Tag Archives: Holland

Italy Sets New Pace For Recreational Cannabis & Domestic Cultivation

By Marguerite Arnold
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The Italian Supreme Court seemed to take a page from both Israel and Thailand last year (who announced exports and reform legislation on Christmas Day 2018). In the dying days of 2019, on December 19, the court ruled in what is basically a landmark decision for not only the country but the continent, that small-scale domestic cultivation of cannabis (both of the CBD and THC kind) is legal.

Even more intriguingly, the ruling was ignored for several days in Italy before being picked up by news agencies. This in turn has apparently set off a much wider and predictable debate about the use of the plant in the country – either for medical and or recreational purposes. Many are doubtful that any legislation will pass formalizing the inevitable in the near future (one attempt has already been killed), but one can never know these days. This is an issue that perennially takes countries and politicians by surprise as populations warm quickly to the concept of medical reform.

That said, so far efforts to formalize the ruling into law have been slapped down by the center right Forza Italia Party. Further, if a right or center right coalition comes to power in Italy as widely expected, it is likely to try to overturn the court ruling legislatively which has been described at least in such circles as an “absurd verdict.”

It is important also to understand this distinction if not label and how it translates both internationally and domestically.

In Canada, reform was championed by economic liberals (who are basically centrist, globalists if not free traders) and libertarians more than any other label. However initially, reform was driven not by political campaigns but rather a national challenge to prevailing cultivation law at the supreme court. This then became the legal basis for reform legislation of both the medical and recreational kind.

In the U.S., cannabis reform is frequently championed by states’ rights advocates, who are from a European perspective, extreme right wing. Right down to opposing the federal imposition of not only civil rights but other kinds of regulatory law. Including in this space. This also includes absolute hostility to anything resembling “national” if not “single payer” federal healthcare.

The two issues obviously overlap, intersect and create many strange juxtapositions if not outright contradictions and paradoxes. And many strange bedfellows.

This disconnect of course is also what has held back a united front on passing federal reform no matter how much this has allowed recreational to now spread to 11 American states as of January 1 this year. As a result, for now and certainly for several years after the next presidential election, barring a surprise realignment of politics in the U.S., there is unlikely to be any progress on federal reform. But in the U.S., cannabis legalization is a “purple” issue. Trump, for example, still opposes any national change – although if the election is tight, look for a lot of promises from both sides.

Across the Atlantic however, what Italy’s new judicial stance on the subject means for the first time, is that there is potential for a real fight on the ground from a political grass-roots front in a socially conservative European state. This is also intriguing for another reason. Italy’s health ministry also just cancelled one of Aurora’s cultivation licenses. For all the naysayers on the significance of this development, this should not be discounted.

Kind of like a Canada or Mexico moment for the continent indeed.

Not to mention what this discussion does for the CBD discussion. Both in Italy and elsewhere.

Look Homeward Deutsch Angel

Advocates across the continent if not the UK, are of course, also watching closely. Germany in particular, tried to avoid this exact discussion three years ago, but it is unlikely that advocates at least, will let this continental victory rest. Starting with the fact that this is a debate that was firmly shut off in 2017 with the passage of the medical cannabis insurance coverage law to widespread patient frustration and huge patient issues with access ever since. Even though, in fact, Guenther Weiglein, the German patient who brought the suit, took it as far as he could legally. His right to domestic cultivation, along with the few patients who managed to avail themselves of the same right before the law changed, are no longer allowed to do so.

european union statesSo of course, beyond charging the debate in Italy, this development will also increase pressure in Germany (for starters) as well as other European countries to reconsider what so far at least has been verbotten and largely because of Germany’s lead so far.

Even in places like Holland, Denmark, Portugal, Spain and Greece, the domestic cultivation discussion has been off the table. Luxembourg, and just outside the EU, Switzerland, has not raised this prospect.

That may well change in all of these countries plus others as the clock now starts to tick down to the end of 2021.

Regardless, early predictions about the pace of change as well as the size of the markets have largely been wrong.

So, for all the intriguing possibilities, this is not a slam dunk, but certainly a strong charge down the court in the right direction.

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Aurora Medical Cannabis Flower Unavailable In Germany Pending Review By Authorities

By Marguerite Arnold
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For now, at least, Aurora is AWOL in German pharmacies.

Sources who did not wish to be identified from apothekes here confirmed to Cannabis Industry Journal that Aurora product was currently unavailable throughout the country. The same sources also confirmed that Aurora contacted them about the suspension.

