Dec 3, 2021
Germany announced a transformational development for its legal cannabis industry after the three political parties agreed to regulate the distribution and sale of recreational cannabis.
The development represents a major catalyst for the European Union’s (EU) cannabis industry and the change in legislation will benefit companies that are levered to Europe’s largest economy.
The three political parties are expected to form the next government in Germany and we are glad to see the groups come together to advance important cannabis legislation. Going forward, we will monitor how the market advances and how long it takes for a recreational cannabis market to be established.
Based on the legalization process that we have seen in other countries, the amount of time it takes to establish a recreational cannabis market varies and can be very unpredictable. Although it would be great if we received some information about Germany’s time frame for the opening of a recreational market, we expect the agreement to create significant ripple effects in other large economies in the EU and abroad.
The near term impact of the agreement between Germany’s three political parties is challenging to measure, however, we are most excited about the potential domino effect that is associated with the legal cannabis in Europe’s largest economy.
Is Luxembourg the Next Domino to Fall?
If you look at the recent developments in Luxembourg (which neighbors Germany), cannabis legislation seems to be advancing after the government changed its mind on its previously announced plan to create a legal recreational cannabis market.
Last week, Luxembourg issued an update on cannabis legislation and stated that it plans to allow each household to cultivate up to four cannabis plants. The new plan does not allow for the sale of cannabis or for the consumption of cannabis in public.
Although we consider Luxembourg’s updated strategy to be less than optimal, it’s a step in the right direction. The next step in the plan will be the drafting of legislation by the Ministry of Justice. As part of the strategy, the Ministry of Justice will work with five other ministries and judicial authorities to draft legislation and we will monitor how the industry advances in 2022 and beyond.
A Change of Power in Germany is Coming
In the coming months, we expect to learn more about Germany’s plans for a recreational cannabis industry and will be highly focused on how the market advances. The initial document provided minimal detail on how the recreational cannabis industry will be structured and we hope to learn more in early 2022.
We do not expect the passing of the legislation to be an easy process and do not know what legalization means to the three parties. The term can mean many different things and we look forward to getting clarity on this. A key part of the process will be the drafting and approval of an actual legalization bill, which still needs to be completed.
Next month, the three-party coalition is poised to take power from the current conservative government and we will monitor how the legislation advances after this. We expect Germany’s cannabis market to be a major topic of discussion in 2022 and are following several public and private companies that are levered to the country.
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