November 18, 2021

The Next German Government Wants To Legalise Adult-Use Cannabis

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The prospective ruling coalition in Germany wants to introduce legislation aimed at legalising adult-use cannabis in Germany, local media sources confirmed on Thursday.

Conor O’Brien, Industry Analyst, Prohibition Partners
18 November 2021


Germany may soon be the next country to join the short list of regions that have approved full legalisation of adult-use cannabis, joining Uruguay, Canada, and a number of US states. The Netherlands and Switzerland will also introduce legalisation on a trial basis in 2022.

This latest news comes from German source die Funke Mediengruppe, who have spoken to the negotiators of the soon-to-be coalition government of Germany, a representative of the agency confirmed with Prohibition Partners on Thursday. Negotiators from the so-called ‘traffic light’ coalition of the Social Democratic Party (SDP), the Greens and the Free Democratic Party (FDP) told die Funke Mediengruppe this week:

“We’re introducing the controlled distribution of cannabis to adults for consumption in licensed stores. This will control the quality, prevent the transfer of contaminated substances and guarantee the protection of minors. We will evaluate the law after four years for social impact.” – A spokesperson for the coalition 

This confirms a report from Bloomberg earlier this month which indicated the parties were close to agreeing such a deal.

The largest opportunity for cannabis outside of North America

The legalisation of adult-use cannabis in Germany would be welcomed by advocates of sensible drug policy who for years have pointed to the benefits of ending cannabis prohibition for the sake of individual liberty, resourcing of law enforcement and the legal system in general, battling the illicit black market, for public health through the supply of regulated products, and also for the economy.

On the financial side, a recent report from economist Prof. Justus Haucap of the Institute for Competition Economics (DICE) indicated that a legal adult-use cannabis industry in Germany could contribute €4.7 billion (US$5.3 billion) to the German economy, through savings in law enforcement as well as the implementation of a tax on cannabis sales.  The report estimates sales of 400,000kg of cannabis each year in Germany, which could be sold conservatively at between €4 and €10 per gram, giving rise to a market which rivals that of the largest adult-use markets in the US like California, which saw sales of €3.9 billion (US$4.4 billion) in 2020.

While the financial opportunity is therefore very attractive, stakeholders should be extremely cautious about the details of adult-use cannabis legalisation in Germany; if and when it will occur, and how long it will take to develop and replace the existing illicit market (see below).

Much uncertainty remains for legalisation

The confirmation that the incoming German government will attempt to legalise adult-use cannabis is hugely welcomed by all advocates and stakeholders with an interest in cannabis across the world, but much remains to be ironed out. It is uncertain when legalisation could be achieved and, also crucially, what the specific regulations will look like.

The German federal elections took place in October 2021, giving relatively pro-cannabis parties like the SPD, Greens and FDP an opportunity to form a government without the formerly dominant Christian Democratic Union – something not seen since 2005. However, it is yet to be confirmed that these three parties will, indeed, form the next government, with confirmation on this likely coming in December. Once this does occur, the coalition are then likely to introduce a cannabis legalisation bill, which would pave the way for a legal adult-use cannabis industry in Europe’s largest, wealthiest nation.

However, the coalition will only control the Bundestag, and it is likely that approval of cannabis legalisation will be needed from another house of the German Government, the Federal Council (Bundesrat), which represents the voices of the 16 states (Bundesstaat) of Germany. Past attempts to legalise cannabis on a trial basis, for example in Berlin in 2016, were blocked by federal regulators on the basis that changes to the German Narcotics Act require majority support from both of these governmental houses. Currently, the Bundesrat is controlled by conservative interests, though advocates are hopeful this will change in the next year or two, as the dominance of Angela Merkel’s CDU dwindles across the German states.

In the case that the traffic light coalition does take up office in the Bundestag, and the legislation passes with or without the necessity of Bundesrat’s support, the specific details of legalisation will be crucial in determining the nature of the newly-legal adult-use market. Full legalisation for all adults above the age of 21 has occurred in many states in the US and also in Canada. However, approaches to legalisation in Europe have been much more conservative to date.

In Switzerland, adult-use cannabis trials are set to be launched in 2022, with a maximum participation of 5,000 registered consumers per trial. In the Netherlands, 10 municipalities are set to launch fully-legalised supply chains, meaning legal access for  little over 10% of the Dutch population. In Uruguay, cannabis can only be sold to registered customers via pharmacies, placing a severe limit on potential sales in place in the Latin American country.

More specific details on the new legislation in Germany are yet to be elaborated on, and the number of people who will have access to cannabis in the country remains to be seen. Sales of cannabis could, therefore, differ by orders of magnitude depending on the style of legislation brought in, and how this legislation will be implemented in practice.

Prohibition Partners will continue to monitor the plans for legalisation in Germany and elsewhere in the world to provide readers with market-leading data and insights.

The Next German Government Wants To Legalise Adult-Use Cannabis

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