The fallout over less than quality cannabis entering at least the Danish and German markets, as reported by CIJ repeatedly this year, continues to make waves, globally. This newest development seems to be a step up in seed to sale inspections of late as a response from governments who have to deal with normalizing cannabis laws and different standards no matter what else is going on.

That this development also comes on the heels of not only the scandals at CannTrust and Hexo (both Canadians with aspirations in the EU), but many reports on the ground from distributors and pharmacies in Germany of mouldy if not pesticide tainted cannabis ever since 2017, is also significant.

Substandard product is clearly coming from somewhere.

As CIJ also reported, this issue also appears to have flared between Holland and Poland this year right before Italy also cancelled one of Aurora’s cultivation licenses lately on the grounds of GMP compliance this fall.aurora logo

High Quality Supply Chain Issues Are In The Room

This newest development with Aurora is the first sign that German authorities at least, appear to be taking notice.

As Marijuana Business Daily is reporting, the review is of a “proprietary step” in the production process related to a method used to ensure the shelf life of flower cannabis. Aurora has stated in return, that their “products are sourced from an EU GMP certified facility and are safe to consume.”

Sourced or not from a certified facility, the devil, when it comes to EU GMP, is in the details at the source. Not to mention the product on the ground as it ages. And those particularities, on a global level, are still being worked out in a process known broadly as “harmonization.”

When it comes to the cannabis industry in particular, this is also very much in the room thanks to two large treaties with North America of late. Namely CETA, the broad trade agreement between Canada and the EU, which, among other things replaces the old MRA pharmaceutical agreement that existed previously. And of course, the EU-US MRA agreement, which came into full force this July.

As the discussion between Poland and Holland this year demonstrates clearly, one country’s definition of GMP even within the EU can differ.

Product grown and processed in a foreign third-party country, no matter the designation of the actual facility itself in this environment, is bound to get a review. Especially cannabis from Canada.

Put in context of the market itself, this is even more significant, especially given Aurora’s presence in the German market not only as provider as the holder of most of the licenses (5) awarded to three cultivators – a title won with lots of blood on the ground. Not to mention many casualties – including of course the first tender bid itself.

Will This Impact The German Cultivation Bid?

In the current environment, with Aurora announcing retreats on construction in progress just about everywhere, both in Europe and at home, this could easily also be a warning shot across the bow by German authorities.

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Photo: Ian McWilliams, Flickr

While the hijinks of the cannabis industry seem to get a wink and a nod just about everywhere else cannabis reform has come, that is not true on the ground here. Further, Germany very much is a land of laws and regulations. And the average German, no matter how much they kvetch about the same, has by now more or less accepted that medical cannabis that can help very sick people get better is ok. The issue of who should pay for it is another question. Regardless, none of the cannabis in the market here is what could be termed as “cheap.” The idea that such medicine might be of less than required medical quality is one that is, as a result, indefensible.

While nobody (so far) has come forward to the press from the patient side with proof that can be validated, there have been distributors and pharmacies discussing issues surrounding the quality of product for some time now too. None want to be quoted for this story, but the noted focus on seed to sale quality issues by all of the big producers (see Aphria of late as just one example), are clearly a response to the same.

It is also unlikely that Aurora will lose its cultivation licenses in Germany – although again, this review by the German government also may be a second look into the company’s finances and ability to build a high-class facility in the country capable of producing the five lots now required.

Their inability to service this contract seems unlikely on financial grounds, no matter how retrenched Aurora has been of late.

Given the current environment, however, the events of the last six months, and the reality on the ground, this latest inspection seems to be an almost inevitable warning shot across the bow to not only Aurora but all cannabis producers at a time when the first German cultivated medical cannabis (see ICC) is now in pharmacies.

Not to mention high quality product from other parts of the world. If the Canadians can’t cut it, the message seems to be, there are others who are now stepping into the ring who can.

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Italian Government Cancels One of Aurora’s Licenses

By Marguerite Arnold
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Aurora has just faced a rare setback in Europe. The Italian government has cancelled one of three tender cultivation lots to supply Italian patients it granted Aurora this summer (in July).

Aurora was the only company to win the bid after other companies were disqualified.

For this reason, the high-level parliamentary attention to the bid this fall is even more interesting. Most foreign cannabis is being imported from the Netherlands and Bedrocan. While Wayland (ICC) and Canopy are in the country (Wayland has established production facilities for CBD in fact), Aurora was the only foreign Canadian cannabis company to actually win government issued, cultivation slots.

What Is Going On?

In July, Aurora won the Italian bid, beating out all other companies for all three lots.

aurora logoYet in September, the third lot, for high-level CBD medical flower, was cancelled by the Ministry of Defense which oversees cannabis importing and production, for an odd reason. Specifically, the lot was suddenly “not needed.”

