Markets Great and Small Leading Europe’s Continental Shift Toward Legal Cannabis

By Oliver Bennett, Special Contributor to New Frontier Data

As with New Year’s resolutions and health-club memberships, optimistic impulses in January are typically best tempered by some healthy circumspection. That may be especially useful for the legal cannabis industry, which for all its recent and impressively strong momentum toward reforms and legalization has also provided cautionary examples from Canada to California as those North American markets continue to take form.

Still, it would seem quibbling not to feel optimism about ongoing developments in Europe’s cannabis space. From the European Union’s most populous member, Germany, to its smallest, Malta, there has been a continental shift toward reforms and legalization.

As New Frontier Data reported eight months ago, Malta is serving as the harbinger for reforms; last month it officially adopted its first tentative steps for cultivation and consumption — allowing adults to grow up to four plants at home, and carry up to seven grams at any time — while still prohibiting its use in public or in the presence of children.

With an estimated population tipping past 500,000, the Mediterranean archipelago is best known for its tourist-tempting landscapes. Some 2,400 kilometers to the north, meanwhile, Germany and its approximate population of 83.8 million features nearly 190x more residents and the continent’s largest economy.

Germany’s recent and largely unanticipated momentum to adopt a legal market was spurred by its new coalition government’s taking actions to both promote the country’s cannabis market to new levels if also stirring serious concerns among its neighbors and other European countries.

Following intense and largely secretive negotiations throughout last fall, the federal proposal means to establish a regulated market for adult sales and consumption of recreational cannabis while promoting broader reform policies — e.g., quality controls, regulated and taxed dispensaries, and youth-protection laws.

As New Frontier Data recently reported in Cultivating Capital: Cannabis Finance & Investment, “Germany leads the continent with the largest medical cannabis program in Europe, and — as the EU’s largest economy — the country’s recently announced passage of adult-use cannabis legalization will have significant cascading implications for European drug policy.”

Now the country is expected to lead the European Union – and the wider continent of Europe – into greater liberalization and acceptance for cannabis, with adult-use sales expected to lead other European countries towards consider transitioning from medical-use programs to full adult-use markets.

Because of its federal structure, Germany’s reforms are likely to be enacted state-by-state, with its more progressive cities like Berlin, Frankfurt, and Cologne being among the earliest adopters. As for regulatory protocols, all that the new coalition government has so far pledged is to allow for controlled adult-use sales in licensed shops. It is assumed that ordinary pharmacies are likely to provide retail and dispensing spaces, with licensing deals thrashed out as the situation develops. It also suggests that ready exporting countries will jostle for position in the German market, which domestically has been estimated through decriminalisation to enjoy a net benefit to the state of €4.7 billion per annum, comprising €2.8 billion in taxes and €1.36 billion in savings. Thus, the world’s fourth-largest economy would establish itself as the single-largest country to legalize cannabis.

While the timetable for Germany’s legislations remains to be determined, the staged approach is already nudging attitudes in other nations to liberalize their drug laws. London’s mayor Sadiq Khan has announced plans for a cannabis decriminalisation pilot in three of London’s 32 boroughs, though conservative resistance from national leaders makes the likelihood for swift and progressive action seem unlikely in any near term.

Others seem more game for changes: Luxembourg shares a border with Germany, and since 2018 has made noises about legalizing cannabis. Switzerland, too, has been planning to roll out recreational trial programs this year, starting with Swiss cities being allowed to set up cannabis markets – Zurich is expected to be first – featuring organic and locally sourced cannabis. Others worth closely watching include Portugal, Spain, Italy, Austria, Greece, and the Czech Republic.

Still, the sudden sense of inevitability about cannabis seems contradicted by the EU’s legislative authority and tendencies for often  fragmented attitudes among its 27 member states. Europe’s remaining 17 non-EU member nations are also divided on the matter.

So long as European cannabis laws remain a “crazy quilt of contradictions” with a persistent social  stigma on cannabis abiding, legalization is a highly partisan issue, very often driven by NGOs and grass roots campaigning.

Ultimately, economic arguments may prevail in the post-pandemic period over any lingering qualms to champion investment in the industry. In an unrelated boon to the industry, Pfizer – now a household name across Europe due to its COVID-19 vaccine – is preparing to enter the medical cannabis industry partnering with biotech company Arena Pharmaceuticals in relation to a promising cannabinoid-based bowel disease treatment. Danish company DanCann Pharma has said that Germany can “play a crucial role in starting a domino-effect for the rest of Europe”, and Curaleaf has lauded the German government’s adult-use plans with one report suggesting that the U.S. company could have a “first-mover advantage”.

With such a slate and range of activity, 2022 is fast looking to prove itself a watershed year in the European cannabis industry, even if all those health-club memberships still seem dicey.