How Big Is Germany’s Medical Cannabis Market?

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Although the German Federal Government legalized medical cannabis only in 2017, its approach to release licenses and the large demand created an attractive market for well-established medical cannabis companies.

The success of the German medical cannabis market has brought Cannovum AG to become the first publicly traded medical cannabis company in Germany. The fully licensed pharmaceutical wholesaler, importer, and manufacturer was listed on the Düsseldorf Stock Exchange in May 2021.

Such achievement represents a significant milestone for the medical cannabis market in Germany. Today, Germany represents the largest and the most profitable medical cannabis market in Europe. 

Market intelligence firm Prohibition Partners has estimated over 128,000 patients receive medical cannabis in Germany annually. Insurance companies reimbursed around 60% of medical cannabis prescriptions in 2019.

Although its medical cannabis policy is very young, Germany is to lead the European cannabis market in terms of growth. Over a million German patients will have access to medical cannabis by 2024, and the German medical market alone will be worth €7.7 billion by 2028.

The Federal Institute for Drugs and Medical Devices (BfArM), the German version of the Food and Drug Administration, estimated that Germany imported a record 9,249 kilograms in 2020.

Germany relied on the Netherlands and Canada exports until a few months ago. Well-established medical cannabis companies, such as the Dutch Bedrocan, and the Canadian Canopy Growth, Aphria, Aurora Cannabis, Cronos Group, and Tilray, benefited from the lack of internal production. But recently, Germany has also imported cannabis from Australia, Israel, Portugal, Spain, and Uruguay.

However, the evolving development of the market brought Germany to start to grow medical cannabis in the country. After the Federal Government chose the Canadian companies Aphria and Aurora and the German cannabis company Demecan as the only three domestic growers in 2019, German-grown medical cannabis has become available for purchase and sale by local pharmacies for the first time in July 2021.

Furthermore, German company Cansativa has become the sole distributor of all cannabis grown in Germany. The contract forecasts production of 10,400 kilograms for four years, according to Marijuana Business Daily.

Although Germany is not the only country where medical cannabis is legal in Europe, its success may influence those European countries that planned to start pilot projects to legalize or improve access to medical cannabis programs.

However, the European medical cannabis landscape remains small as compared with North American standards, although it is a fast-growing market.

The total sales of medical cannabis in Europe ranged from €230 million and €250 million ($251 million - $273 million) in 2019, according to a report by Marijuana Business Daily.

The overall US spending on medical cannabis is expected to grow from $8.5 billion in 2020 to $16 billion in 2025 in the United States, according to a report by New Frontier Data.

By forecasting the European cannabis market, Prohibition Partner estimated a worth €403.4 million ($477 million) by the end of 2021, and growth at a compound annual growth rate (CAGR) of 67.4% from 2021 to reach €3.2 billion ($3.8 billion) by 2025.

The regulatory approach to medical cannabis in Europe differs from country to country. The lack of a harmonized regulatory framework created grey areas where even regulating CBD has become challenging. 

For this reason, US and Canadian companies have developed different approaches to manoeuvre the medical cannabis space in Europe.

One of the biggest hurdles for North American medical cannabis companies to enter the European medical cannabis market is getting EU-GMP (Good Manufacturing Practice) certification, which defines all processes, including drying, processing, extraction, and distribution of medical cannabis products. Most companies that receive EU-GMP certifications target Germany for investments, which is considered the most profitable market.

One of the main issues of the European medical cannabis markets concerns the supply chain. Some European countries experience undersupply or even a lack of access to medical cannabis products.

Another issue related to the scarce supply is the lack of accurate information on patients. Even Germany lacks a registry for cannabis patients and a centralized database that tracks the total number of medical cannabis prescriptions or sales. 

The same happens in Italy, the second-largest medical cannabis market in Europe. Medical cannabis policy in Italy is not the same in every region of the country, and supply and access to medical cannabis programs differ from region to region.

Although the German medical cannabis market is at an early stage, it has shown great potential, and its future seems promising. However, it will take time to see how domestic production will affect imports, and how medical cannabis development in Germany will influence the growth of other European markets.

Article written by: Dario Sabaghi.

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