But if German producers only have to grow in the bunkers, it will be cheaper elsewhere, he added. Pascual said it would be better for German companies to focus on the downstream parts of the cannabis supply chain, such as the processing of cannabinoids.
German weed-smoking patients could be the winners from increased competition in the domestic market. According to the Techniker Krankenkasse, the cost of a monthly therapy can vary between 200 and 2,200 euros. But most public health insurance companies still refuse to reimburse about 40% of all patients who seek such therapy. They probably wouldn’t be averse to some good competition in the German cannabis market.
dronabinol germanymjna,People also search for,Privacy settings,How Search works,dronabinol germany,mjna