There is an ineffable logic to the pace of reform these days. Nowhere is that clearer in both the success of voter reform measures in the United States (along with timelines for implementation baked into the language of the same) and developments internationally. No matter that New Zealand decided to take a recent punt on the issue, there are other forces moving elsewhere that have the potential to be far more consequential – and in the short term.
Israel Announced Its Intent To Create A Recreational Market in 2021
There is little news anywhere as consequential as that of the oldest medical market finally succumbing to the inevitable. Namely, Israel has announced that it will allow an adult use market to begin operations probably by the third quarter of 2021. That said, don’t hold anyone to a deadline in the days of COVID-19, which will just as surely have not passed by then.
However, this development means that the entire conversation has moved up a notch – because the Israelis have so much research on the plant at this point.
For this reason, the tiny country is likely to have an outsized impact on the entire discussion – along with conveniently timed medical exports to the world.
Luxembourg Will Initiate Its Recreational Market Shortly Thereafter
It is likely not insignificant that the Israelis announced their intent to begin an adult use market just ahead of the long-announced Luxembourg flip – now on the agenda of the Green Party domestically for several years.
The strategic location of Luxembourg in both the European market as well as the much larger financial one now interested in the vertical cannot be understated. Indeed, the country has already played an outsized role in the development of the medical market here due to the contretemps over the clearing of stock trades in the German market as of 2018.
The double whammy of good news from both markets will also create a buzz internationally that is sure to drive other conversations forward – even if it is to study how both countries approach the issue. And, more to a point, how they differ from Canada, including regulation of their equity markets.
Combined with a more regulated market in Holland and presumably continued “experimentation” in Denmark, and by the end of next year, adult use reform will have hit the continent and in no small way.
Does This Mean The Sudden Potential of Adult Use Everywhere?
As 2020 has shown, in spades, just about anything can and frequently does happen. However, do not expect many more countries to move into the recreational column for the next several years.
Whatever the UN does or does not do about cannabis at the next meeting of the WHO, cannabis the plant remains a Schedule I drug internationally. This means that, for example, import and export of the same across borders, even in Europe, is likely to be problematic and for some time to come – let alone its international travel across say, the Atlantic.
Further from the law enforcement and financial security (namely money laundering) perspective, there are big issues that have to be dealt with finally, internationally, that so far have not – and under the guise of “medical reform.”
For that reason, in other words, do not expect Germany, much less France or even the UK to suddenly switch gears. And remember that both Luxembourg and Israel are small countries.
Bottom line? Adult use reform is here to stay, and will increasingly show up on the map. But the more “blanket” reform, still driving the entire discussion, is broadly, and globally, medical.
Cannabis reform is proceeding globally right now in some interesting places, and in an oddly syncopated schedule yet again.
Namely, in the last few weeks, change has been moving forward not only in the U.S., but Europe too. That this effort in the EU came literally weeks before the American presidential election where as of now, no matter who will occupy the White House, even more states move into the adult use camp is also surely no accident. Particularly given the results.
In South Dakota’s case, voters agreed to legalize both a medical and recreational market in a single election. In New Jersey, the referendum that passed authorized a market that is moving quickly to get implemented. This is equally intriguing. Namely that to the average person right now, no matter where they are, the continued delays and gridlock to get going, no matter the problems along the way, are increasingly unpopular politically. That too, is showing up at the ballot box.
Indeed, cannabis reform is now absolutely one of the most pressing and yet unaddressed issues in several countries at present. See New Zealand (where the voter mandate for adult use reform failed during their Presidential election last week).
Europe Seems To Be Following New Zealand’s Caution As Germany Delays Further Reform But…
Last week, a proposal on adult use cannabis reform failed in the German Bundestag (Parliament). With the exception of the far right Alternativ für Deutschland (AfD), every other political party agrees that there needs to be forward motion on the topic, but nobody seems to want to fully address it. This is no surprise. Indeed, the recent appointment of a former German minister last month to a Swiss cannabis company seems, certainly in retrospect, to presage the same. As well as the many protest votes on the topic emanating from Berlin, one way or the other.
However, in the aftermath of what is expected to be a widely influential medical case here (namely the regional approvers may not interfere with a doctor’s right to prescribe to qualified patients), it may be that the government wants more time to grow its medical program while Denmark, Holland and Luxembourg (if not Spain) figure out the logistics on the ground.
