Germany: Crown Jewel of the EU Cannabis Market
By Deepak Anand, VP Business Development & Government Relations
The situation with legalization of cannabis in Germany seems to be experiencing its own challenges, which is opening the doors for Canadian companies to make their move in this market. Germany’s large, aging population, which is also covered by socialized medical insurance, means the German annual medical market could be worth as much as 10.2 billion euros, a huge opportunity for cannabis producers. Understanding the future opportunities, means understanding the past, present and future direction of this ‘crown jewel’ market.
Germany legalized Cannabis for medical purposes in January 2017. Before the law was liberalized, patients who suffered from certain diseases, like multiple sclerosis, cancer or chronic pain, could only use cannabis if they had applied for a specific exemption at the Federal Institute for Drugs and Medical Devices (BfArM). As regulations were extremely strict, only a few hundred patients were granted the permission to use the cannabis plant for medicinal purposes.
The 2017 change in law meant that patients could now receive a prescription from their doctor and obtain cannabis at a pharmacy. Although the restrictions have been lifted slightly, these processes are still strictly controlled by BfArM.
Like Canada, the main form of cannabis being prescribed in Germany is dried cannabis flower. The costs of the dried cannabis flower and cannabis extracts will be covered by health insurance for patients who have no other treatment options. We are seeing however that only one third of patients currently accessing medical cannabis in Germany are being reimbursed for it through insurance providers. Currently German pharmacies charge patients €25 (CA$39) per gram of dried cannabis buds.
Despite the demand increasing significantly after 2017, there were huge shortages of Medical Cannabis in Germany. To combat this, BfArM proposed a tender process for the public procurement of cannabis in 2017. It invited qualified companies to put forward their bid to sell cannabis plants to BfArM. In turn, BfArM was to sell these plants to the pharmacies.
In March 2018, Dusseldorf regional court in Germany halted the tender process, arguing that the timeline given to companies had been too short.
The court’s decision follows complaints from German companies who had reportedly argued that timelines were too tight and that certain tender requirements — such as experience growing cannabis legally — favoured foreign applicants from countries like Canada with an existing medical cannabis system.
Several Canadian companies and their German subsidiaries were believed to have been on the shortlist for the 10 licences, including Canopy Growth Corp., MedReleaf Corp., Aurora Cannabis Inc. and Aphria Inc. (through its recent acquisition of Nuuvera Inc.). Other companies, such as Maricann Group Inc., Tilray and Cronos Group Inc. are also invested in Germany and may have been in the running as well. Currently it is unclear when the tender process will continue, and whether it will have to start from the beginning or not.
In 2017, Canadian LP’s exported 520.855 kgs. of Dried Cannabis and 183L of Cannabis Oil to Germany for medical purposes. Canadian Licensed producers (LP’s) such as Aurora (through their wholly owned German subsidiary Pedanios), Canopy (through Spectrum), Cronos (though Pohl-Baskamp) along with Tilray, Maricann, CannTrust and MedReleaf have been exporting medical cannabis to Germany.
Regardless, this delay stands to significantly benefit companies in Canada that are licensed (including the host of newer licensed producers who didn’t have cultivation licences when the initial tender process was announced). They could export medical cannabis to service the German medical population, which continues to experience shortages due to lack of domestic cultivation.
Until medical cannabis from German cultivation is available to German patients, demand is covered by imports from Canada, the Netherlands, and soon Israel.
Canada has a well established and regulated production and distribution system related to cannabis for medicinal purposes. Germany can reply on product from Canada on issues of quality control including a strict and specific laboratory batch testing framework that Canada has, which checks the type of insecticides or pesticides used and how much THC and CBD is present in the medical cannabis products being exported.
The future is not without challenges for Canadian LPs. Since Medical cannabis is being imported into Germany for sale through pharmacies it must be through a (Good Manufacturing Practices) GMP certified exporter and importer. Behind these three letters lies a comprehensive quality assurance system, which must be considered in the production of medicines and active ingredients. This is to achieve the greatest possible consumer protection.
In general, the GMP regulations have the following core objectives:
- Consistent product quality
- Avoidance of any kind of contamination
There are also a host of complex Directives, Acts and Laws that one must navigate that most Canadian companies are not used to translating into practical business processes. As Canadian LPs are see Germany as an export target as well, at CCI we are seeing dozens of GPP compliant companies taking a strategic turn to implement the quality management systems required for an EU market, and we are here to help them along the way.
How to get Started in Germany
CCI is assisting German companies by performing GPP and GMP audits and compliance verification to ensure that Canadian and international wholesalers who are looking to supply medical cannabis products to German importers. CCI ensures that they are complying with the stringent controls set out in relation to compliance, quality control and testing protocols on all cannabis grown, manufactured and processed as defined under the ACMPR as well as GMP guidelines. Specifically:
- Identifying gaps against GMP and GPP
- Providing general recommendations to fill gaps as applicable.
- Providing final assessment of compliance to EU-GMP and GPP regulations.
- Providing final report documenting high-level observations
CCI can also assist by providing the German companies with documentation required from LPs before starting the export-import relationship such as establishing the Quality Agreement, verifying the manufacturing authorization and certifications.
Canadian Licensed Producers wanting to export to medical cannabis to Germany can contact Deepak Anand (Deepak@CannabisComplianceInc.com) to help them connect with German importers as well as entities granting GMP certification recognized under MRA.