As of October 31, the Minister of Health responded to parliamentarians who wondered about this administrative overrule by saying that the rejected lot (lot 3, for high-level CBD) was in fact rejected because stability studies to define the shelf life of products were not being conducted.

EU GMP Standards Are In The Room In Europe

This is not really a strange turn of events for those who have been struggling on the ground in ex-im Europe to learn the rules.

For at least the second time this year, and possibly the third, a national European government has called stability tests and the equality of EU-GMP standards into question. As Cannabis Industry Journal broke earlier this fall, the Polish government apparently called the Dutch government into question over stabilization tests (albeit for THC imports) during the February to September timeframe.

european union statesIt is still unknown if there is any connection between these two events although the timing is certainly interesting. Just as it was also interesting that both Denmark and Holland also seemed to be in sync this summer over packaging and testing issues in July.

Aurora and Bedrocan are also the two biggest players in the Polish market (although Canopy Growth as well as other international, non-Canadian cannabis companies are also making their mark).

What is surprising, in other words, is that countries all around Germany are suddenly asking questions about stability tests, but German authorities, still are notably silent.

Why might this be? Especially with German production now underway, and imports surging into the market?

Is This A Strange EU-Level CBD Recreational Play In Disguise?

There are no real answers and no company is talking – but in truth this is not a failure of any company on the ground, rather governments who set the rules. If there are any cannabis companies in the room at this point who are not in the process of mandating compliance checks including stability tests, it is the governments so far, who have let this stand.

Notably, the German government. Nobody else, it appears, is willing to play this game.

Further however, and even more interestingly, this “cancellation” also comes at a time when novel food is very much in the room in Italy. Namely, it is now a crime to produce any hemp food product without a license. There is no reason, in this environment, why a national cultivator could not also produce locally a high-quality, high-CBD product for the nascent Italian medical market.

While nobody is really clear about the details, there is one more intriguing detail in the room. The government may, in fact, allow medical cultivation now by third parties.

Alcaliber Spinoff Linneo Health Gets Greenhouse GMP Certification In Spain

By Marguerite Arnold
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As the industry faces what is undoubtedly a watershed moment for the international cannabis vertical, a new Spanish firm steps into the market with its own EU GMP certification license. Linneo Health is also helmed by the ever eloquent and highly experienced Jose Antonio de la Puente – a tall drink of water with a conscience, a brain and an admirable mission statement.

As Cannabis Industry Journal broke in our last story, a lack of international standards in Europe have been on trial of late. The same day that the CannTrust scandal began to blow in Canada and as Danish authorities rang global alerts, the only qualified packager in Holland was issued a new EU GMP cert. That is a government decision, not a commercial one.

This also implies, at minimum, government lack of coordination and agreement on EU GMP cert even between European nations, for a nascent industry while also trying to avoid the thorny issue of patient home grow. See also the trials and travails of the erstwhile German cultivation bid and its reconstituted Frankenstein-esque bigger if younger sister. In fact, this contretemps is almost certainly involved if not indirectly to blame.

Not All Is Entirely Rosy On Cannabis Europe’s Eastern Front

Almost simultaneously to Linneo Health’s announcement, however, the news came that in Poland, authorities had suspended the pending product registration process. Will this be on hold until after the October election?

In this environment it is almost impossible to know.

Here is one thing to consider. These almost simultaneous developments in Spain and Poland and the newest announcement about further certification of the Dutch recreational system under a new pending “recreational trial” are almost directly related.

That said, even such political maneuverings are not new – and far from limited to any single company. Both Germany and Poland have been wracked by reform stuttered by short term gain and market entry strategies executed by most of the biggest players in the room. Aurora, for example, announced their first import into Poland the same day the Polish government changed the law last fall. Aurora uses Germany as its breakpoint distribution center for Europe.

A Stamp of Authenticity That Is Sorely Needed

Beyond the pharma and market entry politics, however, this Alcaliber-helmed project creates a ring of authority to the same that creates at least one cannabis brand the European medical community can see the certification for.

For now at least, certainly among the ranks of the upper echelons of the international cannabis industry, there must surely be a sigh of relief.

EU GMP certifications (in other words, the authorization to produce product bound for a medical, pharma market) do not happen overnight. On the European front, this is surely at least a step in the right direction for an industry embattled by scandals, particularly of the securities, production, certification and accounting kind right now.