French medical trials expected to begin Q2 of 2021
Given that France has finally committed to a national medical trial to begin no later than the second quarter of next year, and further one where it punts the majority of the cost onto the industry itself, this would create a solid “medical cannabis” bloc in Europe’s most affluent states. Not to mention the first real, nationally authorized patient trial in Europe that is not commercial.
But even this is not the whole story. While dickering about the certifications and scheduling of the plant go on now at the highest international levels, let alone federal ones domestically, hemp products are clearly entering the consumer market here – from upscale CBD stores in city centers to hemp seed oil and hemp-infused mayonnaise appearing on the shelves of German mainstream grocery stores. Not to mention hemp infused alcohol of at least the vodka, gin and rum varieties.
And then of course there is Italy.
The Italian Market May Be The Dark Horse In Europe Everyone Has Been Waiting For
Within literally the month of October, all in public view, the Italian government circled on the topic of legalizing the CBD/hemp market. As of last week, the Ministry of Health finally decided that cannabidiol sourced from hemp is not a narcotic.
CBD in Italy went from widely available to banned and back to available again.
Given the fact that home grow now is not illegal, and medical cannabis is technically available, it would seem that Italy is positioning its hemp market to survive if not thrive at least domestically and further thread the needle of industry continuity against fluid and further rapidly changing European and international regulation right now.
In the meantime, like Germany, however, the country is clearly angling to create an industry infrastructure – and further beyond the pharmaceutical vertical – via “other” channels before taking the final plunge. Cannabis Lite fits that bill perfectly.
What Does This Mean For 2021 And Beyond?
No matter the official denials, it is very clear that recreational cannabis reform at the American and Canadian ballot box is moving the conversation forward globally, even if at a different pace.
With the WHO now poised to weigh in on the issue, more American states signing up, an expanding medical market across the world and adult use upstarts everywhere, 2021 is absolutely sure to be a meaningful year just about everywhere on the cannabis front.
The COVID-19 pandemic has certainly impacted the cannabis industry, no matter where you are. However, the impact of a global virus outbreak and subsequent economic recession has had a mixed impact overall on the industry, and further against a backdrop where the entire conversation of reform is also now an international one.
While the big international decisions were slowed down deliberately, as a result of the pandemic, there is a clear indication almost everywhere that this might also have been taken to allow countries to catch up to the inevitable.
Even in the world of cannabis there is a level of diplomacy. The good news of course is that as a result, the topic of reform is now on official agendas, and those are now moving forward with an air of authority.
As a result, here is a look at some of the most significant events that will impact the discussion long after this fall.
The WHO Vote In December Is A Massive Global Benchmark
There is little indication that the global health organization will punt on their reclassification discussion in December. This starts with the fact that Germany, ever cognizant of things like health management leadership is moving ahead with its medical program, full steam ahead.
Further, there are indications all across Europe that the individual countries where cannabis reform has clearly landed are having an impact on their neighbors, if not a more global discussion. European countries like France are quietly announcing medical trials to begin before the end of the first quarter of next year. And Italy just added hemp to its official list of medical plants. Bureaucracies do not move unless they have to, and in this case, they are clearly in transit on the cannabis conversation well beyond the interdiction only phase.
The New Zealand Recreational Vote Is Also Highly Important
Whether the Kiwis actually take this ground-breaking recreational decision across the finish line is almost immaterial at this point. The ballot measure is being decided during a national election within a week and further set against another one (the U.S.) where it is clearly not on the agenda in the immediate future.
That said, of course if the measure does pass, and there is late breaking evidence to suggest that it might, the bar, beyond whatever the UN decides, will have clearly been set.
With recreational reform, New Zealand will also join the ranks of Canada and Uruguay when it comes to this issue. If not, Luxembourg will most likely take this spot at the end of next year if plans continue to unfold as so far promised in country.
Without it, the country will join the many who are implementing plans to integrate the drug into formal medical infrastructure, which is far from a “loss,” at any level. That said it is a sign that individual countries, rather than regional or international bodies, will lead on the issue of reform and will continue to, no matter what the WHO does.
Regional Reform Is Shaping Up In Europe
Beyond this, of course, there are also signs that the issue of cannabis access, no matter what bucket it is being lumped into, is headed for a showdown in Europe on a regional level that has never been seen before.
The state of the Spanish industry now has a date with the European Court of Human Rights at Strasbourg over basic access issues. If that is decided for the plaintiffs, it will mean that not only will Spain be forced to formalize its own cannabis laws, but so will countries across Europe.
