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Just How Much Would The German Recreational Market Be “Worth?”

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A new study by the Institute for Competition Economics at the University of Düsseldorf estimates that the German recreational market could be worth 4.7 billion euros – but what is all this estimating based on?

A new study by the University of Düsseldorf has estimated that legalizing cannabis could bring in as much as 4.7 billion euros a year to the German economy. In Germany, this includes not only the size of the market but the impact on tax revenues, social security contributions from the legalized business, and savings to the police and justice system. The study estimated that 1.8 billion euros of this amount would in fact flow directly into the state treasury.

Of course, all of this is just conjecture at this point. However, given the current furore over the possibility of recreational legalization here of late, a study on the potential worth of said industry was bound to get attention.

But what do such estimates really have to do with reality? After all, when it comes to cannabis, German consumers are just like consumers everywhere else. Not to mention an estimate, before the market has even started, anywhere, is just that. However, here are some contributing factors to consider (beyond the nitty-gritty of getting there).

Size Matters

Here is one way to think about the potential market here. Colorado’s population is just over 5 million and the recreational market there tops $10 billion as of this year (in real-time). Germany has a population of 80 million. It does not take a huge imagination to figure out that Deutschland may turn out to be the EU’s most valuable recreational market, beyond its medical one.

There are a couple of differences to consider right off the bat of course. The first is that there is a real medical market here – and unlike in Colorado, health insurance does cover medical cannabis. Indeed, there are about 100,000 patients in the German system. That number is also going to increase over time – potentially to as much as 10% of the entire population.

What happens beyond that – in other words, a purchase of cannabis without a doctor’s prescription – is literally the great unknown. It is also established that consumers begin to use not only fewer illicit and prescription drugs but drink far less alcohol when cannabis is legal (at least in legalizing states and countries to date). In Germany, this is potentially a huge market – limited at this point by legalization and imagination. Culturally, Germans are ready for something new – particularly a plant they are hearing a great deal more about of late.

Beyond speculation, in other words, however, one thing is very clear. Germans are getting ready for some kind of recreational cannabis reform. And that is pretty massive.

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