In this case, however, it is also clear that no matter the egregious oversteps and potentially illegal and certainly dubious behaviour of some members of the industry, there are also clearly those within it, and at high levels, who have tried to do the right thing. And further, from the beginning of the nascent industry here as of 2015.

Who Is Alcaliber?

Alcaliber is one of the world’s largest opioid manufacturers. Unlike American counterparts, the company decided several years ago to invest in and back ideas of the opioid-to-cannabinoid therapy model. Linneo Health is a 60% subsidiary of Alcaliber and 40% owned by a Spanish family office called Torreal, S.A.

This is, as a result, one of the most important GMP licenses in Europe at the moment if not the world. It means that within a pharmaceutical environment, the first widespread research and production of plants and therapies for those suffering from both chronic pain, plus neurological and oncological conditions that cause or are related to the same, will be put on a fast track long in the offing. Certainly in Europe.

And that for one, is a positive development that will have widespread implications elsewhere. Particularly given the news that the opioid epidemic in the United States finally has a name, and culpable parties.

What Else Is Unusual About This Project?

GMP certification is a vastly misunderstood concept at the moment. It is also a highly thorny one because of a still standardizing set of agreements. The regulatory environment is in place, in other words, but there are many, many gaps, as well as shifting rules and underlying treaties.

GMPHowever, on top of this, there is also an amazing lack of innovation in interpretation, in part because of many misadvised consultants who are actually seeking to “save” production costs for their clients, or because they do not know any better. Or because producers are scared of doing the wrong thing.

The new project in Spain is unusual because it is a greenhouse grow that got EU GMP cert – although look for more of this in the future. It means that with careful, standardized, pharma production, not all regulated cannabis grows, even for the medical market, have to use huge amounts of energy in repurposed post-industrial developments. It is also certainly cleaner than growing outside. And, when done right, saves huge amounts of water.

Cleantech, in other words, has finally hit the cannabis industry in Europe. As well as a pharmaceutical company invested in the cannabinoid treatment of (at least) chronic pain.

That is an overdue and hugely positive development. No matter what else can be said for shenanigans engulfing the rest of the industry at the moment.

Marguerite Arnold

Canopy Growth Makes Multi-Billion Dollar Conditional Acquisition Deal

By Marguerite Arnold
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Marguerite Arnold

The first German cannabis bid may have come to an end more or less, and with a whimper rather than a bang (not to mention the inevitable still-to-be-settled legal challenges). However even as the dust settles, one of the biggest “names” in cannabis and the company formerly expected to win at least a few of the tender lots is looking elsewhere.

Namely Canopy Growth, which was a finalist in the first round of the tender, has not shown up as a finalist firm in Germany this time (at least not so far).

However, it is clear the firm has other intentions afoot, namely U.S. expansion.

In an unprecedented move, Canopy announced its intent to buy the largest U.S. based producer of cannabis, a firm called Acreage Holdings, just before Easter. The conditional deal is being consummated in both cash ($300 million) plus stock swaps, and will not finally close until federal reform has come in the U.S. In fact, the deal makes the bet that the entire issue of U.S. federal reform will be solved within the next decade.

Canopy_Growth_Corporation_logoIn the meantime, however, what this also does is place one of the world’s largest cannabis companies in the middle of what is largely seen as the world’s most valuable overall cannabis market. Further it does so in an environment where the company benefits from Acreage’s considerable market and political clout. Former speaker of the U.S. House of Representatives John Boehner (a fierce opponent of legalization until it was personally convenient and profitable) is on the board of Acreage.

But there are those who might still be confused about why this deal happened. Canopy after all is fond of saying that its first focus is the “more valuable” medical rather than recreational market. And the U.S. market has many challenges still, that stem from a lack of federal reform. In fact, Canopy has frequently said in the past that they would not enter the U.S. until federal reform occurs. What gives?

What The Deal Also Does…

It is not “just” entry into the U.S. recreational market, albeit still on a state level that is significant about the deal. That starts with its timing.

When trying to understand the motivations of Canadian cannabis companies, especially ones who have eschewed the U.S. market in the past (at least until federal reform passes), it is also necessary to understand that they operate in a shifting world of global strategy that is never as straightforward as one might think. And often has nothing to do with cannabis per se.

Namely, while this deal places Canopy in the middle of the U.S. state industry it also does something else. It positions Canopy as a U.S. producer just two months after a new international pharmaceutical trade deal went into force (on February 8) called an MRA.

MRA agreements, also known as Mutual Recognition Agreements, are essentially trade deals between countries to accept the equivalency of their pharmaceutical production and supply chain.

