The enactment of Germany’s new cannabis law was delayed from the initially anticipated date of January 1, 2024, to the Spring of 2024 (likely coming into force around March/April 1, 2024). Based on leaks and disclosures from lawmakers and other insiders, the new German cannabis law will herald a slow, non-commercial rollout of adult use cannabis legalization, while the medicinal cannabis market in Germany will receive a significant boost.
The removal of cannabis from the narcotics law will open up and accelerate the medical cannabis market. New regulations are expected to come into force to open up the medical cannabis cultivation program in Germany, loosening restrictions for the existing three German cultivators. We believe it’s inevitable the next step will be to open up the medical cannabis market to more producers, which will be needed to support a future adult use recreational cannabis market.
There are signs that German cannabis distributors are already ramping up imports to meet anticipated heightened demand. The latest figures from the BfArM suggest 25000 KG of cannabis was imported between January and the end of September, 2023, which equals the import total into Germany for the whole of 2022. Extrapolating the latest figures out to the of 2023 suggests the annual import total into Germany will be over 33000 KG, a 33% increase over 2022.
In reviewing the latest data from BfArM, some interesting observations can be made about countries exporting into the EU’s largest cannabis market:
Canada: From 8000 KG for 2022 to 12000 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Canada will export over 15600 KG, an increase of 94% from the year before.
Portugal: From 3750 KG for 2022 to 3458 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Portugal will export over 4600 KG, an increase of 23% from the year before.
Denmark: From 4398 KG for 2022 to 2225 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Denmark will export over 2967 KG, a decrease of 33% from the year before.
Netherlands: From 2246 KG for 2022 to 2197 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Netherlands will export 2929 KG, an increase of 30% from the year before.
Columbia: From 230 KG for 2022 to 923 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Columbia will export 1230 KG, an increase of 435% from the year before.
North Macedonia: From 1346 KG for 2022 to 829 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, North Macedonia will export 1105 KG, a decrease of 18% from the year before.
Spain: From 438 KG for 2022 to 647 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Spain will export 863 KG, an increase of 97% from the year before.
Lesotho: From 278 KG for 2022 to 619 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Lesotho will export 825 KG, an increase of 197% from the year before.
Uganda: From 1149 KG for 2022 to 149 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Uganda will export 199 KG, a decrease of 82% from the year before.
Uruguay: From 509 KG for 2022 to 54 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, Uruguay will export 72 KG, a decrease of 94% from the year before.
South Africa: From 168 KG for 2022 to 72 KG for the first 9 months of 2023. Extrapolated over the whole of 2023, South Africa will export 96 KG, a decrease of 43% from the year before.
The Australian cannabis market continues to go from strength to strength, offering investors perhaps the best opportunity of any global cannabis market to realize somewhat predictable returns on investment. There are still remarkably few fully commercialized licensed cannabis producers in Australia, which opens up exceptional investment opportunities both domestically, and for global cannabis companies exporting established GMP cannabis products (e.g. top-quality flower, vapes, medical hash, adult chewables) into an underserved and immature market.
Australia’s red-hot cannabis market also increases opportunities for those New Zealand cannabis producers who are able to keep cost of goods low and take advantage of established trade and regulatory pathways.
The cannabis market in Portugal continues to evolve and competition within the marketplace is intensifying. An increasing number of global cannabis companies are looking to Portugal as a supply chain gateway into European and global markets. Portugal is a major hub for GACP-to-EU-GMP conversion and a significant exporter into global cannabis markets.
The cannabis market in the Netherlands is gathering momentum as the winners of the recreational pilot project lottery fast-track their facility build outs and ramp-up their production and commercialization plans ahead of the aggressive launch date (end of Q1, 2024). For investors, picking a winning licensed cannabis producer in the Netherlands could be a winning strategy if the producer can navigate the difficult and time compressed path to market, while offering a level of differentiation in product mix/quality into the coffee shops enrolled in the Dutch Cannabis Experiment.
In the UK meanwhile, slow signs of growth in the medicinal cannabis market are a positive sign, while the continued refusal of the UK government to show compassion or pragmatism in approaching its obligation to allow access to cannabis for medical patients in need is a counterweight to the growth of the sector.
The United States cannabis market holds promise for disciplined cannabis companies with a clearly defined strategy, efficient operating structure, and strict financial management, operating in states where they’re able to differentiate and sustain their offering.
In Canada, the cannabis market remains challenging from a business perspective but there are early signs of emergence from the malaise. Exports of Canadian cannabis into global markets are at an all-time high at the time of writing, and continue to grow by 50% year-over-year. The wholesale flower market in Canada is also changing. The vaults that were teeming with cheap weed have largely been emptied out or now only contain the lowest quality flower. More and more Canadian cultivators are unwilling to sell at rock-bottom prices, and the allure of the export market is a natural defence against price compression.