The German Cannabis Business Association (BvCW) has published a new position paper titled ‘Combating Organized Crime – Position Paper on the Benefits of Cannabis Legalization
for Public Safety’ (translated from German to English). In the position paper, the organization makes the case for launching regulated adult-use cannabis sales in Germany and examines the economic benefits of doing so.

“The trade in illegal—yet in-demand—goods creates an economic niche for organized crime; operating in a market-like manner as “shadow capitalism,” this sector exhibits fluid boundaries with the legal economy and is therefore vulnerable to financial countermeasures.” BvCW writes in its position paper. “According to estimates, the legalization of cannabis—based on a total annual demand of 400 tons—could generate fiscal effects amounting to €4.7 billion.”

“This figure comprises savings for law enforcement agencies of approximately €1.36 billion (€1.1 billion in cost savings for police operations and €313 million for public prosecutors’ offices and courts) and tax revenues of €2.8 billion (€1.8 billion in cannabis tax—modeled after alcohol and tobacco taxes—€650 million in value-added tax, €85 million in corporate tax, €280 million in income tax, and €526 million in social security contributions).” BvCW continued.

“In this regard, it should be noted that the underlying assumption of 400 tons is likely a rather conservative estimate. The initial EKOCAN interim report, for instance, posited a total demand ranging from 670 to 823 tons.” the organization added.

Most of Germany’s adult-use cannabis consumer base still relies on the unregulated market. According to data published by Statistisches Bundesamt, Germany’s total population was 84,669,326 at the end of 2023 (the most recent data available). Of that, an estimated 83.1% of the population was of legal cannabis age (18+), or roughly 70.36 million people.

Germany’s Epidemiological Addiction Survey found that roughly 8.8% of Germany’s population reported consuming cannabis at least once within the last year. Applying that percentage to the number of adults in Germany, the total potential legal cannabis consumer base in Germany is nearly 6.2 million people, and that is likely a low-end estimate because presumably some amount of consumers refrained from admitting to the government that they are cannabis consumers out of fear of potential persecution.

It is worth noting that of the people in Germany who report consuming cannabis, some percentage do so for medical purposes and would continue to rely on the nation’s regulated medical cannabis sector even if nationwide adult-use cannabis sales launched. Conversely, some patients who currently rely on regulated medical cannabis retail options would instead choose to make purchases through regulated adult-use retail channels for various reasons, which is a common trend in other legal jurisdictions.

How large Germany’s legal adult-use cannabis market will ultimately be, and thus how much tax revenue it will generate, depends entirely on the commerce options available to adult consumers. Current European Union agreements prohibit nationwide adult-use sales systems within the European Union, such as the regulated commerce model in place in Canada. Cultivation associations, sometimes referred to as ‘social clubs’, are legal in Germany. According to the Federal Association of Cannabis Cultivation Associations (BCAv), 430 cultivation applications have been approved in Germany, with hundreds more applications pending.

A major component of Germany’s historic CanG measure is regional adult-use cannabis commerce pilot trials. The research-based pilot trials have yet to launch, despite several jurisdictions applying in Germany, and similar pilot trials already operating in the Netherlands and Switzerland, with no major issues being reported. Federal Drug Commissioner Prof. Dr. Hendrik Streeck (CDU) recently made comments in support of launching regional adult-use cannabis commerce pilot trials in Germany, which will hopefully boost the chances of pending pilot trial applications being approved. Until EU agreements permit Germany to launch national adult-use sales, home cultivation, cultivation associations, and (eventually) pilot trials will serve as primary options for adult cannabis consumers.