What that will mean for nascent recreational reform is also unclear, but at minimum, it spells good news for those who want to participate in the industry in a new way, and with a non-profit model so far not given much official traction across Europe so far.
It is not exactly the storming of the Bastille, but cannabis reform appears to finally be not just in the offing, but crystallizing in the land of the Marseillaise. Why? Apart from the inevitable, particularly now that the European Parliament has put medical reform on a continental agenda?
The first reason is that this is an easy way for the increasingly politically beleaguered French Prime Minister Emmanual Macron to show he is a “man of the people.” In the age of the gilets jaunes or “yellow vests” – protesters on the streets pushing for economic and political justice – a reform of the green kind is just the ticket.
Credit: Dennis Jarvis, Flickr
Secondly, French drug laws are still ridiculously harsh. Use or possession of “narcotics” that are not specifically prescribed by a doctor carries up to a $4,000 fine and a year in prison.
The third reason is that politicians and policy reformers are finally getting the message because of another reason also familiar to American reformers. Locking people up for even minor drug offenses (and French law makes no distinction between cannabis and harder drugs) is a societal menace. It costs the government a lot of money to put people in prison. And the police, just as they are in other places, notably Germany, are tired of engaging in this kind of activity. Particularly when a large number of those they end up arresting are actually patients.
Here is the next issue: The drug laws on the books in France date from December 31, 1970. Similar to the U.S., cannabis of course was treated just like heroin and cocaine. Since that period, French drug arrests have steadily increased (making 67.5% of all arrests as of 2016). Convictions for drug offenses have also increased over ten-fold in the last generation (since the turn of the century).Last year, the CBD market was allowed a little room to flourish in the new grey laws around reform
In a country where approximately 700,000 people use cannabis daily, and 1.4 million use it regularly, this is clearly not sustainable on any front. Particularly where cannabis reform is such a potent weapon in a country where the “yellow vests” have made such a global impression. Cannabis reform, in other words, is an easy fix for a country now thinking about the impact of popular revolutions of other kinds. Not to mention with a history of them. And even more particularly where reform last year allowed “le weed light” (low THC, high CBD strains) to go on sale (with a popular response).
Implications
How fast reform will move here is still obviously uncertain. The current government has been making noise about it for the last two years. Last year, the CBD market was allowed a little room to flourish in the new grey laws around reform (although even here, the first CBD “coffee shops” were shut down last summer almost as soon as they opened).
Given the conservative pace so far, look for France to follow rather than lead. From a CBD perspective, if not a THC one, the country looks very much more like Italy and Germany than Spain or Holland from the cannabis perspective – at least at present.
For such reasons, expect France to follow toute le monde, rather than lead the pack. Decriminalization plus some kind of insurance coverage (similar to Germany) is much more likely to be on the short-term agenda than say a massive rush to embrace the industry (as in Greece). The green revolution may now be in the wings here, but pushed by other unavoidable forces in Europe if not domestically.
That said, to paraphrase the words of the country’s last King, Louis VIX, when France does move on something resembling real reform, it will mean that after that, the “green deluge” will most certainly be on the hoof across the rest of the continent.
While the American cannabis industry deals with both unparalleled opportunity and new risks, Europe is setting itself up for a spring that is going to be verdant.
The ongoing drumbeat for reform in countries across the continent is bringing both money and high-grade medical product into the market. Even if volume is still really at a trickle, it will rapidly widen to a steady stream. It is also very clear that the next two to three quarters are going to deliver news that the cannabiz has arrived, and with authority.
The following is an overview of what is happening, where, and with an eye to informing foreign investors, in particular, about new opportunities in an awakening market.
Germany
Without a doubt, the country is priming itself for a medical market that is going to be large and partially government supported, driving regulation of medical use across the continent. On top of that, the idea of selling 28 grams (1 oz) of product to end consumers who only pay about $12 for their medication has gotten the attention of global producers. Opportunities here for those who did not submit a bid for federal cultivation (see the big Canadian LPs) are still unfolding.
Photo: Ian McWilliams, Flickr
However here is what is now on the table: an import market that cannot get enough cheap, GMP certified product. Producers from Australia to Uruguay are now actively hunting for a way in, even if cutting a supply deal for the next 18 – 24 months as the German green machine starts to kick into production-ready status. What a bad time for Israel to be so publicly out of the ex-im biz! In fact, Israeli entrepreneurs are scouring the country for opportunities into the market another way (and there are a few efforts afoot in a sleeping giant of a market waking up from a long snooze to find they cannot get enough product). Right now, however, the legal market is absolutely dominated by Canopy, Aurora, Aphria and Tilray along with Dutch Bedrocan.
