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Non-German companies could potentially benefit from new recreational marijuana pilot programs in Germany, observers say. The European nation partially decriminalized adult-use cannabis on April 1, 2024, becoming the 9th country in the world to legalize cannabis and granting millions of Germans access to the drug.
Interestingly, Germany’s recreational cannabis measures also allow foreign companies to enter the German market via a cannabis pilot program license. These entities would need approval from the German municipality where they would set up shop. Furthermore, they have to prove that their pilot program had a scientific or experimental component to receive a pilot program license.
The Federal Ministry of Food and Agriculture (BMEL) would then give final approval for qualifying programs and issue pilot program licenses. Businesses and institutions that meet these conditions will have a chance to enter the German cannabis market and take advantage of all the opportunities they might find there. Both Switzerland and the Netherlands have similar pilot programs.
As per current German marijuana rules, medical cannabis can only be compounded at pharmacies. International cannabis consultant and ASDA Consultancy Services principal Deepak Anand says this requirement makes any other cannabis product besides oil and flower ‘financially prohibitive’. It still isn’t clear if the pilot programs will allow cannabis sales.
With Germany eliminating cannabis from its list of narcotics in April, German patients can apply for a medical marijuana prescription with a lot more ease. The result was a notable increase in medical cannabis patients in the country that placed undue stress on the limited number of licensed pharmacies that stock the drug.
Germany also has few licensed cultivators and imports a large amount of medical marijuana from other countries. Unlike the U.S. where product oversaturation has caused cannabis prices in several states to tank, Germany doesn’t produce enough cannabis to support local demand and could benefit by inviting companies that increase the country’s supply of cannabis.
However, the fate of Germany’s pilot programs is still unclear. The program was instituted by the Social Democrat Party, which currently runs the government, but the upcoming February elections could derail the entire program. The conservative Christian Democratic Union (CDU) is slated to win in February, and it may not be as supportive of adult-use cannabis pilot programs as the governing Social Democrat Party.
Marijuana industry observers in the country have varying opinions on whether the Christian Democratic Union will clinch the February elections and whether it will decide to roll back, eliminate, or leave the current administration’s cannabis reforms as they are. According to Anand, the CDU government will turn to European Union and international laws that ban cannabis sales and roll back the pilot programs.
For firms like Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) that are constantly on the lookout for new market openings, the pilot programs in Germany present an opportunity that they could evaluate and make a decision on whether it is something worth pursuing or not.
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