Why The German Market Is Now Destination Number 1 For GMP Certified Medical Cannabis
April 16th, 2018
In breaking news out of Germany, the Higher Regional Court (OLG) in Dusseldorf handed down a stunning but increasingly rumored decision on March 28 on the pending domestic cannabis cultivation bid. The impact of this decision will certainly affect the date on which the country begins producing domestically sourced medical cannabis. It also creates an environment where the savvy investor should look for firms with a foothold in this space as a way to enter this valuable and growing medical cannabis market now struggling to meet patient demand – and for now, without a date on which locally cultivated crops will enter the distribution stream.
By way of recap, the German government changed the law last year to mandate that medical cannabis was compensated under public health insurance (which covers 90% of Germans). In April, the government also announced, via BfArM, the agency responsible for regulating all narcotic drugs, that it was issuing a tender bid for the production of about 6.6 tonnes of medical cannabis. Target date for first crop delivery? Sometime in 2019.
The process ran into problems early. By September, lawsuits had been launched. BfArm extended the deadline to respond to the bid. Despite announcements, via press release, of the top ten firms, the rumours continued to persist that the bid would not survive a legal challenge.
Those complaints – four of them – and which claimed everything from cartel-like business practices around bid selection to allowing more time to respond – were also allowed to proceed as Klages (oral hearings auf Deutsch) in court, but three of them were just largely dismissed in Dusseldorf by the OLG.
However to add even more confusion, the OLG’s decision also effectively shuts down the right of BfArM to proceed with the current bid because the agency did not give the complaining firms enough time to respond during the late-summer extension. This is, in other words, a technical fault by a federal German agency in the tendering of an EU bid. The extension was too short. As a result, BfArM may not proceed with the bid or award the ten licenses.
Bottom line? There is going to be some formal if complicated paper throwing and rule citing behind the scenes between bureaucrats and bidders if not BfArM and the rest of the government. Given the opinion of the court that BfArM was at fault, there is the potential of even more lawsuits. For those on the inside track willing to comment off the record, this could go in one of several directions.
For now, as news of the decision makes the rounds during Easter weekend, the ten finalists received the official letters from BfArM announcing that the bid was formally off.
What this ultimately means, however, is that there are currently 15,000 patients with reimbursed claims here and that number is only expected to grow – including even according to government estimates. They have to get the cannabis from somewhere. And that is where this all gets very interesting.
What Does This Mean For Foreign Looking Cannabis Investors?
This decision effectively does several things. Most importantly, however, it basically guarantees that delivery of domestic product will not commence by 2019 unless there is significant hustle on the part of everyone subsequently – but even the government does not believe this will be the case. As a result, investors interested in this market as a legitimate, federally sanctioned and medically insured region, should take note.
Here is where you should be looking for interesting plays:
- The German government is now under the gun to produce medical cannabis domestically. That will not go away. The German hemp farmers left out of the bid process now are also, at this point, in international cooperation or even merged buy-outs with Canadians who can easily meet the requirements of an international team. As a result, look for German firms in this position and begin conversations. The German investment market is less liquid and investors more conservative on this issue than in either the U.S. or Canada right now. That means legitimate oversees cash injections are welcomed. Be aware, however, that the laws are different, and this is a very different investment climate. There is a large legal grow space here planned for a former atomic bunker at a still-secret location somewhere in Bavaria. This ain’t California. Or even Canada. Get a lawyer, and start with a government official who is directly tasked with answering this kind of question – such as those at the German Trade and Investment ministry (GTAI). Nobody else knows what they are talking about.
- Canadian companies already in the game via distribution agreements – and those partnered with them in Europe and Australia are still great investments because they stand to benefit the most in the shorter and longer term from this bureaucratic squabble. The creative production and distribution agreements that have sprung up across the continent are legion at this point and tell an interesting story. Tilray sits in Portugal. Aurora followed Spektrum into Denmark last year is also now in operations in Italy as of January, along with Canadian-German Aphria-Nuuvera. Spektrum itself is about to launch a new source of product (greenhouse-grown but medical grade cannabis sourced from Spain) bound for the German market. These companies are all, conveniently, listed on public exchanges in multiple countries. The easiest international investment in the legal pot biz is this route and will be for some time.
- Greece. This is a hotbed of potential domestic production and even a source for medical cannabis bound for the German market. Look for firms in this space already. However, because the Greek market is so new, be especially careful about export rights. Demand to see paper and certifications in every direction.
- Eastern Europe. With the Israelis now blocked from export in a deal apparently cut over the relocation of the capital to Jerusalem between Presidents Trump and Netanyahu, look for interesting Israeli-backed hybrids to start to come out of Slovenia in particular, but throughout the former “Eastern bloc” countries. The one exception to this is Poland. For the moment, the country is following its German cousin, so imports are the only way cannabis will come into the country, and export, obviously, is out of the running for now.
- Non-EU countries. As will be evident at the upcoming ICBC conference in Berlin, there are other alternatives now springing up with GMP cert, even if they are not in the EU but close to it. Look for innovative companies with the proper licensing and export agreements to come from the eastern regions of the EU if not just outside its borders. They exist and are about to play an interesting roll in a country where legal, medically-certified cannabis is just about as valuable as gold right now and will be, thanks to this recent decision, for some time to come.
Follow Us on Social Media
About CFN Media
CFN Media (CannabisFN) is the leading creative agency and media network dedicated to legal cannabis. We help marijuana businesses attract investors, customers (B2B, B2C), capital, and media visibility. Private and public marijuana companies and brands in the US and Canada rely on CFN Media to grow and succeed.
CFN launched in June of 2013 to initially serve the growing universe of publicly traded marijuana companies across North America. Today, CFN Media is also the digital media choice for the emerging brands in the space.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.