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Inside The Process To Legalize Recreational Cannabis In Germany

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When the German government announced in late 2021 its plan to legalize recreational cannabis sales in Germany, experts and cannabis enthusiasts put great expectations on the so-called "traffic light" government's plan to regulate the industry.

Although Germany and other European countries focused in recent months on the war in Ukraine following the Russian invasion in February and the resulting efforts to detach themselves from Russian energy dependence, German officials had time to speed up the process of legalizing recreational cannabis.

The consultation process

Commissioner for Addiction and Drug Issues Burkhard Blienert officially announced on June 13 the kickoff of the first of five expert hearings to prepare for the planned legislative process to legalize recreational cannabis.

More than 200 leading German and international experts will exchange their views on the legalization.

The planned hearings will focus on health and consumer protection, protection of minors and prevention, supply chains, ecological and economic issues, criminal liability, control measures, and licensing to accompany the introduction of the controlled sale of cannabis for recreational purposes and international experiences.

The consultation process is crucial to understanding the required implementation of the plan to legalize recreational cannabis in Germany and represents a space for objections and reservations that can be openly addressed and discussed.

What legalization model could Germany adopt?

Although lawmakers are expected to introduce a draft bill on recreational cannabis legalization by the end of this year, we can already catch a glimpse of what it could look like in Germany.

First of all, the primary goal and guiding principle of the legislative process will be to ensure the best possible health protection for consumers and to ensure the protection of children and young people.

Contact via email, Blienert highlighted that cannabis would remain banned for children and young people.

Finn Hänsel, managing director and founder of Sanity Group, one of the leading cannabis startups in Germany, explained that the debate over cannabis legalization should focus on the origin of cannabis products and what kind of products will be allowed to sell, their distribution, and marketing activities.

"I think the government needs to decide how they want to legalize cannabis across these three topics. The hearings about international experiences will be important to understand what happened in other countries and what lawmakers need to keep in mind. This is important for the German government to collect information and decide what model to adopt," he said in a phone interview.

It is too early to understand what legalization model Germany could adopt. In Europe, no country has yet legalized recreational cannabis sales.

The Netherlands, which pursues a tolerant policy toward the so-called "soft drugs," adopted the formula of the coffee shops. In Spain, where cannabis is only decriminalized, consumers have the opportunity to consume cannabis in the Cannabis Social Clubs.

But for Hänsel, these quasi-legalization models are not working.

"I think it should be all or nothing. These models will fail in the long term. For instance, in the Netherlands, where it is legal to sell cannabis products in coffee shops, distribution is dominated by organized crime. I would suggest the North American model for Germany as the legalization's final goal should be to minimize the illegal market," he said.

Asked whether he already has a cannabis sales model to adopt for Germany and whether pharmacies would play a significant role in the sales of adult-use cannabis products, Blienert said that these questions need to be answered in the coming months.

"We want a model that fits Germany," he said.

What has medical cannabis taught Germans?

The role of the pharmacies could be important to understand the room for maneuver of German and international cannabis companies that want to join the industry.

Medical cannabis, legalized in Germany in 2017, has contributed to showing society the plant's medical value and attenuating the social stigma.

Blienert said that it certainly kicked the debate overall. "The change in government has finally set the course to sell cannabis to adults in licensed specialty stores. This will have many positive effects: better health and youth protection, less criminalization, and finally no more stigmatization," he said.

Hänsel explained that ten years ago, not many people were aware of the medical value of cannabis.

"The legalization of medical cannabis in 2017 helped Germans understand cannabis is not just a drug and helped fight the stigma around the plant," he said.

Price and convenience in the legal cannabis market

One of recreational cannabis legalization's main issues is understanding the best way to divert consumers from the illegal market.

US states that have legalized recreational cannabis have learned how simply regulating the cannabis industry doesn't necessarily mean eradicating the illegal market. In many US legal cannabis states, illicit activities are still thriving.

To avoid such a scenario, Hänsel thinks that the best way for Germany to cope with the illegal market is to focus on convenience and price.

"Convenience, availability, and other factors need to be met by the legal market. If lawmakers only allow pharmacies to distribute products, cannabis won't be widely available. I think Germany should have an open model in which pharmacies and licensed shops can sell cannabis. For instance, Berlin should have enough stores to satisfy the demand. Otherwise, people will likely continue to buy cannabis from the illegal market," he said.

Minimum age to consume cannabis

Another issue that lawmakers have to cope with is establishing the minimum age allowed to consume cannabis.

On one side, scientific experts say the ideal age to consume cannabis is between 21 and 25. But on the other hand, the age group excluded from the legal cannabis market will likely buy it from the illegal market.

As a recent report published by the European Monitor Drug Centre for Drugs and Drug addiction (EMDCDD), the mean age for first cannabis use in the European Union member states is 16.

Cannabis taxation in Germany

Taxation of cannabis products will play a significant role in defining consumers' behavior when recreational cannabis legalization is implemented.

High taxes on cannabis products, complex bureaucracy applications, and expensive costs on the shoulders of cannabis businesses could advantage the illegal market.

Hänsel proposes that taxes on cannabis products shouldn't exceed 25-30%. Taxation must be included in the final price, not on top of the final price, which must be competitive with the offer of the illicit market.

"I think the German government should ensure that every single aspect of the legal market is on the same level of competition with the illegal market, including price, availability, and better product quality. If the government doesn't meet these criteria, people won't buy cannabis from the legal market," he said, adding that also capping THC levels in cannabis products would incentive people to continue to buy from the illegal market.

However, it will be necessary to understand whether keeping low prices will be economically sustainable for licensed stores and cannabis companies, which have to incur costs to keep their businesses running and offer better and safer products without contaminants.

Cannabis marketing in Germany

Regarding cannabis marketing, the German government is expected to be pretty restrictive on this topic and launch prevention campaigns targeting children and young adults.

"The key now is to establish a comprehensive and effective prevention campaign that teaches children and young people how important it is to feel good about their bodies and have good self-confidence," Blienert said.

But at the same time, Hänsel thinks that the government has to keep, on the one hand, the legal consumption of cannabis attractive enough to minimize the illicit market, and, on the other hand, it shouldn't encourage minors or people who haven't try it to start.

Legal and political hurdles

Besides the doubts about these details that will find an answer in the upcoming months, the coalition government that took upon its shoulders the legalization of recreational cannabis in Germany must face several legal and political barriers.

At the international level, experts warn that Germany may risk breaching the 1961 UN Single Convention on Narcotics law, which only allows signatory states to use cannabis for medical and scientific purposes.

Given that, Germany has two options. It could withdraw from the convention, but in this case, the process would take up to one year, or it could ignore the convention like Canada did when it legalized cannabis in 2018 without being yet sanctioned.

At the political level, the government coalition made up of the social-democratic SPD, the Greens, and the liberal FDP may get easy approval of a draft law from the Bundestag, the German federal parliament, where it retains the majority. However, it may be hindered by conservative opposition groups at the Bundesrat, the legislative body representing the sixteen German federal states.

The coalition government is expected to bring persuasive arguments to legalize recreational cannabis, including the protection of public health, the German experience with medical cannabis, the protection of children, the fight against the illegal market, and economic benefits.

According to a study published by the Institute for Competition Economics (DICE) of the Heinrich Heine University in Duesseldorf in November 2021, the legalization of recreational cannabis could bring Germany annual tax revenues and cost savings of about €4.7 billion ($4.96 billion) and create 27,000 new jobs.

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