Three companies in Germany are allowed to grow cannabis and process it to make medicine. While the requirements are strict, the potential is great, as already evidenced by US cannabis and CBD (cannabidiol) operators. West Coast Ventures Corp. (OTC: WCVC) is a smaller public operator that has moved into the CBD edibles market, which is projected at $4.1 billion in 2022. Its Illegal Burger cannabis edibles franchises are set to reap the rewards of pro-cannabis legislation. German organizations are at a much earlier point in the curve of cannabis and CBD awareness.
Notably, Canadian companies own the three companies in Germany that can grow cannabis for medical purposes. In Canada, as in the US, cannabis businesses are savvy, open to exploiting opportunities within a growing and lucrative sector. WCVC’s iconic Illegal Burger brand, for example, offers an uncompromising, high-quality dining experience at the same time as educating consumers about the benefits of CBD. According to operators in Germany, enhancing public awareness regarding this politically controversial and economically valuable plant is vital to the industry.
Around 50,000 people are already legally using the drug as a medicine in Germany. According to its producers, this figure could soon be hundreds of thousands. This is why Hendrik Knopp is building a greenhouse with a difference in Neumünster.
Knopp is Managing Director of Aphria Deutschland, one of three companies allowed to grow cannabis in Germany. In a contrast to the proliferation of cannabis and CBD dispensaries in the US, his greenhouse will feature security sluices and 15,000 tons of reinforced concrete walls 24-centimeters thick.
The most important facts in a nutshell
Two years after the release of medical cannabis for patients, the Federal Institute for Drugs and Medical Devices (BfArM) was able to complete its tender for the cultivation of 10.4 tonnes of cannabis within four years.
- Three companies may grow cannabis in Germany for four years.
- A total of 10.4 tonnes of cannabis may be harvested.
- The first harvest is scheduled for autumn 2020.
- Cannabis is grown in strictly guarded facilities.
- For the cannabis producers, the cultivation promises to be a million-dollar business.
- 13 lots of 200 kilograms of hemp per year were distributed. Aphria and the Berlin company Aurora each received five lots, making a combined one ton per year. The Berlin startup Demecan is allowed to grow 600 kilograms of cannabis per year, using the remaining three lots. All three companies belong to Canadian parent companies who could smell a million-dollar business in Germany.
According to a scientific report of the Techniker-Krankenkasse, medical cannabis can be offered as therapy to help with:
- chronic pain
- multiple sclerosis
- Nausea as a result of chemotherapies
- Loss of appetite with HIV/AIDS
Greenhouses resemble high-security warehouses
The Federal Institute expects the first harvest to take place in the fourth quarter of 2020. This means that the three producers do not have much time to build their plants to high safety standards and start growing in them. With their reinforced concrete shells and bulletproof windows, the production and storage facilities will resemble high-security warehouse wings. Inside, on the other hand, workers can expect technical centers of excellence.
Depending on the cultivation, the intensity of the active substance THC varies. For medical cannabis, it is essential to reach a pre-determined THC value. Growers can achieve this with infrared lamps, sensors, and modern air conditioning technology.
Investments should pay for themselves
Constructing such a plant is expensive. Axel Gille, Managing Director of Aurora Europe, is convinced that the investments will pay for themselves. ‘Reasonable prices’ had been agreed with the Federal Government.
The price at which cannabis producers sell is not known. For reasons of competition, they do not wish to provide any information about this. The “Handelsblatt” recently quoted prices of 1.50 to eight euros per gram with reference to industry circles. Assuming a selling price of five euros per gram, this would result in sales of 20 million euros each for Aphria and Aurora in four years. Demecan would generate twelve million euros.
Aurora is building its reinforced concrete greenhouse in the Leuna Chemical Park in Saxony-Anhalt. There, the safety standards at the local chemical and medical companies are already high. Demecan is also moving to East Germany: the new plants are to be built in Dresden and the surrounding area.
Production in Germany is unlikely to meet demand
For these three German companies, cultivation is a bet on the future. In the opinion of the manufacturers, the initially permitted cultivation volume of 10.4 tonnes would hardly cover Germany’s demand for medical cannabis.
“According to estimates, there are currently between 30,000 and 40,000 patients in the statutory health insurance funds,” says Aphria boss Knopp, “in addition to 10,000 to 15,000 patients in the private health insurance funds.” Official statistics do not exist, but the demand for medical cannabis has tripled recently.
His competitor Gille sees great market potential: “0.5 to one percent of the population could also be cannabis patients in Germany.”
In Canada, where medical cannabis has been legal since 2001, the proportion of cannabis patients is 0.9% according to the Canadian Ministry of Health. In Germany, that percentage would mean around 750,000 people.
Even with 55,000 patients, only about 0.13 grams of cannabis produced in Germany remained per capita per day. According to a recent evaluation by the BfArM, the mean value for first prescriptions of cannabis is one gram per day. Not all health insurance companies, however, are convinced of the medical effect of cannabis.
Germany will continue to depend on imports
Since the number of patients will increase with growing awareness, Knopp is sure that the amount of imported cannabis will rocket in the coming years. Up to now, everything had to be imported. Delivery bottlenecks were frequent.
But why all the effort when cannabis has to be delivered from Canada? “If you manage to cultivate medical cannabis in a highly regulated country like Germany, you will create a European reference object,” Knopp says.
Philip Schetter, who is managing director of Aurora together with Gille, also supports the thesis, adding: “The German authorities are looking very closely.”
The European market has great potential. In countries such as Great Britain, Denmark or Portugal, cannabis is already permitted for medical purposes. Medical cannabis could soon be permitted in France, too. The Senate gave the go-ahead in May and is planning to launch a model project.
Is a medical cannabis lobby coming?
The German manufacturers don’t want to think too far ahead at the moment. They want to make cannabis known as a medical device. Therefore, they seek cooperation rather than competition.
“We welcome any serious competitor, because the main task in Germany at present is to educate patients, pharmacists and doctors about the medical benefits of cannabis,” says Knopp.
Schetter has a medical cannabis lobby in mind: “In the medium term, it would also be conceivable for pharmaceutical companies to join forces on the subject of cannabis at the German and European level.”
A politically controversial issue
Cannabis producers and their concerns are likely to be met with open ears by the FDP parliamentary group in the Bundestag. Wieland Schinnenburg, the FDP’s spokesman for drug and addiction policy, told our editors: “Germany will therefore continue to depend on imports. This is unsatisfactory.” He argued that Germany should produce more cannabis than it needed so it could become an exporter.
Sabine Dittmar, health policy spokeswoman for the SPD, however, says: “We are breaking new ground here in Germany and also need to gain experience in an appropriate form. I have full confidence in those responsible at BfArM.”
Dittmar also promoted the use of model projects to provide a controlled supply of cannabis to adults. The Bundestag’s health committee recently rejected such a request put forward by the FDP, as well as the SPD’s no votes. Dittmar said that this was “simply due to coalition discipline.” CDU/CSU have so far strictly rejected similar attempts. And Dittmar called on Union politicians to take an example from Erwin Rüddel (CDU), Chairman of the Health Committee.
Rüddel told our editorial staff about the model projects: “With the help of a model experiment, I would like to have clarity about the effects that a changed drug policy could have and would also like to objectify the discussion. Currently, the discussion between opponents and advocates of drug liberalization is stagnating. The CDU politician said that previous findings from other countries were “not transferable one-to-one to Germany.”