The German parliament is clearly also going to do something about another piece of reform which will also drive market expansion – starting with announcement of additional cultivation possibilities (potentially this time even open to German firms). On Friday, the day after the British parliament wrangled over the same thing, the German Bundestag debated decriminalization along with a few other hot button topics (like abortion). With only the AfD (right wing) still in the “lock ‘em up camp,” and even the head of the police calling for reform, it is clear that decriminalization is on the legislative agenda this year.
Spain, Italy, Switzerland, Portugal, Denmark & Holland
While it may seem presumptuous to lump all these very different countries under one label, the reality is that the level of reform is generally in a similar state (transition to medical), and that drives potential political and market risk as well as evaluation of investment decisions.
In Spain, federal reform has not come yet, but medical deals involving pharmaceutical companies (both exclusively cannabinoid focussed and otherwise) are afoot. Plus of course there is Barcelona (the Colorado of the country in many ways).
Italy, Portugal and Denmark are all the battlegrounds for the big Canadian (and German) companies now set on having a country-by-country footprint in opening markets across the EU (see Canopy, Aurora, Aphria and their German counterparts of Spektrum Cannabis, Pedianos and Nuuvera). Licensing is political, happening at a high level, and only for those with the bank to back deals that come with high capex attached. That said, there are lucrative opportunities for those with local contacts and liquidity.
Holland is another animal altogether, but for the most part everyone is so confused about the state of reform domestically that the only people really in position to take advantage of it are the Dutch, at least for now. That said, Dutch-based plays (in part financed by Canadian backing) for other Euro markets are absolutely underway. Who else has so much experience here, let’s be honest? Regardless, investments in these canna markets, particularly for the Euro-focussed but North American investor, for now, will tend to be through public stock acquisitions of Canadian parents or direct investments in Dutch companies (see Bedrocan, but they are not the only game in town).
Switzerland, for the most part, is setting its own pace, but reform here means the CBD market, including for medical grade imports, is a place for the savvy medical investor to look for cultivation and ex-im opportunities. Including in the home-grown, Swiss pharma space.
The recent pronouncement of government officials that Greece was opening its doors to investment and a medical cannabis business means that there will be a federally legal, EU country that is promoting both investment and tourism opportunities just for domestic consumption, let alone export. Scouts from all the major canna companies are combing both the Greek mainland and its islands.
Poland
If there was ever such a thing as a “virgin” cannabis market, Poland might well qualify. For those distributors with cheap product that has not (yet) found a home, the country is poised to start to announce (at least) distribution deals to pharmacies with producers now establishing themselves in other markets. Medical legislation has just changed, in other words, but nothing else is in place. And with Polish patients now having, literally, to scour the continent for product not to mention foot the bill for the travel costs to get it, the next obvious step is a national pharmacy chain distribution deal or two with producers from all over the world now looking for Euro market entry possibilities. Domestic production is some time off.
The BalticsThe ongoing drumbeat for reform in countries across the continent is bringing both money and high-grade medical product into the market
If there were such a thing as the “Berlin” of the cannabis market in Europe (namely sexy but poor), it is probably going to be here. Cheap production markets and opening opportunities for export across the EU for high quality, low cost cannabis are not going unnoticed. Look for interesting plays and opportunities across the region. Scouts from the big international canna companies already are.
The UK
Britain comes last because of the political uncertainty in general, surrounding the island. However, last week Parliament appeared on the verge of being embarrassed into acting on at least medical reform. There will be a market here and of course, there is already one globally known cannabis company with a 19-year track record and a monopoly license on canna-medical research and production (GW Pharmaceuticals) that calls the British Isles home. This will be a no-brainer, particularly for foreign English-speaking investors still leery of continental Europe. However it will also be highly politically connected. Expect to see a few quick arranged marriages between such landed gentry and foreign capital – potentially even this year.
The French have always been known for possessing a certain national savoire faire. In English, that translates to a phrase meaning innate understanding of how to do things with a certain amount of panache, if not bonhomie. International diplomacy was long conducted in French as a result.
However, when it comes to the famed French silver tongue or sophistication on the cannabis issue, and well, not so much. As is widely acknowledged, even by the French, the country is stuck in the Dark Ages when it comes to cannabis. Almost literally. Including having the strictest and harshest penalties for possession anywhere in Europe. Such penalties do not include a stint in the Bastille. But they can involve prison time, and they are ridiculously harsh. Quelle Horreure! Not mention, Vive la Revolution!
