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By Niklas Kouparanis, Bloomwell Group CEO and Co-Founder
Since the legalization of adult-use sales in 2018, the Canadian cannabis market has seen rapid highs and, more recently, serious oversupply woes. As of December 2022, the country had a massive stockpile of 1.47 billion grams (3.2 million pounds) of dried cannabis flower, according to Health Canada.
As a result of this cannabis surplus, product prices have plunged, and many operators are struggling to maintain profitability. This begs the question: what is the solution to Canada’s oversupply issue?
Potential relief may come from across the Atlantic Ocean–Germany, to be specific. Earlier this month, the German Health Ministry released a Q&A on the draft of the Cannabis Act (Cannabisgesetz, CanG). This draft detailed the government’s planned regulations for cannabis as a legally produced stimulant for personal use at home and for members of nonprofit growing associations (also known as cannabis clubs).
Under this change, cannabis will no longer be considered a narcotic substance and will no longer be subjected to the regulations under the Narcotics Act (Betäubungsmittelgesetz, BtMG) and other related laws. Adults ages 18 years and older will be allowed to possess up to 25 grams of cannabis for personal use and can cultivate a maximum of three plants at home.
The reclassification of cannabis as a non-narcotic will directly impact the nation’s medical market, allowing for further expansion of the industry amid the ease of regulatory requirements for production, distribution, storage of medical cannabis, and documentation. Safety standards,
in particular, would be made much less complicated, resulting in lower costs along the entire value chain, especially for manufacturers, importers, and pharmacies.
Under current regulations, many patients do not yet qualify for cannabis treatment, even though they have medical conditions that may be alleviated with cannabis’s wellness properties. Once cannabis is no longer regulated as a narcotic drug, patients will no longer be required to have a special narcotics prescription to access medical cannabis and will only need regular scripts. In addition, medical physicians will be allowed to prescribe medical cannabis for a wider range of symptoms.
Since 2017, Germany has been increasing its supply of cannabis imports for medical and scientific purposes. Canada remains the top supplier, providing over 6,000 kilograms of cannabis flower and extracts in 2021 alone. The expansion of the German medical market will likely increase demand for supply. Many experts predict that the medical market in Germany will grow up to 10 times, according to Cannamedical Pharma.
Best Practices for Canadian Growers
As an established grower in Canada, it’s important to leverage the opportunities that Germany’s medical market expansion presents. That starts with making sure that businesses have the proper permits and compliance measures in place to export medical cannabis overseas.
Under German law, cannabis for medical purposes must meet the rigorous regulations of the European Union-Good Manufacturing Practice (EU GMP) certification and the Good Agricultural and Collection Practice (GACP). Businesses should partner with either an EU GMP hub entity in Canada or Germany to help them make sure that cannabis exports meet GACP and EU GMP standards.
To export their product from Canada to Germany, Canadian growers must have a business partner in Germany. The German company must have a narcotic drug permit that allows it to deal with narcotic drugs. Without this permit, the German company cannot accept imports from Canadian growers, as every export-import must pass the International Narcotics Control Board (INCB) in Vienna. Even after the reclassification of cannabis as a non-narcotic in Germany, it is still classified as a narcotic under the United Nations Single Convention on Narcotic Drugs and, therefore, must meet these standards.
For this reason, it’s crucial for growers to do their due diligence when selecting overseas entities to align with. Canadian growers should look to partner with German companies that have been well-established in the country’s medical cannabis market for some time and can show a track record for operating efficiently and in compliance with German law.
Timeline for Expansion of the German Medical Cannabis Market
It is yet to be determined when the reclassification of cannabis will occur under German law. This change is expected to come on January 1, 2024, according to statements from German Health Minister Karl Lauterbach during his interview on ARD, a public German television station. This timeline is dependent on how smoothly the policy process will go within the German parliament.
Now is a critical time for Canadian growers to establish strategic partnerships. With the cannabis surplus in Canada putting significant strains on businesses, operators need to be tactful and agile in their approach to solving this issue. One potential solution could be Germany’s medical market, which will expand under its reclassification of cannabis as a non-narcotic, leading to an ease of regulations and greater patient access. With this uptick in demand for German medical cannabis looming, Canadian growers should seize the opportunity to establish themselves as import partners within the burgeoning European cannabis industry.
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