Conservative Germany preps for the possibility of legal pot
FRANKFURT, Germany — The first sign that something is different about the centuries-old former winery in a sleepy hillside German village is the door. It is brand-new and reinforced with a steel grate. Behind it, a startup has built a multimillion-dollar testing and processing facility and is getting ready to cash in on Germany’s next big wave: the possible legalization of marijuana.
“Germany is traditionally conservative and has always been politically very cautious,” said Finn Hansel, a founder of Sanity Group, the startup that built the high-tech facility, where technicians in white coats use chromatography to test the makeup of imported cannabis plants. The company asked that the exact location of the farmhouse remain a secret for security reasons.
The idea that marijuana could become legal “is still somehow unbelievable to me,” Hansel said.
Germany’s new government announced that it would legalize recreational cannabis for adults in its coalition contract presented in October. Although no bill or official schedule for a law exists yet, experts believe one will be passed within the next two years.
Medical marijuana is legal in Germany, and small quantities of the drug for personal use were decriminalized years ago, but companies like Sanity Group are scrambling to make sure they can supply a recreational market.
Recreational marijuana is legal in a number of U.S. states and in a few countries.
While the arrival of legal marijuana is being anticipated by businesses around Germany, Jakob Manthey, a scientist at the Center for Interdisciplinary Addiction Research at the University of Hamburg, warns of rash decisions.
“A huge market is being created here, and that could ultimately also be a reason — or an important factor — that will ultimately lead to the voices of scientists being considered less carefully than the voices of business interests,” he said recently.
Although he approves legalizing marijuana, Manthey said that Germany’s legal market — in Europe’s biggest economy — will have a signaling effect on the rest of the European Union, where several nations are slowly coming around to legalization.
Hansel co-founded his cannabis company in 2018 after successfully starting several conventional businesses. He said he saw a great business opportunity in legal cannabis.
Right now, the work at the converted farmhouse is focused on the medical and wellness sectors, but it is set to scale up as soon as the recreational market comes online. Sanity Group says it has received about $73 million in funding to date from international and national investors, including Casa Verde, Snoop Dogg’s investment fund, as well as more conventional investment funds.
No one knows exactly how much can be made once weed goes fully legitimate. But a recent study estimated that legalized cannabis could generate nearly about $5.7 billion annually in tax revenue and savings in policing. The study, led by Justus Haucap, an economist at the Düsseldorf Institute for Competition Economics, also estimates that legalization could create 27,000 new jobs. According to Haucap’s research, the legal market could generate demand for 400 tons per year.
The plan is to sell cannabis in licensed distribution sites, where quality can be ensured, sales taxes can be collected, and it can be kept out of the hands of minors. The most likely route, many say, is that pharmacies — which now dispense medical marijuana — continue to sell the drug.