Germany Needs Workable Adult-Use Legislation Capable Of Drying-Up The Illicit Market.

Leading German Cannabis Lawyer Kai-Friedrich Niermann reflects on 2021 and looks ahead to the challenges and opportunities that lie ahead in 2022

BC: What are the main opportunities and challenges for the European cannabis industry in 2022

K-FN: The cannabis industry in Europe in its various sectors – medical, commercial hemp and CBD – has been experiencing an incredible boost for several years. 

However, the various industries in the member states continue to struggle with their outdated regulations in this area. 

For example, France is still struggling with the implementation of the ECJ ruling from the KanaVape case, and in Germany, drastic prosecutions against traffickers and consumers of commercial hemp products are still taking place, despite the new government’s announcement of full legalization of cannabis.

In 2022, it will therefore be important to create a uniform legal framework for commercial hemp products. A first step has been taken with the increase of the limit value for commercial hemp in the field from 0.2 to 0.3% THC. 

This implementation must also take place in the member states. Furthermore, this limit value must not be allowed to remain, but must be increased to 1.0% THC in the long term, in order to foster the most diverse application possibilities of the hemp plant with a stable and varied selection of varieties. 

The member states must recognize in their legislation that abuse for intoxication purposes is not possible with industrial hemp products, and therefore a more liberal handling is possible and necessary.

The market for CBD products as food will remain difficult in 2022. In Germany, the Novel Food Regulation has been enforced on a large scale, so there are mainly products on the market that choose a circumvention strategy, for example as cosmetics.  

The full market potential of CBD products will not unfold until they are approved as novel foods by the European Commission. However, this is not expected until 2023 at the earliest.

In Germany, it will have to be seen how quickly the legalization and decriminalization of cannabis can be implemented. 2022 will be dominated by debates and hearings in Bundestag on the concrete form of a Cannabis Control Law. The new government should move forward quickly here and also take initiatives at European and international level so that a domino effect can occur. 

The industry will need to pool its interests in the recreational cannabis sector to ensure that balanced and workable regulations will make possible a legal market capable of drying up the illicit market. 

The establishment of a THC industry association can therefore be expected in the foreseeable future. 

The medical cannabis market must differentiate itself from this, even though existing players will most likely play a large role in supplying the recreational market as well. 

Should the FDP make good on its announcement from the election campaign and make Germany the export nation for medical cannabis, an increase in the production quotas of the existing cultivation companies and further tenders can be expected. 

Whether such a decision will endanger Canadian supremacy in the long term, as well as the development of the new cultivation nations, remains to be seen.

BC: How did you view industry developments in 2021 

K-FN: In Germany, events in 2021 were largely determined by the Bundestag elections in September. It was already foreseeable at the beginning of the year that the formation of a government would only be possible with a coalition in which at least two parties were in favour of legalizing cannabis. 

In the end, the so-called ‘traffic-light’ coalition came together, which stipulated the legalization of cannabis in its coalition agreement, namely by dispensing recreational cannabis in licensed specialist stores. 

The fact that the Greens and the Liberals were able to convince the SPD so quickly to abandon the model projects favoured by the SPD then came as something of a surprise.

Despite this welcome announcement of comprehensive cannabis reform, law enforcement actions have been hard on the industry throughout 2021. In particular, the popular CBD flowers, which can be bought not only on every street corner in Berlin, but throughout the country, were repeatedly the subject of investigative measures and seizures. 

Even dealers of hemp leaf tea, which has been available in German retail stores for decades, have been targeted. It was not until a clarifying ruling by the Federal Supreme Court in March 2021 that it was made clear that hemp products can be sold to the end consumer for consumption purposes at all. 

Questions such as the risk of abuse for intoxication purposes and whether the presence of THC makes the product a narcotic remain open. However, the ruling of the ECJ in the Kanavape Case could bring clarity here. It will take some time before these principles are fully adopted and implemented by law enforcement agencies and administrations. 

The new German government is therefore also expected to take swift legislative action to eliminate the risks of criminal liability for trade and consumers in the industrial hemp sector. 

At the same time, two lawsuits were filed against the Federal Republic of Germany before the Administrative Court of Braunschweig. The aim of these lawsuits is to ensure the principle of the European free movement of goods in the case of commercial hemp flowers as an herbal smoking product and hemp leaf tea as a foodstuff, since these products are already freely marketable in Luxembourg, Belgium, Austria and Poland. 

The European free movement of goods will prove to be the engine of harmonization here.

The EIHA (European Industrial Hemp Association) was able to consolidate its consortium for the community application for approval of various CBD products as novel foods and secure funding for the extensive toxicological studies. The first studies have already begun.

Following the announcement of the traffic light coalition in the coalition agreement to legalize cannabis, the first major players in the industry have already come forward and announced participation in the new market. 

These include existing medical cannabis import companies, cultivation companies and investment companies. 

It is also expected that US and Canadian companies will again find increased interest in the German market, whose volume in the recreational cannabis sector is estimated at €6bn to €10bn.