Full legalization on hold: Are the cannabis industry’s billion-dollar dreams bursting?

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The cannabis industry in Germany actually expected record sales. But the revised key issues paper on legalization buries that hope. In an interview with ntv.de, entrepreneur Finn Hänsel tells whether his business model is suffering and how things are going from now on.

ntv.de: The originally planned free sale of cannabis for adults in specialist shops has been deleted in the current key issues paper. How do you find that?

Finn Hänsel: From a social point of view, I am happy about the planned decriminalization. From an entrepreneurial point of view, we naturally hoped for more. The cornerstones presented last year were more attractive to entrepreneurs. At that time there was still talk of free trade. Full legalization is now a long way off. The federal government wants to test sales through licensed specialist shops in model regions for five years. This is already going in the direction of shops, but only to a very limited extent, since the municipalities can decide for themselves whether they want such pilot projects or not.

Finn Hansel is the founder of the Sanity Group. His company focuses on both medicinal cannabis and the recreational market.

How is this hurting your business?

The key issues paper does not harm our company. We’ve had a solid core business in medicinal cannabis for several years. That continues to grow. Of course we had hopes that the opening of the market would increase business. That will not be the case now. We also need to monitor whether decriminalization leads to a migration from the medical to the decriminalized field. This should be avoided, if only from a therapy point of view.

They wanted to open their own shops. That’s no longer possible.

We will see to what extent we as a company can get involved in the so-called cannabis clubs. We are waiting for the bill for that. There’s still talk of ‘non-commercial’, so I’m not particularly hopeful at the moment. The key issues paper put our entire shop strategy on hold for the time being. This means that it will only be relevant if the pilot projects actually become shops.

The plan is to test sales through licensed specialist shops in model regions for five years. Does this make sense?

I would have preferred a different, area-wide setup instead of a ‘patchwork’. If only to create a comparable data basis for checking the effects of legal sales. Germany has to be careful that the model projects don’t become too restrictive so that people have an incentive to switch from the illegal market to the legal market. I also think it is difficult that companies now have to invest millions of euros in domestic cultivation for a pilot project phase limited to five years. The import would be much more attractive for everyone involved and, in our opinion, also legally feasible.

In Canada, many cannabis companies have also failed due to the messed up legalization, despite cannabis shops. Is the German scene threatened with a similar fate?

One problem in Canada is that absolute overproduction in their own country. This is one reason why I generally advocate importing alongside domestic cultivation. There is no point in a mass of companies in several countries trying to set up a complete infrastructure. In Germany, too, there would quickly be a risk of overproduction because suddenly everyone thinks that cannabis can be used to make a lot of money. Canada has made many mistakes in legalization. In the beginning, the guidelines were too harsh. As a result, the black market could not be curbed. If the dealer brings the cannabis to your home within ten minutes, but the nearest dispensary is half an hour away, does not deliver and you are not allowed to advertise, then this is a disadvantage compared to the illegal structures.

Is cannabis production exclusively in Germany sufficient at all?

No. Under the conditions, the cannabis requirement for the model projects can only be covered by imports. Cultivation in Germany alone is not worthwhile for private providers. Pilot projects do not justify investments of several million euros in setting up cultivation facilities. The three growers that we have in Germany today cannot meet the demand. On the one hand, they only produce in small capacities, and on the other hand, they are completely designed for medical cultivation. Also, they have certain cultivation obligations that they have to cover to the government for the medicinal sector. If these three growers now start producing cannabis for the model projects, then they will also have to build up capacities.

Where is the cannabis supposed to come from if imports are banned and local growers can’t deliver?

Setting up a good cultivation in Germany takes several years and costs several million euros. So if we want to start pilot projects quickly, then we really have no choice but to also allow the import. If the import is banned, investors who want to invest in cultivation in Germany would first have to be found. This is only possible with long-term legal certainty and not based on an experiment with an unknown outcome.

A general ban on advertising should also apply to cannabis products. How do you intend to reach customers like this?

In the end, the question will be: What is information and what is advertising? When we run our own shops, hopefully word will spread that quality cannabis is on offer. If in the end there are shops that nobody can find, that doesn’t help the fight against the black market either. So I’m curious to see how clear this advertising ban really is.

How can two parallel cannabis markets coexist?

A big danger we see in Canada is that the medicinal market has collapsed very badly at the moment when cannabis has been easier to get hold of. The medical market there collapsed by up to 80 percent after legalization because the prescription is very complicated. Of course, patients then ask themselves why they should still go to the doctor when they can get cannabis freely available around the corner. A similar scenario could threaten Germany. For this reason, the prescriptions urgently need to be simplified so that this migration does not happen. On the other hand, companies must be allowed to make profits in the model projects. In order for the industry to grow and create more workers and more companies to emerge, the general economic conditions must of course be adjusted in such a way that it is also attractive for companies.

Germany isn’t the only country looking to legalize cannabis. What is striking is that there are restrictions everywhere. But people still consume, and the state misses out on tax revenue and the opportunity to become world market leader. Where does the fear come from?

The biggest limitation is international law. Even a country like Canada, which now has a large number of producers, is not allowed to export outside of the medical market. Even if we had a luxury goods market in Germany, one would probably fall back on German cultivation. This is not how a world market can develop. Actually, some countries would have to join forces to achieve certain exceptions to the Schengen Agreement. At the same time, the UN Narcotics Drug Convention would have to be revised over the next few years so that countries can legalize cannabis. If these two conditions are met and international trade in recreational cannabis would be possible, then I am sure that a relatively uniform world market will emerge in which a lot of potential can develop.

The Union firmly rejects the traffic light’s cannabis course. You are a CDU member and have been campaigning for the legalization of cannabis since 2002. Is it perhaps now the time for you to leave the party?

Before I leave the party, I prefer to try to create an open culture of discussion in the party and to enlighten people – also about the opportunities that come with it. In the end, of course, you have to put up with the question: why is the CDU, which actually stands up for freedom and against bans, so restrictive when it comes to cannabis?

Juliane Kipper spoke to Finn Hänsel



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