This is the amalgamation of a two part feature first published by Business of Cannabis.

The significant watering down of its goals, the German coalition government’s repeated failures to deliver on time, and the progress of countries like Switzerland and the Czech Republic throughout 2023 mean that Germany no longer dominates the European cannabis zeitgeist as it did at the start of the year.

However, as our host of industry experts explain, it is still set to play a vital role in European cannabis liberalisation over the course of the coming year.

Kai-Friedrich Niermann, Founder, KFN Law Office

2023 was a rollercoaster ride of emotions for the German cannabis industry. In April 2023, the surprising change of course on cannabis legalisation came when Federal Ministers Özdemir and Lauterbach announced that there would be no commercial route in Germany.

Due to international and European obligations, only decriminalisation with home grow and collective home grow could take place, and the commercial route would first have to be researched with model projects.

In August, the German government then presented a draft that could hardly be stricter and more prohibitive.

And still, in December 2023, it is not even clear whether this completely over-regulated draft, designed with old and new penal provisions, will even be put to a final reading and vote in the Bundestag.

Possession of three live plants for personal cultivation will be possible next year, but paradoxically, people will only be allowed to store a maximum of 50g of dry cannabis per person in their household. It is also questionable whether and how many cultivation associations will even be established next year due to the bureaucratic overkill.

Over 20 extensive and complex paragraphs deal with cultivation clubs, and despite much wrangling, all parties involved have been unable to convince the Minister of Health of a Cannabis Social Club solution. Consumption in the clubs, just like edibles, will therefore not be possible for the time being.

The biggest surprise was certainly that the cultivation of medical cannabis was released in Germany in the latest version of the draft. In the future, assuming the CanG bill is passed next year, anyone in Germany will be able to apply for a cultivation licence.

There are no restrictions on the quantity to be produced, the number of cultivation facilities or the type of product. How this will affect the German market, the international markets and the import companies established here is not yet foreseeable.

If sufficient medicinal cannabis can be produced in Germany domestically, this should have a direct impact on the imports to be reported annually to the INCB in accordance with the rules of the Single Convention. Anyone who still wants to sell medicinal cannabis in Germany may also have to produce it in Germany

Having a production site in Germany therefore seems to be becoming much more attractive, especially with regard to the model projects that are still to come. It remains exciting!

Niklas Kouparanis, CEO and Co-Founder, Bloomwell Group

Nothing will stop Germany from decriminalising and reclassifying cannabis in 2024; Germany’s Cannabis Act will be passed at the beginning of the year by the Bundestag, and this includes the groundbreaking provision that cannabis will no longer be considered a narcotic in Germany, beginning April 1, 2024.

Patients numbers will grow significantly and rapidly due to the fact that medical cannabis can be prescribed as regular Rx medication; costs will decrease; and patients will be able to use eReceipts – easy to use online prescriptions.

The reclassification of cannabis in Germany as a non-narcotic will set the stage for more affordable and accessible medical cannabis for all patients. Our country of 83 million, which currently has between 200,000-300,000 medical patients, could eventually see its number of medical cannabis patients multiply into the millions.

Germany is on the verge of ending prohibition and ushering in a paradigm shift. The number of patients benefiting from treatment with medical cannabis, in particular, will increase rapidly in the coming year.

Germany will become the biggest medical cannabis market in the world next year, so investors should look to Germany, where there are opportunities to do business with experienced companies that are already engaged with patients and are utilising data on medical cannabis supply and demand.

Outside of Germany, medical cannabis continued its march across the European block, in the last few weeks alone seeing Ukraine vote to legalise access to medical cannabis, and France bring medical cannabis into its general healthcare system for the first time.

In the UK, Europe’s second largest medical cannabis market, progress for its medical, CBD and hemp industries remains stilted by regulatory inconsistencies and over-bureaucracy. Many are looking to 2024 with optimism that the industry may finally be allowed to reach its full potential.

Mike Morgan-Giles, CEO, Cannabis Industry Council

The UK cannabis industry still faces a largely incoherent regulatory and policy framework, which creates challenges within the prescription cannabis, consumer CBD, and industrial hemp sectors.

The Cannabis Industry Council does welcome the Government opening the door to the potential e-prescribing of CBPMs, which would cut bureaucracy and help patients. If GPs were also allowed to initiate medical cannabis prescriptions, this could be a game changer.

We will also continue to strive for the widespread adoption of industrial hemp as a sustainable agricultural crop and for decarbonising the built environment. Given the ongoing objective to reach net zero by 2050, it appears inconceivable that this can be achieved without a notable contribution from hemp.

