FEARS that German health ministers may be dragging their feet on rolling out cannabis legislation were definitively quashed earlier this month, as the Government resorted to unconventional tactics to speed the process along.

Health Minister Karl Lauterbach, who bears responsibility for drafting legislation for the “controlled sale of cannabis to adults for recreational purposes in licensed shops”, was threatened with a €1m cut to his department’s PR budget if a draft was not passed during the second half of this year.

The move represented one of ‘three signals’ from the German coalition Government, which is under significant pressure to deliver on its promise of cannabis reform, that it was determined to speed up the process.

However, by strong-arming Ministers to push through legislation rapidly, the Government could risk enacting frameworks which have not been fully thought through, causing problems for the market in years to come.

3 Signals

When the German ‘Traffic Light Coalition’ finalised their coalition agreement and came to power late last year, with a clear mandate to reform cannabis law, the consensus among parties was that this was a ‘health issue because of harm reduction’.

The project subsequently fell to Social Democrat (SPD) politician Mr Lauterbach, who formally took the position of Federal Minister for Health in December 2021.

However, during an interview in February this year, Lauterbach appeared to suggest that cannabis reform was not top of his priority list, and that a reform draft was unlikely to come before 2023.

With the Health Ministry overwhelmed by the ongoing coronavirus pandemic, the task of integrating hundreds of thousands of Ukrainian refugees into the German social security system and its pledge to treat wounded Ukrainian soldiers, a six-month delay to the draft may have seemed relatively reasonable.

However, as German cannabis healthcare company Bloomwell’s CEO Niklas Kouparanis explained to BusinessCann, this delay could have a significant impact on the coalition’s ability to roll out the scheme before the current legislative period is over in 2026.

“After the law is drafted, the government will need some time to get it approved by the Bundestag and Bundesrat. Furthermore, Germany might need to leave and re-enter the UN single convention.

“If the government seeks to evaluate the success of the cannabis market, including assessing if there has been adequate quality control measures as well as measures to ensure the protection of minors, then it’s about time to get things rolling.”

German cannabis lawyer Kai-Friedrich Niermann added that if the coalition failed to show demonstrable progress soon, it could be disastrous for them in the next election.

“It is very important because they would lose credibility if they really don’t start working on that now. They themselves say they are the ‘reform coalition’.”

In response to political and public demand for ‘some sort of signal reform won’t be delayed until 2023’, the government is understood to have pressed Mr Lauterbach to speed up the process, resulting in ‘three signals’ from the government.

The first was an announcement from Federal Commissioner on Narcotic Drugs, Burkhard Blienert, that the planning process had begun, and that this should be completed by Autumn.

Next Mr Lauterbach publicly announced plans to ‘accelerate’ the draft process, stating that expert discussions would begin over the summer and a draft law would be put forward by October.

Following his announcement, on May 11 the German Federal Budget Committee, which is keen to determine whether it can factor early revenues from the cannabis industry into its 2024 budget, announced plans to withhold €1m from the Health Ministry’s PR budget until the draft bill had been passed, and slash it entirely if it was not passed by the end of the year.

Green Party member Paula Pechotta told Editorial Network Germany (RND): “As a traffic light, we must now also tackle the health projects in the coalition agreement in addition to the fight against corona and implement them quickly.”

Canada 2.0

In a recent interview with BusinessCann, Carlsquare’s Arnold Holle said that anyone expecting a recreational market to be launched within the next two years was ‘fooling themselves’, adding that the ambitious pledges made by the coalition were ‘nigh impossible’ to achieve before the legislative period was over.

“By the end of the legislative period (2026), I think the answer will be that we’ll have a trickle of supply that will be legal and the Germans will say, ‘we’ve implemented something, it’s beautiful, but it’s only covering 0.1% of demand’.”

With those responsible for formulating the blueprint for Germany’s recreational market battling increasing pressure and shrinking time constraints, the likelihood of an underdeveloped framework being put forward has potentially increased.

With much of Europe looking to Germany to become the continent’s ‘flagship adult-use market’, the Government, industry and investors are keen to avoid the issues which afflicted the Canadian market long after adult use was launched in 2018, including uncompetitive prices, poor quality and a subsequent booming black market.

Mr Kouparanis believes that while it was still ‘sufficient and realistic to project that Germany’s adult-use market will come online in the beginning of 2024’, detail should take precedence over speed.

“One thing should be made clear: details and precision are now more important than speed when it comes to drafting the adult-use cannabis regulations and bringing the market online… It’s more important that the law is sustainable, rather than rushed to be implemented within the next few months.

“The success of the market depends on a nationwide sales infrastructure with competitive prices. Therefore online sales (e-commerce) should be allowed and regulations should be as pragmatic as possible, enabling licensed businesses to be able to compete with the illicit market.”

Mr Niermann, whose Recreational THC Report 2021 provides a comprehensive framework for how the German market could develop, brushed aside these concerns, stating that ‘Canada did it, Uruguay did it as a G7 state, Germany will be able to get that through as well.’

He suggested that overcoming the commonly cited ‘international implications’, like the 1961 Single Convention on Drugs, was ‘not a problem’.

“What is the problem is all the details like the licences etc, but this will be solved within the course of the next months before October”.

He added that it wasn’t necessary to ‘do it all at once’ suggesting that the market could instead be developed in progressive steps, as seen in Canada.

This could see dried flowers or decriminalisation launched first, ‘allowing time to develop a set of rules’ for the next step, like vape pens or edibles, to be thoroughly thought through.