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Germany’s domestic cannabis industry is awaiting legalization

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An employee harvests hemp (marijuana) in a greenhouse at the German pharmaceutical company Demican’s production site for medical cannabis in Ebersbach near Dresden, eastern Germany on November 28, 2022. AFP

EBERSPACCH, GERMANY – In the eastern German countryside, near Dresden, a former slaughterhouse is now home to Europe’s largest cannabis farm.

Behind recently renovated concrete walls, German startup Demecan has been legally growing marijuana for the past year.

The company is one of the few companies in Germany to obtain a license to produce this “green gold”, which has been legal in Germany for medical use since 2017.

But the nascent industry is eyeing a bigger prize: Chancellor Olaf Scholz’s government plans to legalize the drug for recreational use as soon as 2024, which would leave it with one of the most liberal cannabis policies in Europe.

‘Ten times’

Inside the building, the scent of the plants—lined by the hundreds under yellow grow lights—is overwhelming.

“We will have the option to expand the facility to grow recreational cannabis,” Philippe Goebel, managing director of Demican, tells AFP.

The government coalition, led by Schulz’s Social Democrats, has presented a roadmap for the legalization of cannabis by 2024.

Under the draft plans, adults would be allowed to carry a maximum of “20 to 30 grams” of cannabis for private consumption, via a network of licensed stores and pharmacies.

The huge Demican complex, which covers about 120,000 square meters (1.3 million square feet), produces one ton of cannabis annually, but it has not yet reached capacity.

The company can quickly ramp up production “ten-fold” to meet the growing demand, Goebel says.

Harvesting takes place on the farm every two weeks as workers pick the flowers from the stems of the plant before drying them.

“I like this job so much, it’s not like any other,” says Sven Skoris, 34, who studies gardening alongside his responsibilities on the farm.

Demicane has no problem with hiring for its growing business, in an area characterized by an aging population and worker shortages.

“It’s a trendy product that’s generating a lot of interest,” says Goble.

“It’s a new industry, and it’s very interesting to me,” says Jana Kleinschmidt, 25, cutting papers with scissors.

In addition to its production efforts, Demecan has the license to import another 20 tons of cannabis into the country from Canada annually.

“We currently supply 55 percent of the German market,” says Goebel, who notes that his company is in “centre” to benefit from rationing.

Snoop Dogg

Germany’s recreational cannabis market is a potential business worth four billion euros ($4.2 billion), according to a recent study by Heinrich Heine University Dusseldorf.

In recent months, fundraising has taken off in the sector as companies wait for the go-ahead from lawmakers.

Berlin-based startup Cantourage, a maker of cannabis-based medicines, floated 15 percent of its shares on the Frankfurt Stock Exchange in November.

Cansativa, Germany’s only online platform for selling therapeutic cannabis products, raised $15 million in February with the help of American rapper Snoop Dogg.

Sanity Group, a German company focused on hemp-derived products, also raised $37.6 million in September.

Legalization seems like a good deal for the government, too. The same study by Heinrich Heine University estimated that the move would boost public finances by €4.7 billion annually.

But the idea remains controversial.

At the end of October, Klaus Reinhardt, president of the German Medical Association, called the plans “almost cynical”.

He said the legalization of a substance that can lead to behavioral problems in teens, as well as addiction and psychological changes, was “shocking”.

The conservative opposition to the government also opposed the move.

Bavarian State Health Minister Klaus Holiczek, who is part of the conservative CSU party, called the idea a “dangerous signal for the whole of Europe”.

First, however, the government’s plans need approval from the European Commission – otherwise they risk escalating.

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