The Cannabis Industry Council will also continue to press for change to improve the economic outlook for businesses and farmers. These include the rules restricting foreign cannabis investment, and the current ban on farmers extracting CBD under an Industrial Hemp Licence.

British Cannabis

As British Cannabis Group enters its ninth year in the UK cannabis market in 2024, it is evident that challenges and opportunities are intertwined in a landscape undergoing constant transformation.

Despite promising growth prospects, the CBD sector faces formidable hurdles that require immediate attention, including regulatory changes and economic factors.

The CBD market, once touted as a goldmine, is enduring a turbulent phase in 2023, with prospects for 2024 equally challenging. These challenges are primarily rooted in the broader economic landscape. Factors such as inflation, supply chain disruptions, and global economic uncertainties have contributed to a volatile market. Businesses must navigate these economic headwinds to stay afloat and thrive.

Regulatory ambiguity continues to cast a shadow over the CBD industry. The Food Standards Agency (FSA) and the Novel Foods legislation have raised questions about product compliance, particularly concerning the recent decision to recommend a maximum daily intake of 10mg of CBD. Industry players are grappling with compliance issues and require clear guidelines to ensure they meet retail requirements and maintain consumer trust.

A source of hope for CBD brands in 2024 lies in the upcoming success of British Cannabis application for an Article 4 non-novel determination, covering a traditionally extracted range of cannabis products, based on a cold-pressed cannabis method. The validation of this primary ingredient as a non-novel food will clear a path for new products and new brands, which has been held up by regulation.

In the cannabis industry, 2023 has been a year of trials and tribulations, with 2024 poised to bring its own set of challenges and opportunities. Collaborative efforts between industry stakeholders and regulatory bodies are essential to overcome these challenges, ensuring a prosperous future for both CBD and medical cannabis. Clear guidance, industry standards, and a renewed focus on patient support and education will be pivotal in navigating the complex terrain of the cannabis industry in the years to come.

Thomas Skovlund Schnegelsberg, CEO, Stenocare

The key theme for 2024 will be further growth for medical cannabis sales – in Europe and globally

The past year, 2023, had both good news with growth in patients’ treatment with medical cannabis and sad news with licensed producers closing. However, the year will be remembered for its continued positive momentum of growth in most markets.

Stenocare in Denmark has several expectations for the year ahead. New markets will open and embrace medical cannabis as a new treatment. Ukraine and its war veterans will have the opportunity to use medical cannabis for PTSD, and we will also see new countries legalise to offer alternative treatment for chronic pain and opioid-addicted patients.

Speculation that recreational cannabis will become generally legal in Europe will continue, fueled by the German efforts. But it is important to understand that the EU law framework for all European members outlined in EU Article 2 and Schengen Article 71 that production, distribution, sales, and possessing recreational cannabis is illegal, and the members must enforce the laws. The only path is to introduce a time-limited pilot with a narrow scope that complies with the EU law framework. From an industry perspective, this will drive both public awareness of medical versus recreational use and further contribute to reducing the historic stigma for the cannabis plant.

Stenocare expects that both sales and the number of patients will continue growing during 2024. On a company level, this will translate into 100% growth in sales and break-even by the end of the year. As the young medical cannabis industry works towards the Prohibition Partners 2027 sales projections of USD 2.2 billion in Europa and USD 12.8 billion Globally, Stenocare is inspired by the famous quote from Winston Churchill: ‘It is, perhaps, the end of the beginning.’

In the UK, Hilltop Leaf’s CEO Hamish Clegg suggests that domestic cultivation, product consistency and a greater balance of quality and price will define the market in 2024.

The price versus quality focus comes as some companies flooded the market in the second half of 2023 with very cheap products, which is great for patients on a tight budget, but not sustainable from a profitability stance at the current scale of the market, or from a quality of product basis.

In 2023 some of the sub £5/g product quickly sold out – this resulted in patients not being able to get consistency of supply causing frustration. I think there may be a greater balance of price and quality in 2024. I believe patients would rather pay a little more (£6-7/g) and receive the same product every single month.

2023 was incredibly patient-driven with patient demand to try as many different products as possible. There is a sensible reason for patients to try multiple products (strains, strengths, formats) to establish the most appropriate strain for their condition – we are all different after all. However, that is very hard to do if patients don’t stick to one product for a sensible period of time, such as three months. 

Chopping and changing makes it near impossible to determine which product is most appropriate for that individual. Next year I think products coming to market will be more clinically-led and high quality. Therefore, I think clinicians will be looking at working with suppliers who can give their patients consistent supply and have high quality products.

