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Is There A Medical Cannabis Price War Brewing In Germany?

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Germany is undisputedly the market leader in Europe when it comes to sales and overall numbers of cannabis consumers. However, prices have remained high here for a number of reasons. That is now coming to an end.

Pharmacies Have Been Forced To Lower Their Markups
Until the beginning of March 2020, German pharmacies were allowed to mark-up cannabis from distributors by 100%. This has now been renegotiated between the German Pharmacy Association and the German Association of Public Health Insurers. Until now, pharmacies have been unconcerned with price. Now, with markups lower, they will have to change their procedures.

More Competition Among Distributors
There are currently 50 distributors who are authorized to distribute medical cannabis in Germany. That is up from 17 last year. At the same time, the amount of cannabis entering the country has remained relatively stable over the last year. In addition to flower, there is now another competitor for the dronabinol (synthetic) market. Price competition between distributors is about to heat up. They have sold floss product to pharmacies for upwards of $10 a gram for about the last year. Before that, prices were even higher. 

Price Wars Between Producers
Producers have sold into the German market at prices that have steadily dropped. Until the beginning of 2019, there were reports of Canadian LPs selling floss at CA $13 dollars a gram. As of now, with price impacts felt just about everywhere in the chain, the standard price per gram is still about 5 euro a gram. Expect that too, to drop as German domestic production comes online (set by the government at 3.20 euros a gram). On the dronabinol side of the market, this too is expected to drop with a new competitor now aiming for the German market, to compete with Canopy Cannabis, who bought the domestic German producer at about the time that the German cultivation bid was decided in the first half of 2019.

Direct Impact On Patients
While the “average” German patient who obtains cannabis by prescription and has been approved by their public health insurer, the vast majority of cannabis patients are still stuck in a very difficult place. Obtaining pre-approval for coverage is a long and drawn-out process. With that approval, publically insured patients pay only $12 for their prescriptions. Without it, they are forced to pay more than $20 per gram. Private patients, who may represent as much as a quarter of the market (but nobody is sure) also have to pay out of pocket. And nobody is quite sure how many cannabis patients there actually are.

Domestic Production Is Coming
The biggest existential threat to all importers right now is German domestic cultivation. That is expected to become available starting at the end of 2020. 

Bottom line? There are big shakeups coming, and in every direction.

For an up-to-date analysis of the German market, be sure to book your tickets for the International Cannabis Business Conference when it returns to Berlin.