Germany’s Cannabis Cultivation Market Set for Major Expansion

Germany’s medical cannabis landscape is undergoing a significant transformation, with the Federal Institute for Drugs and Medical Devices (BfArM) issuing the first three new licenses for domestic cannabis cultivation. This move is expected to at least double the amount of cannabis grown in the country this year, marking a pivotal shift in Germany’s approach to medical cannabis production.

The New Licensing Landscape

Following the passage of CanG on April 1, Germany has made substantial amendments to its Medical Cannabis Act, which has been in place since 2017. These changes include:

1. Lifting the restrictive cap on licensed cannabis growers
2. Eliminating the tender process for obtaining a license
3. Plans for BfArM to relinquish its role in selling medical cannabis, allowing companies to sell directly to local distributors

Alex Khourdaji, Senior Analyst at Prohibition Partners, predicts that these changes will drive a competitive domestic cultivation market and potentially establish Germany as a new international export contender.

The First Three Licensees

1. Tilray: The US cannabis giant received one of the first licenses in half a decade to cultivate cannabis in Germany.
2. Aurora: Aurora’s European subsidiary was granted two licenses:
   • One to continue domestic cultivation at its GMP-certified facility in Leuna, Saxony-Anhalt
   • A dedicated R&D license for trialing up to seven additional novel cultivars
3. Demecan: Germany’s own Demecan also received an expanded cultivation permit.

These three companies were the initial winners of the 2019 tender to cultivate limited amounts of cannabis in Germany.

Impact on Production and Supply

Under the original tender, these companies were limited to producing 10,400 kg over four years (2,600 kg annually). Now, the restrictions have been significantly eased:

• Aurora plans to cultivate additional approved products and expand its offering to German patients.
• Demecan aims to double its production capacity, achieving an annual yield of around two tonnes.
• Tilray’s subsidiary, Aphria RX, expects to increase production by 5x and can now cultivate 31 approved strains.

Market Dynamics and Future Outlook

The German medical cannabis market has been heavily reliant on imports, with domestic supply meeting only a fraction of the demand. In Q3 2023:

• Domestic production: approximately 650 kg
• Sales in pharmacies: 4,895 kg
• Imports: 8,355 kg

The German government expects these changes to lead to the establishment of 100 medical cannabis cultivation facilities in the country. This expansion aims to curb the sharp rise in imports and promote domestic production of high-quality medical cannabis.

As the landscape evolves, patients are expected to benefit from a greater selection of domestically produced products. However, it remains to be seen whether domestic producers can compete effectively against cheaper imports.

With these developments, Germany is positioning itself as a potential leader in European medical cannabis production. The coming months and years will likely see further expansion and innovation in the German cannabis cultivation sector, with potential ripple effects across the European market.