The supply chain will inevitably be helped by the first UK supply. I think 2024 could be the year we start to see UK production coming to market, albeit in small volumes. Capital markets are also likely to open up as interest rates start to reverse. This will help the UK industry to continue to grow – that said I think investor focus on cash flow, cost discipline and ESG will mean there is capital available only for the right opportunities.

Finally, we all hope society (Police, Employers, Govt, the wider demographic and even NICE) increases acceptance of CBPMs as a treatment. That said this will only happen if patients  continue to respect others acceptance and follow the guidance of their doctors.

Turning to the emergence of adult-use cannabis markets across Europe, Paris-based Augur Associates explained there are two distinct models countries seem to be adopting.

Global attention is shifting to Europe, where countries are overcoming regulatory hurdles with innovative legal approaches. However they mostly remain quite reserved, banking on “regulated decriminalisation” rather than actual adult-use non-medical commercial markets.

Some countries are legalising under the guise of scientific research, (while however bearing no actual international legal ground in terms of scientific projects). Switzerland, the Netherlands and Germany are at the forefront of this approach, employing pilot projects to assess the social, health and youth protection consequences of legal commercial supply chains.

The European non-medical industry is thus gradually evolving between the meshes of two emerging models. The first is based on ‘private non-profit organisations’, also known as Cannabis Social Clubs, whose members are registered and responsible for growing cannabis and distributing the harvest among themselves.

Malta and the first German pillar illustrate this model, which also allows citizens to grow cannabis at home. In this non-commercial model, the industry has very little involvement and it will be quite difficult for them to get in. Which bears the question: who will pay to set these clubs up? It is not a small feat, nor cheap. Money laundering and infiltration by the illicit sphere will need to be watched carefully. The Luxembourg project is a downgraded version of that first option (if it ever gets there).

The second model involves ‘spatially limited and tightly controlled supply chains’, as tested in Switzerland and the Netherlands, and as proposed by Germany in its (potential) second phase of regulation.

The aim of these supply chains, which are limited in time and should be perceived as political experimentation, is to explore effective and (supposedly) compliant ways (with EU and international law) of legally distributing cannabis. These are ‘little steps’ regulatory processes, mostly using international compliance issues as a reason not to go full-legalisation; these burdensome processes are looking to be over-regulating under the pretences of protecting public health from cannabis radioactivity. However, these processes are moving forward, despite a quite unfavourable political EU climate.

The Czech Republic project seems to look like an upgraded version of that second option (while integrating the basis of the first option) and could represent the very first fully regulated market to be set up in the EU. Belgium and Portugal have launched preliminary processes and should be watched closely in 2024.

If it is successful in overcoming regulatory hurdles and a politically critical climate, the European adult-use cannabis market could become a major global business sector. 2024 looks set to be a pivotal year, with innovative models and pilot projects shaping the future (or not). While the challenges are still numerous, the momentum is undeniable.

This momentum, in both adult use and medical cannabis, is set to see a much needed boon for cannabis investments, according to SOMAÍ Pharmaceuticals CEO, Michael Sassano.

2024 is shaping up to be a year of potential big wins for cannabis from legislative, valuative, and popular opinion viewpoints.

Clearly, politics and regulations have always been an Achilles heel for cannabis. Recent movements show that regulators are rejecting political lobbyists and going for what is right and popular.

In August, the United States Health and Human Services (HHS) Assistant Secretary for Health Rachel Levine sent a communication to Drug Enforcement Administration (DEA) Administrator Anne Milgram about rescheduling cannabis from a Schedule I narcotic, like heroin or LSD, to a Schedule III.

The Germans are facing similar calls on both sides of the aisle to de-list cannabis as a narcotic and decriminalise the plant. The recently approved proposal to decriminalise cannabis, enact social clubs and remove cannabis as a narcotic looks like it will progress through the German parliament.

These two landmark regulatory events could send the global legalization efforts in most countries into overdrive. Already, we see major cannabis policy announcements from almost every continent, and countries like Thailand, Ukraine, Czechia, Albania, Morocco,  Brazil, and Japan to name a few, are all pushing cannabis programs. In 2024, expect countries you never thought would join the cannabis train hopping aboard.

2024 should be a turning point after six years of turmoil and inconsequential legislative moves. The Biden administration needs an easy win, and regulatory action is one. German politicians need a win and will most likely secure it administratively. Globally, countries need to bring about change in turbulent times. Generally speaking, valuations cannot get cheaper as companies have successfully survived and are now on the upswing. Additionally, consumer preference will outweigh lobbyists’ influence through 2024.

Let’s not wait for 2025. Urge regulators to make 2024 the year they do what their constituents want instead of pursuing ideas benefiting corporations.

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