The Year Of Pharmaceutical Cannabis?

What will 2022 look like from a cannabis industry perspective in Europe?

There have been multiple commentaries on the shape of reform in Germany, as well as the timetable this year. Namely, is 2022 the year (finally) of adult-use reform or is it the year that large, established pharmaceutical companies move into the industry?

Adult Use or Medical Reform?

Just about everyone now expects adult-use reform in Germany not to occur this year and for reasons that range from enduring Covid to the Russian war with Ukraine. 

This means that the only way the industry must grow is the CBD market and the medical side of the equation.

In an environment where health insurance companies and the MDK, the state-based organization tasked with final approval of medical cannabis for patients, are not approving new patients (numbers for patient approvals have been essentially flat for the last two years) this does not spell particularly good news for those who make their livings on the pharma side of the equation. Pharmaceutical companies are interested, just like anyone else, in volume and profits. With no growth in prescriptions, the industry is currently in a steady state. Mergers and buyouts are also likely to continue as pharma side companies struggle to make money in an industry that is still pricing on a retail, rather than wholesale, level. Introducing expensive new cannabinoid-based drugs into the market will also not solve this problem. Indeed, it may make it even harder for patients to get approvals in the future.

A Looming Price War

What is likely to happen this year is that the outrageous prices and overheads slapped on cannabis may begin to go away. This is an industry so far built on finding loopholes for just about everything, including its ability to exist. In the meantime, the now widespread practice of importing GACP cannabis from usually developing economies to Portugal or Spain and “converting” it to EU-GMP cannabis is likely to change. For every certification “hop” a usually high surcharge is slapped on the plant, and on retail rather than wholesale amounts.

What that means in the long term is that GACP qualified cannabis is reaching medical markets like Germany, repackaged as GMP. In the long run, this is not a sustainable business model. Neither is the practice of charging a standard amount per gram of certification in Germany.

Beyond this, there is the matter of global competition. Companies that have been delayed by Covid are now entering the market in countries both in and outside of the EU with their own flos and oil extracts. This means that the prices for the same will drop – certainly at the cultivation end. 

In short, there is no clear path for the industry this year, and from any quarter. And this will continue to be the case until full and final reform actually comes.

Be sure to attend the International Cannabis Business Conference in Berlin and Zurich for updates on the legalization of cannabis, and market trends!