Suppliers of cannabis seeds, gardening equipment, fertilizers and grow lamps will benefit from Germany’s decision to legalize cannabis, Dirk Heitepriem of the German Cannabis Business Association (BvCW) told DW.
Germany partially legalized cannabis in April, relaxing rules to allow adults to cultivate up to three cannabis plants for personal use. Those unable or unwilling to grow plants but looking to legally source the drug can join cannabis social clubs as of July 1. These nonprofit cooperatives may cultivate and distribute cannabis to members under strict conditions.
Compo, a German horticultural supplier, is one of the companies already seeing business picking up. It launched a brand new product line aimed at cannabis cultivators. The Munster-based company, which employs some 1,000 people across Europe, has seen product sales — including special cannabis potting soil and fertilizers — far exceed expectations. “We project that sales figures will increase even more in the coming year,” a Compo manager told DW.
Seed sales surge
Due to legal uncertainties surrounding the sale of cannabis seeds in Germany, however, many individuals are turning to foreign seed banks like Barcelona-based Royal Queen Seeds, a major market player. When Germany’s partial legalization came into effect “we had 10,231 orders in one day,” Royal Queen Seeds President Shai Ramsahai told DW.
He said high demand initially overwhelmed his company with thousands of orders but has now stabilized at about 3,000 to 4,000 orders per day. In April, Royal Queen Seeds’ online business grew by “300% and total online revenue was €6 million,” Ramsahai said.
Zamnesia, another big cannabis seed bank operating out of the Netherlands, has also seen a surge in German orders, the company’s General Manager Nick Ave told DW: “Every year, from about the middle of March until the beginning of June, seed sales go up because people want to start growing their plants. Normally we see an increase of about 30% in seed season, but this year was a 150% increase.”
Medicinal cannabis
While companies are cashing in on individuals growing cannabis for personal recreational use, the German medical cannabis industry may see even stronger growth. It offers plenty of potential, according to market analysists Prohibition Partners, with “an estimated patient base’ of over 200,000” and “sales, patient numbers and imports increasing year-over-year.”
This year’s partial legalization means cannabis is no longer classified as a narcotic, making it easier for patients to get a medical prescription. Domestic commercial medicinal cannabis production was also tightly regulated, with a capped production quota in place. This has now changed. New licences will be issued for domestic production and distribution, thereby liberalizing the market, increasing competition, and possibly strengthening the industry,” Jakob Manthey, Jurgen Rehm and Uwe Verthein wrote in The Lancet, a leading medical journal.
BvCW’s Heitepriem said he expects “medical producers will benefit due to the increase in demand for medical cannabis as it’s easier for patients to access the product.”
DEMECAN, a pharmaceutical company based near Dresden in the German state of Saxony, is currently the only German company licensed to cultivate medical cannabis in the country. With the production quota scrapped, it plans to ramp up production from an annual 600 kilograms (1,320 pounds) of cannabis to 2 tons, company spokesperson Franz Großmann told DW. He added that DEMECAN welcomes the liberalization, saying it will allow the company to maximize its economic potential, which would benefit Saxony and Germany as a whole.
Bud bonanza?
While Germany’s legalization has created considerable excitement particularly with regard to the medical market, Heitepriem cautions against over-optimism.
“We had rapid startup development over the last couple of years in the medical sector and are seeing an increased interest from US, Canadian and European companies in investing in Germany,” Heitepriem told DW. Yet many companies had learned their lesson seeing Canada’s cannabis bubble burst after the country legalized the drug in 2018, he added.
While he said revenue projections were “overexaggerated in every discussion we ever had on that topic” Heitepriem nevertheless thinks there is “huge potential of a couple of billion in revenue, but I wouldn’t really give an estimate because there are so many uncertainties.”
Edited by Ben Knight
