In Brief: The Cannabis Market in Germany
The German government legalized medical cannabis in January 2017. Before legalization, there were only about 1,000 patients who used cannabis through a special permit. In 2018, around 142,000 prescriptions were issued. One factor that accelerates the growth in demand is that unlike in the U.S., German insurance companies will reimburse patients for cannabis prescriptions. One German news organization reports that in 2018, a “total of 19,600 applications for reimbursement of the often expensive cannabis therapies were received by the major health insurers alone – AOK-Bundesverband, Barmer, Techniker and DAK-Gesundheit. Approximately two-thirds of the applications were approved by the health insurance funds.”
The country lacks the infrastructure to grow cannabis; therefore, the country has historically relied on imports to meet growing demand. Recently though, the German government awarded three Canadian companies (Aphria, Aurora, and Wayfair) with contracts to cultivate and distribute limited amounts of cannabis in Germany. Some speculate that the contracts awarded won’t be sufficient to meet demand. This suggests that its government will need to issue more permits, creating opportunities for more companies to penetrate the market.
Companies looking to penetrate the German medical cannabis market need to be aware that German law requires that any cannabis imports must be cultivated in an EU GMP certified facility, the highest level of certification in the world. It’s a certification required of European pharmaceutical companies. There are only eight such facilities in the world.
So, overall, there are some significant hurdles to penetrating this fledgling market, but the expected explosive growth rates may justify the effort.
Noam Hirschberger, CFA, CVA
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