On the cannabis front, the existence of MRAs between existing countries as cannabis has become legal, has also largely dictated the new international cannabis trade (see Canada and Germany as a perfect example) although this has been held as a closely held secret by the largest cannabis company executives (some of whom have previously denied that this was driving their expansion across Europe).

However, thanks to the agreement on this MRA in February, as of July of this year, Europe and the U.S. will formally kick off a situation where the European and therefore German health authorities will formally recognize American GMP processes.

That means that on the pharma front, Canopy has also essentially re-entered the European market, albeit by a bit of a backdoor. It also means that Canopy can immediately start to import cannabis drugs at least, made in the U.S. into the European and by extension, German market.

Cannabis drugs have been going in the opposite direction across the Atlantic to the U.S. for at least a year now (see the GW Pharma’s Epidiolex adventure last year). And further over the U.S.-Canadian border if now only bound for academic research (see Tilray).

It also may mean that they can import medical cannabis itself to be used as “medicine” or processed into one in Europe.

Does This Mean That U.S. Federal Reform Is Imminent?

Not necessarily. In fact, keeping the U.S. market in general out of the global cannabis trade, while allowing the top companies to participate both in the cross-state market and the global pharmaceutical one benefits the biggest companies. Conveniently, this also allows U.S. cannabis “pharmaceutical” producers to enter the EU in force just as Israel is expected to (third quarter this year). This also puts the “deal” U.S. President Trump and Israeli President Netanyahu cut on the subject to delay Israeli sales in an entirely new light (and one that should outrage both Americans and Israelis in the industry on this front even more). Not to mention every European hopeful producer unaware of the larger game afoot.

That said, what federal U.S. legalization will do is drop the operating costs of the larger U.S. entities now engaged in multi-state operations.

Cannabis in other words is not likely to be legalized in the U.S. before the next presidential elections for reasons that have everything to do with the profits of a few – and for that reason will certainly be a major theme in the next national political race.

And in the meantime, the biggest companies, Canopy included, are not only laughing all the way to the bank (although their shareholders are another story), but setting themselves up to be at the ground floor DNA of the global cannabis business as it establishes itself in every country of the world.

Marguerite Arnold

Countries Take Lessons From Others On Legalizing Cannabis

By Marguerite Arnold
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As the German bid fiasco proves, and in spades, there is no easy transition out of prohibition. As of this April, it will be two years since the German Cannabis Agency issued its first cultivation bid. Since then, the first attempt went down in legal flames (in court) and the agency in charge, BfArM took an embarrassing hit for committing a “technical fault.” As of April, the second issuance gets its day in court. And then presumably, hopefully, cultivation can start to get going.

However, the German cultivation bid is far from the only time that government officials and regulators have created canna Frankensteins. In every legalizing market so far, in fact, from Colorado’s recreational start in 2014 to Canada, lawsuits, flubs and mistakes have been the order of the day.

There is a growing debate in Europe over how the cannabis industry should be allowed to flourish.States throughout the US continue to model their legalization frameworks off of states that have already done so. No wonder, then that as legalization rolls on, other countries are beginning to study the early movers- for tips on what to do and what to avoid.

New Zealand Takes A Look At Portugal

New Zealand is widely expected to become either the “next” country (or the one after that) to fully legalize recreational cannabis. Further it plans to do so during a national election (presumably ahead of the U.S. but that will be interesting to watch). New Zealand has jumped the gun already and put it on the electoral agenda.

That leaves the Kiwis with at least another 18 months to consider how they might pull it off. Don’t forget, it took the Canadians that long, with one failed initiation date last summer that was pushed to the fall. And that was with a medical market that was already three years old.

As of this month at least, New Zealanders are looking at several options, Portugal being one of them. Portugal gained distinction by decriminalizing all drugs at the turn of the century and has not looked back.

The country has seen a steady decline in all the bad stuff associated with the black market. Overdoses, drug crime, teen use and HIV infections have all dropped dramatically.

That said, for all Portugal’s forward motion, nobody else, yet, has quite followed suit.

Decriminalization, it should be pointed out, is also only one of the many issues facing a national change in policy. As Canada knows well.

Luxembourg Takes A Look At Canada

The Greens in Luxembourg certainly made news last year when they announced that recreational cannabis legalization was on their five-year legislative plan. In a tip to both U.S. and Canadian discussions about how legalization can increase tax revenues, Luxembourgers are also clearly looking at how to follow suit.

Auroraaurora logo cannabis so far has the only distribution agreement inked with the country to provide medical supplies, but it is unknown at this point whether Luxembourg will be content to merely import or grow its own.

