Swiss Cannabis Market Enjoys Advantages Unavailable to EU Competitors
By Calin Coman-Enescu, Regional Director, Europe, New Frontier Data
Switzerland lies at the heart of Europe and has historically plotted its own course on national policies and matters of public interest. The dynamics often derive from traditional Swiss culture and a direct democratic model which often affords the public to vote on matters. For instance, the Swiss enjoy the world’s second-highest gun ownership rate (28%) while it is illegal to cut one’s grass on Sundays.
So, what does that mean for cannabis and its various forms? Minor cannabis possession became decriminalized in 2012, and since 2017 low-THC (i.e., under 1%) cannabis is sold at nearly every tobacco store. The Swiss government imposes a flat tax of CHF 38/kg (USD $40) as well as 25% of the retail revenue. The legal, low-THC market has been booming and shows no sign of abating, bringing in a windfall for the Swiss tax office. In 2018, tax revenue reached CHF 15.1 million (USD $16 million), up 37.8x from CHF 400,000 a couple years earlier.
Similarly, the progressive laws around CBD — fuelled by the Swiss government’s acknowledgment of its positive medicinal effects — have positioned Switzerland as a CBD hub for Europe. Under Switzerland’s current regulatory set-up, cannabis and CBD in may contain up to 1% THC content, or 5x the 0.2% THC limit observed by other European countries. It makes the country an attractive and logical option for both domestic and international cannabis and CBD businesses wanting to enter the European CBD industry. Swiss cannabis law is clear and uncomplicated; so long as the final product contains 1% THC or less, it is legal, no matter what its source. By contrast, cannabis laws in most EU member states are much more ambiguous. Though industrial hemp cultivation and CBD products derived from certified industrial hemp that contains less than 0.2% THC is considered legal, CBD products containing extracts derived from what is not labelled as industrial hemp is less clear, even when it contains 0.2% or less THC.
However, the higher threshold also holds some surprising benefits for consumers. Swiss CBD producers have the legal clarity and freedom that allows them to bring a wider range of products to market, offering customers far more choice.
Medical cannabis is perhaps surprisingly limited in Switzerland, given the pervasiveness of CBB products and low-THC cannabis. Currently, only one narcotic cannabis drug preparation is officially approved for medical use in Switzerland. Since 2011, however, physicians can obtain a special permit for their patients, allowing them to prescribe medical cannabis for up to 12 months. For now, only two pharmacies in the country can dispense tinctures and oil concentrates to those with serious or terminal illnesses. Flower or resin are not available as medical cannabis.
Finally, adult-use cannabis remains by far the most widely consumed recreational drug in Switzerland, if the overall retail sales value trails that of cocaine. A recent study published by a consortium of various Swiss groups estimates the national recreational cannabis market to be worth around USD $500 million in turnover, representing income worth up to USD $300 million. The study estimates the total volume consumed annually to be between 40 and 60 metric tons, or up to 7x the volume of all other narcotics combined. Despite efforts to contain such illicit consumption and introduce regulated alternatives in the forms of CBD products, low-THC cannabis, and a medical program, the illicit market remains strong in Switzerland with an estimated 500,000 regular recreational consumers (5.83% of the population).
As such, Switzerland’s lower house health commission cleared the way for a limited pilot program to allow for legal production and distribution of recreational marijuana. The results of the pilot program will be used to guide future cannabis policy, but is not yet intended to be a first step towards legalization. That said, existing policy is very lax by many standards, with possession of under 10 grams of recreational cannabis being considered a negligible quantity not subject to fine.