Nobody has said (yet) “Let them eat spice cake.” But France is now clearly an outlier in a continent moving towards cannabis reform of (at least) the medical and decriminalized kind.The most recent statistics suggest that 17 million French people have tried cannabis.
And herein lies the French paradox. Despite the highest per capita usage of any European country, French cannabis consumers have not turned into effective advocates on the political front.
Why not?
How High Are The French?
The most recent statistics suggest that 17 million French people have tried cannabis. 1.4 million use it regularly, about half of those on a daily basis. And here is the exciting (read: terrifying part). Users (not dealers) face up to a year in prison on the first offense, plus a fine of 3,750 euros (about $4,000).
Mon Dieu! Who on earth do the French think they are? A southern American state? One that probably actually banned “French” fries during a dull day at the state ‘lege when politically inspired to do so a few years back?
But even that epithet doesn’t cut it anymore in an environment where Florida is getting in on the action, and the first medical dispensary just opened in Texas.
Image: Richard Akerman, Flickr
It is also not like the French big wigs also do not know they are out of step. France’s boyish president, now in office for about a year, Emmanuel Macron, promised decriminalization by the end of 2017 (it didn’t happen). Now a new parliamentary report, released, fittingly on Valentine’s Day, recommends swapping out the current draconian punishments for a fixed fine of between 150-200 euros ($250) per offense. The report also specifically concludes that current legislation is not working.
In 2015, there were 64,000 drug related convictions in France. 40,000 were for use, not dealing. While just over 3,000 of those convicted actually served a prison sentence, even the more conservative aspects of French society have had enough.
Like Germany recently, where the head of the country’s largest police union came out last week for decriminalization, the French police do not want to continue a charade that results in more paperwork for them, rather than a real shift in policy with concrete results. And now, neither do its politicians.
don’t expect this current diplomatic impass to hold for long, even if it gains enough traction to get passed into federal law.In an environment where political gridlock is the name of the game, however, it is very clear that cannabis is just one more issue dropped into a toxic mix that also includes topics like “what’s up in the EU.” Not to mention the nascent separatist and populist sentiments of neighbours like Spain and Germany. Countries, ironically, also far ahead of France on the cannabis front.
The hope of French activists on the ground is that cannabis is actually caught on the right side of history now. Even if, finally, it is changing the law to decriminalize the drug and only penalize patients (and others) with a ticket.
That too, is unlikely to succeed, as many such experiments elsewhere have failed before. That said, it is clearly a step in the right direction and an inevitable one at that.
Caught in the Middle
The great irony of this of course, is what is happening as France becomes an unwilling partner in the cross-border cannabis ménage-a-trois now afoot thanks to changing medical cannabis laws elsewhere in the EU. Namely, cannabis may remain off the reform agenda to parliamentarians and out of reach to the average French patient. That said, cross-continental transport of the drug will inevitably create a situation where a significant amount of cannabis products consumed by medical users elsewhere in the EU is trucked and or trained across France while out of reach to the locals.
Portugal and Spain are shaping up to be low-cost producers to the West. On the East, Germany, Switzerland and increasing numbers of Eastern European countries are looking for cheap product. That means there is going to be a great deal of medical grade cannabis crossing the continent by way of French territory. There is already a trickle. It is about to become a flood. What happens to reform in a country clearly caught in the middle?
As a result, don’t expect this current diplomatic impass to hold for long, even if it gains enough traction to get passed into federal law.
French cannabis policy is far from a la mode. Even to its own citizens. And on this issue, for sure, absolutely old fashioned in the most un-French way possible.
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There is little news anywhere as consequential as that of the oldest medical market finally succumbing to the inevitable. Namely, Israel has announced that it will allow an adult use market to begin operations probably by the third quarter of 2021. That said, don’t hold anyone to a deadline in the days of COVID-19, which will just as surely have not passed by then.
The strategic location of Luxembourg in both the European market as well as the much larger financial one now interested in the vertical cannot be understated. Indeed, the country has already played an outsized role in the development of the medical market here due to the contretemps over the clearing of stock trades in the German market as of 2018.
Whatever the UN does or does not do about cannabis at the next meeting of the WHO, cannabis the plant remains a Schedule I drug internationally. This means that, for example, import and export of the same across borders, even in Europe, is likely to be problematic and for some time to come – let alone its international travel across say, the Atlantic.