One of the biggest problems Europeans will encounter immediately in looking at the Canadian transition to recreational use is that the government literally had to mandate an additional five-year period for medical use after the beginning of the recreational market. So far, at least, Luxembourgians appear to want to do this the other way around. They have already created a multi year test and study program for medical uses of the drug.

A Big Difference In Approaches

There is a growing debate in Europe over how the cannabis industry should be allowed to flourish. On one end of the discussion who see no issues with the North American model of public companies, in particular, having the greatest influence over the shape of the industry. But this is not the only discussion in the room at this point, particularly given the huge head start the Canadian public companies now have in the rest of the world.

In places like Spain and Thailand, for example, politicians are also starting to bring other models to the fore- including protectionist policies around domestic cannabis production.

Regardless, compare and contrast is a trend that is still in its infancy as the market leaders struggle with the implications of half-baked policies and those who follow seek to emulate the successes but avoid the mistakes.

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European Moves Signal Green Spring For Cannabis

By Marguerite Arnold
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It is hard to believe that two years have passed since the German government changed the law to mandate insurance coverage of cannabis by public health insurers. It is not so much the passing of time, but what has and what has not happened here on the ground during this stretch.

This is borne out by a quick overview of regional developments just in the last few weeks on the ground across the European Union.

Germany

The country that is still given credit for kicking off the whole medical cannabis enchilada discussion on a formal, federal level in Europe, still has not issued its first domestic cannabis cultivation tender. It will be two years this April since the initiative was first announced. Since then, several lawsuits have derailed the process, BfArM, the federal agency in charge of the tender, has admitted to a “technical fault,” and, presumably after the next round in court, the agency might be able to get on with business. The next date of note is April 10 (when the lawsuit will be heard in Dusseldorf).

german flag
Photo: Ian McWilliams, Flickr

Hopefully, this also means that the domestic cultivation of cannabis will finally begin (according to the agency) by, at latest, the fourth quarter of 2020. In the meantime, look for the awarding of bid finalists (or in the worst case, one more bid issuance after April) this year.

In the meantime, and even according to BfArM’s press statements, the import industry will fill in the gaps- meaning that by the time cultivation actually gets under way for real here, it will already be swamped, in terms of volume, by imports.

Where those imports will come from is another discussion. Right now, the only two countries with import rights for cannabis into Deutschland are Holland and Canada. Expect that to change this year, with Israel, Portugal, Spain and potentially even Greece all being very likely contenders.

Switzerland

Significantly, this tiny, non-EU but Schengen state is considering a pilot to study recreational cannabis. Namely, 5,000 recreational users could soon be recruited to help the government set the rules for a fully recreational market, presumably sometime in the near future.

Switzerland has led the discussion in the region on several fronts- notably setting the pace on CBD sales and continuing to air debates about how profitable the fully recreational industry will be for the public purse.

Bern, the capital of Switzerland
Photo: martin_vmorris

It is all very intriguing, particularly to neighbouring DACH state, Germany, but don’t expect the Swiss to do anything too outrageous on the legalization front- namely step too far out in front of either the UN or the European Parliament. Or anger their other DACH trade partner, Austria, who has taken the extreme polar opposite approach to all things CBD.

So to the extent that the Swiss have very much led the charge on the CBD front, such policies have not and will certainly not be copied across Europe (and has not been so far) any time soon. See the controversies over “novel foods” popping up not only in Austria, but Spain too.

Regardless, like Luxembourg, the Swiss are eyeing this new industry and proceeding cautiously in line with larger, international regulations that so far have led the pack on tweaking, testing and presumably changing in the next couple of years.

There are at least 200,000 people who currently use the fully leaded THC version of the drug illegally. Those who would qualify for the pilot study (only one of several proposed as the country considers the impact of cannabinoids from all angles) would have to be adults who already use the drug.

Stay tuned. This will certainly be one interesting trial.

Belgium

Belgium has also just announced the formation of its own “Cannabis Agency.” The new agency will, just as in Germany, oversee the development of the industry domestically- namely issuing licenses for production and import and overseeing quality.

Does this mean a Belgian cultivation bid is on the horizon? Could be. Although so far, no country except Greece has engaged in any large-scale cultivation effort commissioned by the government. And no country except Germany has so far issued a public tender. Even Italy proceeded with a unique hybrid last year when the military essentially turned over the domestic production it controlled over to Aurora.

This too is also likely to be an interesting space over the next few years.

A Belgian tender, right along with a Polish one (also expected after BfArM successfully executes at least one) may well be in the offing this year. This may also put additional heat on the German agency to bite the bullet and issue cultivation licenses by the end of 2019 no matter what happens in Dusseldorf in April.

