Pharma: The hype about weed - cannabis companies smell big business

It could become one of the world's largest markets for cannabis: if the planned legalization of the substance in Germany also applies to recreational use, cannabis companies could look forward to lucrative business.

Pharma: The hype about weed - cannabis companies smell big business

It could become one of the world's largest markets for cannabis: if the planned legalization of the substance in Germany also applies to recreational use, cannabis companies could look forward to lucrative business. Then the substance could be bought in licensed specialist shops in German pedestrian zones.

While this idea puts worry lines in the face of critics, not only local companies have plans for legalization, but also companies abroad are warming up and want to push into the potentially huge market for smoking weed. The Swiss, in particular, see themselves as well prepared, as cannabis has been cultivated there legally for many years.

Medical cannabis, which patients with serious illnesses can have their doctor prescribe, has already experienced a boom. Since liberalization in 2017, the market has multiplied, estimated from one to 11 tons in 2022. Experts assume there are over 300,000 patients in Germany. Three companies are allowed to grow 2.6 tons of medical cannabis in Germany every year on behalf of the state, and around 21 tons were also imported in 2021.

Now also for the enjoyment

However, the federal government wants to go one step further and legalize cannabis for consumption under strict regulations - in the form of a controlled sale in licensed shops to adults. The idea: The prohibition policy has not prevented cannabis use. A state-monitored sale could strengthen the protection of minors, prevent contaminated substances on the market and curb crime. Home cultivation should also be allowed to a limited extent, according to a key issues paper in the autumn. Health Minister Karl Lauterbach wants to present a draft law this spring.

If legalized, the market would get a huge boost and grow by an estimated 400 to 800 tons of cannabis. "There are already around 4 million cannabis users in Germany today," says Lars Möhring, CEO of cannabis retailer Enua Pharma.

"If legalized, it will create one of the largest recreational cannabis markets, perhaps the largest in the world," said Benedikt Sons, co-founder of cannabis retailer Cansativa. "Legalization cannot be stopped," he believes.

Sweet smell in the air

At Cansativa's headquarters, an inconspicuous building in the industrial area of ​​Mörfelden-Walldorf near Frankfurt, 10 to 20 tons of medicinal cannabis can be stored under strict security measures. There's a sweet smell in the air in the warehouse. Workers in protective suits repackage 2-kilo bags of cannabis flowers into 10-100 gram bags for pharmacies. This must be done in a low-germ environment with documentation of every gram.

Cansativa is the only company in Germany that is allowed to sell medicinal cannabis from local cultivation and offers pharmacies all common cannabis products, including flowers and extracts, on one platform. Last year, Cansativa traded 2.5 tons of cannabis. "In 2017 there were five products, today there are more than 200," says Sons.

Cansativa also has plans for legalization. "We're always talking to customers and thinking through scenarios," says Sons. One thing is clear: "We don't want to grow cannabis for the time being, we want to stay with the trade." He does not expect legalization before 2025.

Veto is still possible

But there are still legal hurdles. For example, the EU could veto the German plans if, in the opinion of the EU Commission, they contradict international narcotics law. The federal government wants to convince the EU that legalization and strict regulation of the cannabis market takes better account of the concerns of the EU treaties on health and youth protection.

Cansativa is far from the only company preparing for legalization. In November, the Berlin start-up Cantourage went public. With the proceeds, it wants to expand production, open up new markets and prepare for release for consumption. The Frankfurt medical cannabis company Bloomwell, which won actor Moritz Bleibtreu as an investor, is also involved.

In addition, listed companies from North America are entering the market. They have an advantage over start-ups: Plants for growing cannabis can easily cost in the mid double-digit millions. The conditions are high, explains Cansativa co-founder Jakob Sons: "These range from a reduced room temperature, artificial light and high safety precautions to precise documentation requirements."

High electricity costs

Swiss companies therefore see themselves at an advantage. "We don't have as high safety requirements for cultivation as in Germany and only a quarter of the electricity costs," says Mike Toniolo, founder of TB Farming in Schönenberg an der Thur. Electricity, including air conditioning, accounts for up to 40 percent of the cultivation costs.

What Toniolo's company, not far from Lake Constance, is all about cannot be "over-smelled": The smell of cannabis wafts from the production halls to the last corner of the office. Toniolo has been cultivating hemp plants for 27 years and has around 450 of his own varieties. He grows cannabis with up to one percent THC content, which has been legal in Switzerland for years. In 2022 he received the first Swiss license to produce medicinal cannabis. "We specialize in high-THC buds, some of which are over 27 percent," he says. He also has customers in Germany.

The plants grow in his monitored and air-conditioned "clean rooms". The THC shines like crystal on the fruit heads. The room may only be entered with rubber gloves, a smock and a mask to keep dirt away from the plants.

Toniolo says that if cannabis were legalized in Germany, it could quickly deliver high-quality recreational cannabis. The expansion of production from 1.2 to 6.5 tons per year is already planned, with room for improvement. There are around a dozen companies across Switzerland that can deliver to Germany. The industry is ready: "We have the know-how through years of experience, we have high quality standards, and we can produce cheaper than it would be possible in Germany: the German market could hardly get better cannabis."