Germany Set To Legalize Adult-Use Cannabis

On February 23, 2024, the German Bundestag passed the Cannabisgesetz, or Cannabis Control Bill, making it the third member of the EU to legalize adult-use cannabis.  Once in effect, this law will legalize adult-use cannabis for those 18 years of age and older, and will allow personal possession and home-grow.  The law is set to go into effect April 1, 2024, although the Bundesrat could potentially delay its implementation.  However, the Bundesrat’s consent is not required for the Cannabisgesetz to go into law, so any delays by the Bundesrat would be only temporary.

While Germany will immediately become the largest European country by population and economy to legalize adult-use cannabis, its implementation will be more similar to Malta than U.S. states that have legalized cannabis in that consumers will only be able to purchase cannabis by joining private clubs.  This presents less economic opportunities in the immediate future, but still warrants attention in the industry.

Key highlights of the Cannabisgesetz include:

• Removal of cannabis from the Betäubungsmittelgesetzes (BtMG), or German Narcotics Act;
• Permitting personal possession of 25 grams of cannabis in public and 50 grams at home for adults 18-years-old and older;
• Home grow of up to three plants per adult;
• Creation of Anbauvereinigungen, or non-profit cannabis social clubs, for the cultivation, manufacturing, and purchasing of adult-use cannabis;
• No commercial adult-use cultivation, manufacturing, or retail sales.

Adult-Use Possession

The Cannabisgesetz will allow adults 18 years of age and older to possess 25 grams of dried cannabis flower in public, or 50 grams of dried cannabis flower at home. Purchase of cannabis is limited to 25 grams of dried cannabis flower per day and 50 grams of dried cannabis flower per month per eligible adult over the age of 21.  Adults 18 to 21 are permitted to purchase only 30 grams of dried cannabis flower per month with a THC content of 10% or less.  

This immediately makes Germany the leader in cannabis possession thresholds in Europe, as other countries that have decriminalized or legalized possession have thresholds only in the single digits.  However, while Germany has relatively-high caps on the quantity of cannabis one can possess, Germans will have very few options for obtaining cannabis outside of home cultivation of up to three plants per adult.

Cannabis Social Clubs (Anbauvereinigungen)

Rather than legalize commercial cultivation, manufacturing, and retail sales, the Cannabisgesetz establishes a system of Anbauvereinigungen, or non-profit Cannabis Social Clubs, similar to the system currently in place in Malta.  These clubs will not be able to open until July 2024, although that could get delayed.  Cannabis Social Clubs will be limited to 500 adult-members and will operate similarly to American cannabis co-ops, with members cultivating and manufacturing cannabis and cannabis products in a shared facility for purchase by club members.  Adults may only be a member of a single Anbauvereinigungen. Members can receive geringfügige Beschäftigung, or “minor employment,” from the clubs, which would allow the club to pay them approximately €538 per month.  Otherwise, the Anbauvereinigungen cannot employ individuals to perform the cultivation, manufacturing, or retail operations of the club.

Medical Cannabis – the big winner?

The Cannabisgesetz’s biggest winner may be the medical cannabis industry, due to the removal of cannabis from the Betäubungsmittelgesetzes (BtMG), or German Narcotics Act. The BtMG is similar to the United States’ Controlled Substances Act, which meant that additional burdens were placed on prescribers and researchers with respect to medical cannabis.  Previously, physicians were required to use special narcotic prescription forms and coordinate with the German Federal Institute for Drugs and Medical Devices, and prescriptions were limited to those with severe diseases.  Cannabis’ inclusion on the BtMG also severely limited a patient’s ability to obtain insurance coverage for medical cannabis.

With the removal of cannabis from the BtMG, cannabis can be prescribed using standard prescriptions and for more medical conditions.  This should make medical cannabis significantly more accessible for Germans and make obtaining insurance coverage easier, and could lead to a boom in medical cannabis use. Further, the removal of cannabis from the BtMG will make it easier for researchers to perform high-quality studies and clinical trials using cannabis products.

Current Opportunities, and the future of German Cannabis

While Germany will not allow commercial cannabis cultivation, manufacturing, or retail sales under the Cannabisgesetz, there is still hope of a more robust adult-use cannabis marketplace in the future.  Original plans for licensed adult-use retail dispensaries were removed due to conflict with European Union Law, but Chancellor Schotlz’s government has pledged to work with the European Council to introduce a pilot program for retail sales.  It’s unclear if this will come to pass anytime soon, or what such a pilot program would look like.  European cannabis watchers will know that Switzerland implemented a pilot program for the sale of cannabis in 2022, which may serve as a model for Germany in the future.   Thus, at the moment there are no opportunities for U.S. cannabis operators to enter the German adult-use market.

However, the Cannabisgesetz does create potential opportunities for U.S. operators in the medical cannabis market, especially those with international holdings.  The increased accessibility to medical cannabis created by the Cannabisgesetz could greatly increase demand for medical cannabis in Germany.  Germany does not have a very large infrastructure for the cultivation and manufacturing of medical cannabis products, and already imports some medical cannabis from abroad.  Increased demand for medical cannabis will likely lead to increased imports, and could lead to new licenses for the cultivation and manufacturing of medical cannabis in Germany.  U.S. operators with operations in countries permitting export, such as Canada, may be able to take advantage in the surge in demand for medical cannabis and export their products to Germany through agreements with a German wholesaler/distributor.  However, as the U.S. does not currently permit the exporting of cannabis, this opportunity will be limited only to those operators with holdings abroad.    Further, should Germany seek to issue additional licenses, established operators in the U.S. may seek to establish their own German medical cultivation and manufacturing facilities.

While the Cannabisgesetz does not present the same economic opportunities as created by a new U.S. state legalizing, the importance of the Cannabisgesetz cannot be understated.  This is the first step in creating a legal adult-use market in Europe’s largest economy, and a significant expansion in the accessibility of medical cannabis.  U.S. operators looking to break into Europe should keep an eye out for potential new medical cultivation and manufacturing licenses, while those with holdings outside the U.S. may want to consider developing their brands by exporting medical cannabis to Germany.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee a similar outcome.