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Where Is The German Cultivation Bid?

By Marguerite Arnold
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For those following the German cultivation bid drama, there appears to be a real light at the end of a now two year tunnel– driven by a domestic demand that essentially requires that there be no more delays.

Then again, given developments so far, who knows really what will happen in April. It could be a whole new “fresh start” for a much-beleaguered process or it could just go down as yet another “train” on the basis of a “technical fault.”

One thing is for sure: BfArM again appears to be cautiously optimistic. Yet they have been there before, too. Yes, there is a rising patient count. But there are also now many other import options and cheaper prices coming into the EU. As a result, there is still the likelihood, however implausible, that the German government will want to kick this can a bit further down the road.

German Parliament Building

What is the newest development? In late January, BfArM, the German equivalent to the FDA and the agency in charge of oversight and regulation of all medicines and medical devices, issued a press release about the status of the cannabis cultivation bid they are tasked with overseeing.

If things are not taken off track by the next still pending lawsuit (due to be heard by the high court in Dusseldorf on 10 April of this year), the agency will award the bid. Not before, as the press release also states categorically.

The Highlights

There is no award date yet of course. However, if the court case is decided in favour of BfArM this time (namely defending their exclusion of a bidder even though the deadline was delayed again for seven weeks last fall), there is reason to believe the public airing of that final list of license holders will be released soon after. That means the bid decision could come as soon as the next day and certainly by the end of April.

There were over 200 questions asked of the agency this time by around 79 bidders who submitted a total of 817 bids for a total of 13 cultivation lots. No more than five lots can go to any one bidder or consortium.

The amount to be cultivated under this first bid is 10,400 kg over four years (up from the first amount). Even this is expected to be too low to meet a clear and increasing domestic demand. That said, there is clear expectation that the remainder between what is cultivated domestically and consumed will be taken up by imports (although from where was not explicitly discussed).

The agency also stressed that they are responsible only for the administration of the tender itself. They will not receive, store or redistribute the cannabis or cannabis products. Further, BfArM also stressed that they are not responsible for the regulation of the final retail price at pharmacies.

Finally, the target date for the delivery of the first crops is a conservative estimate which says two things. One, BfArM are not tipping their hand in favour of Wayland (who at present has the largest licensed GMP facility in the country), and second, they are leaving themselves and bid respondents a little more wiggle room. Just in case. For whatever reason.

As the bid states, successful respondents do not need to have suitable real estate under contract until the finalists are announced, but if they are awarded the bid, they will have to not only move fast to secure a facility, but also set up a grow facility that can be certified in the next interim period.

By way of contrast, Wayland announced its purchase of the Ebersbach facility in the summer of 2017. They have just received, 18 months later, their GMP certification. Anyone starting from scratch, in other words, would have to move at least as fast as Wayland has. If not a bit faster, considering that Wayland is already up and running, and at this point certified.

Between The Lines

The entire cannabis legalization discussion has been caught up in the cultivation bid since the beginning. Patients in fact, lost their temporary right to grow if they could not afford the expensive cannabis being sold in pharmacies before 2017. After the law changed, only licensed and regulated operators were allowed to distribute the imported variety and then only from Holland and Canada.

Since then, the first cultivation bid went down in a legal challenge, the price of cannabis at the retail end has effectively increased at least 1,000 euros a month and there are as many as 80,000 German patients taking some kind of cannabinoid, mostly for chronic pain.

It is insurers, in other words, at least as much and now more than patients who are now on the sharp and expensive end of the stick.

Then again, until the actual announcement from the Dusseldorf high court if not BfArM itself, expect late breaking developments and drama until the very end.However, the interim frustrating period auf Deutschland plus the continuing needle of political reform just about everywhere (certainly in Europe) has changed the scenery dramatically in just two years. There are cultivation operations in Spain and Portugal with crops ready to be exported to the German consumer. Eastern Europe and Italy are also cultivating. Greece is preparing to. And Israel finally allowed its producers to jump into the medical game globally.

Prices will inevitably come down. The German government and insurance industry beyond that are two powerful drivers to insure the same. And a big part in bringing that price down is setting a bid reference price to begin with.

The situation, in other words, is being staged to move into the next “four-year plan” where Germany begins to understand how widely effective cannabinoids can be, for what conditions and what kind of delivery mechanisms work best for different patients.

It also aligns the country’s medical program perfectly with Luxembourg’s own four-year medical trial and now stated timeline of ensuring there is recreational reform by 2022.

