German Recreational Cannabis Market Poised To Be Europe’s Largest

German cannabis market
Photo: Noppasin Wongchum / Shutterstock

With more than 83 million people, Germany is the most populous country in Europe. It’s also the continent’s strongest economic engine, with a $3.8-trillion gross domestic product — the fourth largest worldwide in 2020 after the United States, China, and Japan. The powerhouse nation is expected to introduce German recreational cannabis legislation that will decriminalize certain aspects of possession and sale, control country-wide consumption through distribution of licenses, and set up Germany to take over as Europe’s cannabis capital.

The latest statistics provided by the Federal Association of Cannabis Business (Bundesverband der Cannabiswirtschaft), published September 19, indicate the quantity of flower imported for medical and scientific purposes increased by more than 80 percent in the first half of 2021 compared to the same period the previous year. During the first six months of 2021, 8.96 tons of cannabis flower were imported, compared to 4.94 tons in the same period in 2020.


In addition, 980.4kg of dried cannabis flower for medical consumption (required to produce extracts) was imported in the first half of 2021. In the same period in 2020, the amount was 820.3kg, representing an increase of approximately 19.5 percent.

If the European Union’s history is any indication, what happens in Germany rarely stays in Germany; rather, the country’s legal decisions tend to reverberate across Europe. This is why the legalization of adult-use marijuana in Germany likely will redefine the segment’s future across the continent.

With Olaf Scholz serving as Germany’s new Chancellor, the cannabis industry has a new champion driving cannabis policy. His party, the Social Democratic Party of Germany, is in a Bundestag coalition with the Free Democratic Party and the Greens — dubbed the “traffic light coalition” — a direct translation of the German word Ampelkoalition. So far, all traffic light parties have agreed to legalize adult use.

Private cannabis consumption in small amounts already is tolerated by German law, and medical use has been legal since 2017. While the legalization of medical use was a giant step in the right direction, the market has not expanded as fast as it could have in the four years since.

Why? First, physicians are hesitant to write prescriptions. (It takes time to move a traditional establishment in a new direction.) German laws requiring hefty paperwork to get permissions and insurance coverage have not helped either. Then came COVID-19 and supply-chain hurdles, which negatively affected the level of medical consumption.

At the same time, however, the collective German mindset has changed rapidly. According to Statista, about 37 percent of Germans ages fifteen to thirty-four used cannabis in 2018. As more and more governments legalize marijuana use, medical or recreational, we see a collective increase in the acceptance of cannabis use.

The traffic light coalition’s push to legalize adult-use cannabis is a positive development, both in terms of generating tax income and meeting people’s growing demand for this freedom. But “legalization” can mean different things in theory and in practice, and we have yet to see the details of a future bill.

EU Good Manufacturing Practices (EU GMP) requirements are part of Germany’s medical cannabis market, and they once again may enter the picture for the recreational market. These practices include everything from quality assurance to personnel, outsourced activities, premises, and equipment requirements. They also include rules regarding documentation, production, and defect and recall procedures. It takes time, effort, and resources to receive EU GMP approval, and there aren’t many EU GMP-approved operators in the world.

If EU GMP does not become a requirement for recreational production and sale, many operators from other parts of the world — including Canada and Latin America, as well as other parts of Europe — likely will enter the market. Many of these cultivators boast low-cost production models capable of manufacturing products for as little as ten cents per gram. That said, the quality of product produced by these cultivators remains in question.

Other aspects impacting the size and pace of growth of the recreational market are rules for import, the definition of points of sale (pharmacies or dispensaries, the latter of which don’t exist in Germany), potential limits on personal use (i.e., THC levels or the number of grams a person may purchase in a month), health insurance coverage, and licensing requirements. Additional questions remain: How many licenses will be available? Will licenses be limited to cannabis-only shops? Will Germany deploy a pilot program in a specific area first, or will the bill cover the entire country right away?

Regardless of the above issues, any potential bill will need approval in both the Bundestag (where the traffic light coalition was formed) and the Bundesrat, the legislative body that represents the sixteen states of Germany at the federal level.

Although rapid legislative change seems likely, as the new government will want to demonstrate a strong will and a kept promise, challenges stemming from COVID-19 may impede the pace of legislative activity.

On a more personal note, many international operators — including my company, IM Cannabis (IMC) — are paying close attention to the developments in Germany. As IMC already operates in the German medical market and possesses the required EU GMP license, we believe a legal German adult-use market will result in massive business opportunities.

German approval likely will be followed by similar legislation from other European nations.

Oren Shuster thumb

Oren Shuster is CEO of IM Cannabis, a publicly traded entity operating in the medical and adult-use sectors in Israel, Germany, and Canada. Shuster possesses more than two decades of experience founding and growing companies in the med-tech and technology/software industries. He also has held executive positions at companies within the telecom and digital media industries.

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