Big Tobacco wants ‘meaningful part’ in Cannabis Industry
Cannabis industry stakeholders from across the world were welcomed to Messe Dortmund this week for the inaugural edition of the Cannabis Business Expo 2023.
The day started with a number of discussions focussed on the German market as the government’s revised strategy edges closer to being brought into law.
Krautinvest’s Editor-in-Chief Moritz Förster laid out the current state of affairs, suggesting the ‘industry feels a little split’ over the government’s roll back on its ambitions to launch a full commercial market.
Asked whether the current social club model was likely to achieve its intended goal of edging out the illicit market, SPD Member Dirk Heidenblut said he was ‘optimistic this was achievable’, but the focus was also on preventing injustice.
He explained that for him the clubs had always been a part of the overall system, and would be an important step to edge out the black market.
Dirk Heitepriem of the German Cannabis Industry Association (BvCW) argued that the idea that this can be achieved by home growing ‘is an illusion’. Industrial growing is needed for this to be achieved, but the option for people to consume in a legal way is ‘simply changing everything’.
In response, Mr Heidenblut said he ‘wanted to be clear’ this could not be achieved without the industry, but suggested that the industry until now has not managed to stamp out the black market either.
Asked whether expanding the number of German companies able to legally grow cannabis beyond the current three was on the agenda, he suggested it was.
“We’re missing out on economic opportunities. Also, the tender system isn’t working well. For medical cannabis, Europe offers many other systems that are viable.”
Mr Heidenblut added that he felt that making it easier to import cannabis, which has been a contentious issue since the first position paper was published, should be added to the agenda for the upcoming first reading of the bill on October 12.
He later suggested that this reading could mean that Pillar 1 is brought into law by January 1, 2024.
As for Pillar 2, he suggested that the procedure would be similar to what the government has done so far, adding: “We’d like this to be flexible with different models being approved. It will be different to other countries, and may be down to individual states to decide how the pilot projects work.”
However, as the panel discussed at length, there remain a number of issues with the legislation as it stands.
As cannabis lawyer and member of the board of the BvCW Dr Ferdinand Weis explained: “The biggest issue is that the draft is too difficult to read; a number of judges have said it’s too meticulous. There are legal mistakes and also inconsistencies in the draft. For instance, what if a private grower grows over 25g, they can’t sell it, but they are unlikely to destroy it.”
Furthermore, as industry veteran and President of EIHA Daniel Kruse explained, the controversial ‘intoxication clause’ continues to constrain the hemp industry’s potential.
“I would simply cancel this clause. All stakeholders will route for the abolition of this clause,” he said.
“The debate about the ‘misuse of hemp’ needs to be brought to an end. Hemp has a huge potential if the clause is abolished. Industrial hemp would lead to more sales than medical and rec put together in Germany.”
Moving on to the country’s medical cannabis industry, Cansativa’s Katanja Kurth-Grieser suggested that this seemed to represent the only opportunity for her business, but that those opportunities were plentiful.
“Once decriminalised, I’m sure more doctors will educate themselves, and more pharmacies will be open to handling cannabis. Less red tape means freeing up labour.”
She suggested that there was room for improvement regarding medical reimbursement, a sentiment that was echoed by Dr Weis.
“Those who don’t get reimbursed will look for alternatives, then we go to where we don’t want to be. You’ll probably join a club and use rec cannabis as a medicine.”
In a later session, a panel of cannabis investors were asked whether Germany still represented a viable investment opportunity given there was little room for business in Pillar 1 and the medical market was growing slowly.
Yonatan Meyer suggested that while the ‘commercial market we’ve all been hoping for is a long way away’, there remained a ‘tremendous opportunity’ in the medical market.
Moving away from Germany, the panel turned its attention to the US and the potential implications of cannabis being rescheduled.
Mr Meyer continued that from the investment side, while he doesn’t believe it will represent a ‘flip of a switch’ which will see an avalanche of money come into the sector, it does mean ‘people sitting on the sidelines might be more comfortable jumping in’.
Gron Ventures’ Partner Matt Francini said that this included big tobacco, which ‘wants to have a meaningful part of the space’.
He added that he believed there would be ‘as much M&A activity’ as there was at the height of the last green wave, and that now was the cheapest time to invest in cannabis.
“We’re excited. We’ve been looking for good news from the US for a while. But one never wants to bet on regulatory change.”