All of which, in other words, also spells victory and potentially the end game to the first part of the German medical cannabis cultivation question and a larger first step for the EU beyond that to finally end medical cannabis prohibition.

Then again, until the actual announcement from the Dusseldorf high court if not BfArM itself, expect late breaking developments and drama until the very end.

Stay tuned.

Luxembourg’s New Ruling Coalition To Legalize Recreational Cannabis

By Marguerite Arnold
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Stand aside Canada! Events are moving in a strategically interesting way in Europe. And for once it is not news of the German bid.

In this case, implementation of the decision in Luxembourg would actually have two immediate effects.What, where, when? Luxembourg’s new center-left coalition of the Greens, Socialists and more traditional Democrats have put recreational cannabis on their ruling mandate and five-year agenda as of November 29, 2018.

In the comments of the same at the press conference held last week, the sentiments were pretty much of one tenor: “It’s way overdue.”

What does that mean, however, for the rest of the conversation across the continent?

Luxembourg: The First Recreational “State” Market In Europe?

While local advocates are quick to say that their ambition will make them the first EU country to completely legalize recreational cannabis, this is mostly true, but not entirely.

As much as it is fashionable these days to diss Holland, the fact of the matter is that the Dutch pioneered just about everything about the modern movement except clear cut regulation. Coffeeshop envy being what it is, however, it is true that the historical marker of the Dutch market was grey areas. That, however, has been in shifting territory for the last four to five years however. Hard as it is to believe that in just 2014 the Cannabis Cup held its last expo in Amsterdam. How the world has changed since then!

There is also this fact: Switzerland (true not an EU country but just next door geographically), is also poised to use this excuse to make its next move to fully leaded THC. The country has seen a sharp uptick in the consumer, OTC CBD market over the last two years. So much so that foreign (read American and Canadian in particular) enterprises are now looking to Switzerland as one of the more interesting “semi-EU” entry strategies at present. Taxes on a highly profitable industry are also in the public discussion. Adding a bit of THC to the mix, in other words, is likely to come fast in other places too.

Will This Move The Needle In Other Places?

The answer to that question is also, undeniably, yes. How fast that will happen in individual countries across Europe is another discussion. See France, which is now the largest member of the EU to have so far successfully ducked the cannabis question except for some basic decrim ideas that the now embattled French President Emmanuel Macron might, finally, put some enthusiasm into backing.

This could also certainly galvanize the UK. One way or the other, to stay or leave the EU itself. Full recreational won’t be in the cards, however, for quite some time.

Sound incredible? See Brexit so far.it will create the first deliberately regulated recreational market in Europe.

Many other EU countries have also been chafing at the slow pace of reform. Even after basic medical use has occurred. See German advocates who long to follow both the U.S. and Canada, and at present are for the most part shut out of the medical cultivation process. They are simply being outbid by the large Canadians.

But how fast such reforms will come even in Luxembourg, not to mention have a knock on effect elsewhere, no matter how momentous, is still an undecided question.

What Is The Biggest Immediate Impact Going To Be?

As is usually the case in Europe, things are rarely as straightforward as one country deciding to do (or not do) something. In this case, implementation of the decision in Luxembourg would actually have two immediate effects.

One, it will create the first deliberately regulated recreational market in Europe. How fast that could actually roll out is up for debate, considering that the country only legalized medical use as of this summer. As Colorado, California and certainly Canada have proven in spades so far, recreational reform always need some kind of medical base to start with. And implementation of both kinds of markets always seems, at least so far, to carry litigation. Especially in young, untested markets. See the German bid, most recently, just across the border.

However here is the second, and far more intriguing reality that really may be key to the entire enchilada. The legality of cannabis in Luxembourg also has everything to do with the German public cannabis market. Namely, the German stock exchange will only allow Germans to clear stock purchases of publicly listed cannabis companies on the Deutsche Börse if they are in line with not only German cannabis law but also that in Luxembourg, where they actually clear. That was a big issue this summer, only rectified when Luxembourg first changed its medical law.

It also meant, as of this fall, that Aurora went public in New York, not Frankfurt.

In the future, however, after Luxembourg goes full recreational Monty, this will no longer be the case. This will already be tested next spring as another company hopes to go public here. And when that happens, although certainly not for the next several years, the entire discussion of recreational reform will fully and finally be in the European room.

european union states

Q1 European Cannabis Industry Update Report

By Marguerite Arnold
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european union states

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.

german flag
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.

aurora logoIn 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.Nuuvera logo

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.

Greece

Parthenon, Athens, Greece
Photo: Kristoffer Trolle

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.