ICBC Berlin: What does “plan B” mean for the German cannabis industry?

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IInternational Cannabis Business Conference (ICBC) Berlin 2023 returned to the Estrel Berlin Hotel last week, welcoming thousands of guests, speakers and exhibitors.

A few weeks after the German government announced a major change in its plans to launch a commercial cannabis market, the conference was animated by discussions on the opportunities that remained for companies in the country, and on the next areas of opportunity.

This was naturally reflected in the conference’s speaker sessions and panel discussions, which saw a number of major industry players take the stage to analyze the state of play in detail.

Main lessons:

  • Germany is pursuing its ‘plan B’, a combination of ‘everything it could find’ that was allowed by EU and UN agreements
  • Many questions remain unanswered regarding pillars 1 and 2
  • The school exclusion zone of 250 meters for cultivation and consumption sites would mean that “almost all of Berlin will be an exclusion zone”, and without “floor markings” it would be difficult to enforce it
  • Pillar 1 was supposed to be implemented this year, but it seems to be early 2024 instead. The timeline for Pillar 2 is unclear, but there is motivation to move it quickly
  • The current plan is expected to generate annual revenues of 1.135 billion euros, while the previous full legalization plan forecast revenues of around 4.7 billion euros
  • The most important change to come is the removal of “all cannabis-related active substances” from the list of narcotics and their transfer to a new cannabis law, which could have a significant impact on the medical market.
  • While ‘disappointing’ for business, the new legislation nevertheless means that Germany is ‘spearheading’ European cannabis reform, with no country but Malta – and now Luxembourg – offering such liberal laws. on cannabis.

ICBC Berlin 2023 - report

The opening session, led by Peter Homberg, partner at business law firm Dentons, reviewed what we know, and what we don’t, about the current proposals presented by the German government in April.

Homberg explained that the German government presented its initial proposals for an adult cannabis market to the European Commission (EC) in October 2022, “as part of an informal process asking the EC if we could TO DO “.

He said the move was part of an effort to avoid being reprimanded again by the Court of Justice of the European Union, after recently suffering a “big defeat” for his policies of Data protection.

“What happened, no one says clearly, but I will say it clearly. They said no. »

“They didn’t authorize what we had planned in October… So what happened? A plan B.”

He added that this “plan B” was created by the German government who “looked in the box and took everything they could find” that was allowed by EU and UN agreements, which resulted in a “disappointing for the industry” strategy.

With the new strategy leaked to the press in May, Homberg hinted that a number of practical questions still remained unanswered.

The first question concerns the first pillar of the new proposals and the launch of Cannabis Clubs throughout the country, which, according to Mr. Homberg’s calculations, could be authorized to cultivate 300 kg per year per Club.

Since Cannabis Clubs will need to be located some distance from schools, it would be nearly impossible to find enough space in cities like Berlin, an issue that has been discussed in detail in subsequent panels.

With regard to the second pillar, which offers pilot studies on cannabis in the style of Switzerland, Mr. Homberg said that it was not yet clear whether these studies should be provided by domestic producers, such as the anticipated the initial proposals. If so, he believes that the offer would be very insufficient.

On a more positive note, Homberg referred to proposed changes to Germany’s narcotics law, which will see “all cannabis-related active substances” removed from the narcotics list and transferred to a new cannabis law.

This will have a potentially large impact on the medical cannabis market in Germany, as major barriers for patients and prescribers will be removed.

Regarding the implementation date of this new strategy, Mr. Homberg said that the first pillar should be implemented before the end of 2023. However, he said that “so far, we were a bit more pessimistic about the timeline,” suggesting it was more likely to be implemented in early 2024.

The second pillar is expected to be introduced after the summer holidays, another topic which was further explored later in the day.

ICBC Berlin 2023ICBC Berlin 2023

The current plan is expected to generate annual revenue of 1.135 billion euros, while the previous full legalization plan expected revenue of around 4.7 billion euros.

Georg Wurth, Director of the German Hemp Association, then presented his analysis of the current situation in Germany, during a session entitled “Can Germany do it? »

Responding directly to the title of the session, Mr Wurth said: “Germany won’t make it. In my opinion, full legalization will not happen in this decade, and that is disappointing.”

Despite this candid assessment, he went on to suggest that there was still cause for celebration and that even with the new framework, Germany would retain one of the most liberal stances on cannabis in Europe.

“No other country allows the cultivation or possession of small amounts of cannabis in Europe, with the exception of Malta. (The news that Luxembourg has also changed its legislation had just dropped).

“Malta is now spearheading legalization in Europe. Germany, in the first pillar, plans to catch up with Malta, even drawing inspiration from this spearhead. I am sure that Europe will follow Germany”.

“It’s not like in Switzerland where there are 300 people per project, it could allow entire states to benefit from legal cannabis sales, i.e. hundreds of thousands of people. It is really very important. »

On whether each pillar will pass, he hinted that while the upper house could still halt the whole process, he believed it was compatible with EU law, otherwise Malta would have had “much bigger problems “.

Regarding the second pillar, he suggested that the German pilot studies “would not be like Switzerland where there are 300 people per project”, but that they could see entire states and hundreds of thousands of people benefiting of the legal sale of cannabis.

In addition, he said that some municipalities have already applied to host these model projects, “thereby putting pressure on politicians”.

“The discussion is not simmering, it is boiling. So there is good motivation, but we could have more champions in government.

The following round table, entitled Cannabis Policy Reform Efforts in Germany (Cannabis Policy Reform Efforts in Germany), provided an in-depth look at the various issues related to the new legislation, already covered in the two previous sessions.

Moderated by Jürgen Neumeyer of the German Cannabis Business Association, and attended by representatives of several German political parties, the often heated discussion began with the German medical market.

Regarding the current gap between domestic demand and supply in Germany, Roman Rogat of the FDP told the audience that the current domestic production limits should be “seriously discussed, as we are now dependent on imports”, adding that “the idea must be that we can be independent and that we should have a business process where the best company succeeds, regardless of its origin”.

The Greens’ Kirsten Kappert-Gonther said she thought small businesses should also be considered in this process, adding that the current requirements for growers in Germany were ‘ridiculous’, having to take place in bunkers that could withstand it. to heavy weapon attacks.

This raised further questions about the first pillar and the “strange dynamic” between companies that have to grow medical cannabis in a bunker, but Clubs that can do so in a greenhouse.

Mr Rogat added that Germany was now “behind other countries” in terms of regulation, and that the government was “behind our promises” because the legislative process was taking too long.

It was then suggested that during last year’s energy crisis due to the war in Ukraine, a series of brewing German policies, including cannabis reform, took a back seat and were delayed.

Asked about the possibilities for businesses under the second pillar, Ms Kappert-Gonther said: “It is not yet possible to answer the question you are asking, because the second pillar has not yet been defined. Regarding the second pillar, we don’t know what we are dealing with, which must be frustrating for you (the companies). »

Regarding the deadlines, Erwin Rüddel (CDU/CSU) suggested that the series of “outstanding questions on this plan” meant that it was unlikely that any further decisions would be taken during this legislature.

Other panel members challenged this view, saying it was essential to “seize the opportunity now” and do everything possible to ensure that the policy is “set in stone” during this legislative period.

Business of Cannabis will release further information on ICBC Berlin in the coming days.

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