Europe’s biggest economy moves closer to Weed legalization

Europe’s biggest economy moves closer to Weed legalization

BERLIN - Germany could be weeks away from introducing a bill to legalize cannabis under sweeping reforms that would greenlight the consumption and sale of the drug in Europe’s largest economy.

Germany’s Health Minister Karl Lauterbach last week said that the plans had received “very good feedback” from the European Commission, the EU’s executive arm, adding that the bill could be announced by the end of March or in early April.

“We will soon present a proposal that works, that is, that conforms to European law,” Lauterbach said, following months of talks with Brussels.

The government published draft proposals for the legalization of adult-use cannabis in October, which it said aimed to improve public health. Lauterbach insisted that they would only progress to the Bundestag — Germany’s federal parliament — if the initiatives are compatible with EU law.

Under the plans, cannabis would no longer be classed as a narcotic, and citizens over 18 would be allowed to carry up to 30 grams of the drug for personal use. Consumers would also be free to grow up to three plants at home, and licensed stores and pharmacies would be able to sell cannabis products.

May 1 will be seen as the day Germany legalized cannabis. Steffen Geyer - DIRECTOR OF HANF MUSEUM

If approved by parliament, the bill could be implemented in phases between now and mid-2024. It would make Germany the world’s largest regulated national cannabis market and the first country in the EU to permit its commercial sale — with potentially sweeping implications for the bloc.

In the Netherlands, a country widely associated with legal weed-smoking, the growth and sale of the drug to its so-called coffee shops is technically criminalized, though tolerated. While in other countries, such as Malta, legalization is limited.

“If I can trust my sources in the government, the first change will come in May,” said Steffen Geyer, director of Hanf Museum, a Berlin-based hemp museum which he described as being “the heart of the German legalization movement for the past 30 years.”

“May 1 [2023] will be seen as the day Germany legalized cannabis [for personal use],” Geyer told CNBC, noting that commercial legalization would likely follow next year. “Cannabis in Germany will be a success story, I’m sure. The future’s green.”

‘The future’s green’

Cannabis legalization is one of a series of socially progressive policies proposed by Chancellor Olaf Scholz’s three-party “traffic light” coalition government, which entered into power in 2021 after 16 years of conservative rule.

Around 4 million people in Germany used cannabis in 2021, and a quarter of all 18- to 24-year-olds in the country have tried it, according to Lauterbach, who said that the purpose of the changes was to increase public oversight and reduce drug-related crime.

“The government right now is by far the most open about this topic,” said Martin Chodorowski, account manager at Tom Hemp’s, a Berlin-based Cannabidiol (CBD) retailer.

CBD is an active, but non-addictive, ingredient in cannabis, derived from the hemp plant. Its sale has been legal in Germany since 2017, provided that the Tetrahydrocannabinol (THC) content — the main psychoactive part of cannabis — is below 0.2%. Meantime, the sale of other weed products is prohibited.

“The chances for us as a German company are the highest they’ve been in a decade,” said Chodorowski, who welcomed the prospect of a more stable framework for suppliers and consumers of cannabis products.

It is estimated that legalizing the drug could create 27,000 new jobs and bring in an additional 4.7 billion euros ($5 billion) per year in tax revenues, social security contributions and criminal prosecution savings, according to a 2021 study from the Heinrich Heine University Dusseldorf.

“This is the most boring revolution you will ever recognize,” said Geyer, adding that new job creation could be closer to 35,000. “People are just trying to be normal. These jobs are already done today, but without paying taxes, without paying social security.”

EU regulatory challenges

The government has a fine line to tread in producing a bill that adheres to EU laws, international drug treaties, and public health concerns.

Europe has long taken a conservative approach to the legalization of weed, and EU regulation requires member states to ensure that the sale of illicit drugs including cannabis is “punishable by effective, proportionate and dissuasive criminal penalties.”

The plans would also be incompatible with international treaties, including the U.N.’s 1961 single convention on narcotic drugs, although countries like Canada and Uruguay have faced no serious consequences since moving to legalize the drug.

The majority of European countries don’t want to go in this direction. But nobody would have thought 10 years ago that Germany would... Franjo Grotenhermen - EXECUTIVE DIRECTOR OF THE INTERNATIONAL ALLIANCE FOR CANNABINOID MEDICINES

The Health Ministry did not confirm details of its proposed bill to CNBC. But preliminary documents suggest that the government would issue a declaration of interpretation to demonstrate that legalization will aid youth protection and combat illicit drug trafficking.

“The European contract says every state has to enforce the fight against the illegal use of cannabis, and the German government will say we don’t have illegal use, we regulate the legal use,” Geyer suggested.

Europe’s border-check-free Schengen Zone, of which Germany is a member, also currently prohibits the import of illegal drugs over European borders. This means that Germany would need to demonstrate that it can produce enough supply domestically without undermining its neighbors’ drug policies.

Impact for the medical market

Berlin’s proposals will also have to prove they won’t disrupt the country’s well-established medical marijuana market.

The sale of medical cannabis has been allowed in German pharmacies since 2016 — but several barriers to entry remain, including cost. Some medical professionals have warned that legalization of the drug for recreational use could raise risks for patients, who may seek to self-medicate.

“Patients, who cannot afford medical cannabis, may self-medicate with adult-use cannabis without medical advice. In our view, this must definitely be avoided,” Johannes Gallois of the German Association of Pharmaceutical Cannabinoid Companies said.

Carsten Koall | Getty Images News | Getty Images

Still, wider societal acceptance of cannabis could also help de-stigmatize the drug and improve public acceptance of its medical benefits, Gallois noted.

“An overall de-stigmatization of cannabis as a substance will also lead to a de-stigmatized medical cannabis market,” Gallois added.

The government is currently undertaking a review of its medical cannabis guidelines, including how it is prescribed and reimbursed under the country’s statutory health insurance program.

A ‘domino effect’

The plans come as cannabis legalization has fallen under renewed debate over recent years. In the past decade, Canada, Uruguay and, recently, Thailand, have all moved to legalize the drug.

Legalization of the drug in the EU’s largest economy could potentially open the door to similar reforms in other European countries. Lauterbach has previously dubbed the plans “a model for Europe.”

“The majority of European countries don’t want to go in this direction. But nobody would have thought 10 years ago that Germany would go in the direction of the legalization of cannabis,” said Franjo Grotenhermen, founder and executive director of the International Alliance for Cannabinoid Medicines, a Cologne-based medical society.

We need examples like Germany, like Europe, to show that society will not collapse if you make it legal. Steffen Geyer - DIRECTOR AT THE HANF MUSEUM

Neighboring Luxembourg and Czech Republic have already proposed plans to legalize cannabis for adult-use. In Austria, Italy and Spain, it is no longer a criminal offence to possess small amounts of the drug for personal consumption.

Malta, the EU’s smallest member state, in 2021 became the first country in the bloc to legalize personal possession of the drug and permit private “cannabis clubs,” where members can grow and share the drug.

“Germany could be a pioneer and cause a domino effect in this regard,” Gallois said.

Some are optimistic that such moves in Europe could also hasten the liberalization of the global cannabis market, most crucially in the world’s largest economy, where recreational and medical use of the drug is already legal in several U.S. states.

“The whole illegal drugs business will dissolve itself once the United States change their mood on a federal level,” Geyer said.

“But we need examples like Germany, like Europe, to show that society will not collapse if you make it legal on a bigger scale. 80 million Germans is a good start, but it’s not the end of the story,” he added.

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Region: Germany

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