Why Looming Cannabis Legalization In Germany Is A Very Big Deal
News broke today that an agreement has been struck in Germany to legalize cannabis for adult use and to create a regulated adult-use cannabis industry framework.
Momentum for adult-use legalization in Germany was picking up steam leading up to the last election, which was discussed at length at our last conference in Berlin where we hosted a historic bipartisan discussion about cannabis policy in Germany featuring panelists representing all major political parties in Germany.
Members of the incoming governing coalition comprised of the Social Democratic Party of Germany (SPD), the Free Democratic Party (FDP), and the Greens are reportedly introducing the measure in the upcoming session. Per Spiegel (translated from German):
According to SPIEGEL information, the traffic light parties want to legalize the sale of cannabis for consumption purposes. The coalition working group on health and care agreed on this, as the Funke media group first reported. ”We are introducing the controlled distribution of cannabis to adults for pleasure purposes in licensed shops,” stated the negotiators of the SPD , Greens and FDP in the result paper of the relevant working group. This controls the quality, prevents the transfer of contaminated substances and guarantees the protection of minors.
According to the report, the relevant law is to be evaluated after four years with a view to its social impact. So far, the sale of cannabis for consumption purposes has been banned in Germany . The Greens and FDP have long been in favor of legal, regulated trade in cannabis.
It is significant when any nation moves towards cannabis legalization and away from prohibition. However, Germany is a particularly large domino to fall.
As of right now, only two countries have legalized cannabis for adult use – Uruguay and Canada. A number of countries are moving towards legalization, including Luxembourg which recently announced plans to legalize in 2022.
Switzerland allows low-THC cannabis products to be bought and sold, and court decisions in South Africa, Italy, and Mexico have created quasi-legalization.
Unless another country beats it to it, Germany would be the third country to comprehensively legalize cannabis for adult use, would be only the second G-7 nation to do so, and the first on the European continent to do so.
In the grand scheme of things, legalization in Germany is a much bigger deal compared to Uruguay and Canada because of the economics involved as well as the ripple effect that it will presumably create.
Germany has a population of roughly 83 million people, which dwarfs the populations of Canada (38 million) and Uruguay (3.5 million) combined. Whereas Germany is home to the fourth-largest economy on earth, Canada’s economy is ranked 10th and Uruguay is ranked 80th.
Legalization in Uruguay was historic because it was the first country to legalize, and Canada was also historic in its own right for being the first G-7 nation to legalize. However, the global effect from Germany legalizing will almost certainly prove to be more significant.
Germany has long held a significant amount of political influence in Europe and beyond. It is also a major international hub for technological and industrial innovation.
If Germany beats all of its neighbors to adult-use legalization and becomes an adult-use oasis, the profit potential could be enormous. A recent study shed some light on what types of numbers can be expected. Below are excerpts about the study, via Reuters:
Legalising cannabis could bring Germany annual tax revenues and cost savings of about 4.7 billion euros ($5.34 billion) and create 27,000 new jobs, a survey said on Tuesday as politicians thrash out rules for the budding sector.
The survey by the Institute for Competition Economics (DICE) at the Heinrich Heine University in Duesseldorf, and commissioned by the German hemp association, found that legalising cannabis could lead to additional tax revenues of about 3.4 billion euros per year.
At the same time, it could bring cost savings in the police and judicial system of 1.3 billion euros per year while creating tens of thousands of jobs in the cannabis economy.
Legalization in Germany is still a work in progress, being that an actual law has not taken effect yet. With that being said, legalization does appear to be inevitable in Germany, and in the meantime, the eyes of the entire cannabis community will be locked on the European country.