The green wave: How Germany’s cannabis legalisation could reshape Europe

Last month, the German Government approved a draft law that would legalise the recreational use of cannabis. This would mean Europe’s largest economy could soon have one of the most liberal cannabis policies, in a move that is likely to have far-reaching implications.

We took a closer look at the potential implications and considered whether other major European nations could soon follow suit.

A big impact at home and abroad

It’s been almost two years since Malta became the first EU nation to legalise cannabis, but it looks like recreational marijuana could soon be available in the largest economy within the bloc. Under the proposed legislation, adults will be allowed to possess up to 25 grams of cannabis and grow up to three plants for personal use. They will also be allowed to join non-profit “cannabis clubs” of up to 500 members where the drug can be legally cultivated and purchased.

With approximately four million adults currently using cannabis in Germany, there already appears to be a huge market available for companies to tap into and, if the proposed legislation passes, it could get even larger. And as more companies venture into the recreational cannabis space, sizable sums of tax revenue will become available to the country’s government.

Bloomwell Group CEO, Niklas Kouparanis, explains what he believes will happen if the proposed legislation becomes law.

He says: “In the short term, the decision will mainly have a positive effect on the economics of the medical market. With the reclassification of cannabis as a non-narcotic, logistics such as importing, distribution and manufacturing will face less bureaucratic and regulatory hurdles. Also, it will be a simpler and more accessible process for physicians to prescribe cannabis to patients who need it. With reclassification, we expect the number of medical cannabis patients to multiply by five to seven times within a year.

“Regarding adult-use cannabis, from a business point of view, we don’t expect a high market volume within the next year. Keep in mind that the cannabis clubs outlined in the legislation need to operate as non-profit associations. In the long term, we don’t think that the clubs will be able to mitigate the competition of the unlicensed market. However, we do forecast that the clubs are the first step in the right direction and looking ahead, regulations will be optimised by legalising the value chain for businesses.”

Jon Robson, CEO of Mamedica, concurs that Germany will be significantly impacted by the move but says the impact will reach across the continent.

He comments: “As the largest economy in the European Union, Germany’s decision has far-reaching implications for the region. It positions Europe’s economic powerhouse as a major player in the emerging legal cannabis industry, offering substantial opportunities for businesses, investors and job creation within the country. The impact of Germany’s move extends beyond its borders, as it is expected to influence neighbouring nations and potentially provide a catalyst for further cannabis policy reforms across Europe.

“This decision does signal a growing acceptance of cannabis as a legitimate product with economic potential, with the opportunity to inspire other major European countries to consider similar steps. While the specifics of each nation’s approach may differ, due to cultural and political factors, the trend towards cannabis legalisation and regulation in Europe appears to be gaining momentum, potentially paving the way for a more unified and regulated European cannabis market in the future.”

Cause for concern for the UK’s CBD market?

As the move is expected to have far-reaching implications, it’s a wonder whether the UK’s CBD market will also be affected. As it stands, the UK is the second-largest CBD market in the world, with sales in 2021 estimated to have totalled £690m. According to some estimates, the UK’s CBD market will even be worth £1bn by 2025. But could this change if Germany proceeds with legalising marijuana for recreational use?

Robson doesn’t think so.

He says: “CBD is a non-psychoactive compound derived from the cannabis plant and is distinct from THC. The UK’s regulations concerning CBD products are primarily influenced by its own national policies and regulations. Most notably, in September 2021, the UK introduced its own regulatory framework for CBD products including rules related to product safety, labelling and marketing. The UK Government had also established a process for novel food authorisation for CBD products which I imagine will see little effect from Germany’s new legislation.”

Will legalisation elsewhere follow?

Whilst the move looks like good news for the UK’s budding CBD market, it will be interesting to see whether the UK will try to follow Germany down the legalisation route. Marijuana has consistently been the most used drug in England and Wales since estimates began in 1995. According to Statista, in 2020, 7.1% of the UK population had consumed cannabis in the previous 12 months, the same proportion as Germany, so there is certainly a market available for companies to tap into. But the positives and negatives of cannabis legalisation have long been debated, with conservative politicians in Germany declaring the country’s recent proposal “irresponsible”.

Robson comments: “In the UK, the discussion surrounding cannabis reform has been ongoing for some time with proponents emphasising potential economic benefits, reduced strain on law enforcement, and harm reduction through regulation. Where we are seeing definite progress is with the growing support for medical cannabis in the UK and other European nations, with the Home Affairs Committee recommending just last week that the Government support its wider rollout in the NHS before the end of the current Parliament.”

Robson is confident that Germany’s decision will raise awareness for other European nations but says the decision ultimately depends on the uniquely political, cultural, and societal factors within each European nation.

Kouparanis, on the other hand, thinks it’s possible that other major European nations will follow Germany’s lead.

He concludes: “Germany will be the tipping point and role model for other countries’ adult-use cannabis programs. It might even be easier for the UK to legalise adult-use cannabis because it’s not part of the EU. Along with offering a road map to follow, Germany’s legalisation might even motivate another EU member state to go even further and take the decision to the European Court of Justice, testing if a legal value chain is possible and compliant with EU law.”