Takeaways on the German Medical Cannabis Market
Updated: Jan 8, 2020
Alphagreen Group presented at the Worldwide Virtual Conference organised by The Cannabis Society
Our key takeaways are below:
Demand and Supply Balance
The number of patients in Germany will reach 1 million by 2024 resulting in a demand of more than 45 tons of cannabis flower;
In 2018, there were around 3 tons of medical Cannabis imported into Germany with current numbers closer to 5 tons of which close to 3 tons from Bedrocan;
In April 2019, the German Cannabis Agency commissioned three companies (Aurora, Aphria, and Demecan) with the cultivation and delivery of 650 kg per quarter. With a 10% quarterly ramp up, the maximum of cannabis cultivated domestically in 2024 will still be less than 4 tons;
Assuming additional supply from new domestic players if Germany gives out more licenses and additional capacity from Bedrocan over the next several years, that still leaves a gap of more than 30 tons in the German market which needs to be filled by importing products from abroad.
Distribution Requirements in Germany
Requirements are driven by the German Narcotics Act (BtMG - Betäubungsmittelgesetz) and the German Pharmaceutical Act (AMG - Arzneimittelgesetz) which classify medical cannabis as a narcotic drug and a drug respectively;
All licenses related to cannabis are controlled and monitored by the Federal Cannabis Agency set up at the Federal Institute for Drugs and Medical Devices (BfArM - Budesinstitut für Arzneimittel und Medizinprodukte);
A lot of the requirements to operate in the medical Cannabis market depends on the state where one is located. While it used to be enough to have a paragraph 52 of the German Pharmaceuticals Act (AMG) to be a pharmaceutical wholesaler in some states, certain states such as NRW now require paragraph 13 of the German Pharmaceuticals Act (AMG). This is a license which in addition to being a pharmaceutical wholesaler, also allows for the manufacturing of controlled substances. In this case, the manufacturing process is related to the repackaging and labelling of the product;
While paragraph 52 and 13 can be obtained by the local authorities, one also has to have permission to operate with narcotic drugs according to Section 3 of the Narcotics Act (BtMG).
Export Requirements to Germany
Bedrocan is the main player in Europe to export THC medical cannabis flower and cannabis oils to Germany via the Dutch government. There are also a few players from Canada who meet the requirements to export THC products;
Players need to qualify for the EU-Good Manufacturing Practices (EU-GMP) certification which is a 12-18 months process;
Current players include Cronos, Aurora, Tilray and Canopy Growth, Wayland Group and TerrAscend;
It is expected that quite a few new names in Canada, but also in other countries such as Columbia, Jamaica, and Uruguay will obtain the EU-GMP license in 2020 and will be able to export THC products;
For medical cannabis with only CBD products, the process is slightly less complicated and more players were able to have their first commercial shipments to Germany. An example is Plena Global
Alongside the EU-GMP license, there are other Mutual Recognition Agreements (MRA) with some countries. One example is Australia and their TGO 93 (Therapeutic Goods Order) license which allows importing cannabis extracts from Althea in Australia into Germany.
Importance of Brands and Trademarks
Brands and Trademarks are more important in the recreational market where customers have a big choice of products, flavours, and strains;
Packaging matters a lot in the recreational and the wellness market;
The German medical market is so undersupplied right now that the product and packaging are less of a priority compared to markets in Canada and Israel;
Going forward, there will be more need for further discussion around IP and genetics.
Participants Wishes for 2020
The legalisation of cannabis on the recreational level. Future government (CDU + The Greens) in Germany might legalise Cannabis in the near future
More clarity and uniformity between countries needed and many countries have still very different rules for different parts of the value chain in the Cannabis industry
Standardisation and clearer import and export rules
More enforcement of the law on unlicensed cannabis suppliers
Industry Predictions for 2020
More quantities of both CBD and medical cannabis coming to the European market from low-cost locations such as Columbia, Jamaica, Peru and Uruguay
Higher product diversity of more CBD, CBG and other cannabinoid products, as well as combinations with other superfoods/ nutraceuticals
More specialisation and more niches, from sports to beauty and cosmetics
Consolidation and M&A in the industry
More investment into the Cannabis market from players who were prohibited from investing in the market. The catalysts will be the passing of the Banking Act and later the Federal Legalisation in the US
Looking forward to the next Conference in 2020!