Where Goes The Canadian-German Export Market?
For the past several years (since 2016), Canadian exporters have sent ever-larger amounts of medical cannabis to Germany. The amount grew from a mere 44 kilograms to 3,740 by the end of last year according to Health Canada.
But will this exponential growth continue?
The answer is largely no, and for a variety of market-driven reasons although savvy Canadian exporters should be paying especially close attention now:
- German grown cannabis is coming (finally), with a few bumps and hitches, and expected to be here by the end of 2020. While this will not be nearly enough to meet the growing demand here, it will clearly put a damper in Canadian sales especially because:
- The Dutch government is getting more efficient with cannabis distribution – namely, it is beginning to limit the number of distributors it will work with. This downward pressure on the market in terms of the competition will also create German distributors in desperate search of product, but that is another issue.
- As popular as Germany has been as a destination (on the medical market), there are no other countries which regularly import as much Canadian product as Germany.
- There are other factors which will now impact the medical market, namely the growth of legitimate cannabis cultivations around Europe and the entry of Israel into the cannabis market globally.
One thing is for sure. The market will never “be the same” as it was in 2016 and 2017. That period has morphed into one where deep-pocketed cannabis companies approach the entire proposition as a medical product. That is a world, so far (major pharma) that the Canadian market with a few major exceptions has not jumped into, namely because there is so far little need to for domestic sales. The market there may be driven by medical sales, but the recreational question changed the entire conversation.
Here, while that may also happen too, as the next decade countries all over Europe will be grappling (as Israel is currently) with the recreational question, it will almost certainly happen more slowly.
However the change will not be fast enough to save many of the newer, exclusively cannabis focussed wholesalers unless they develop tactics that take them outside of just Germany, or perhaps beyond this one drug.
The distributor market, in other words, is about to go through a series of mergers and buyouts just as the first German cultivated product hits the shelves. Canadian producers who are smart and savvy would do well to look for hungry distributors no longer getting products from across the Dutch border.
Find out more about trends on the ground in Europe’s largest cannabis market when the International Cannabis Business Conference returns to Europe this fall.