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Suing For Growing Rights – German Cannabis Producers & The Deutsch Klage

Marguerite Arnold

December 19th, 2017

Policy

Some U.S.-based weed wits have commented over the past year that the development of the German cannabis market (in particular) is years behind American state development. And in some ways that is undoubtedly true – as much as the great green German ganja giant is ever closer to waking up and roaring.

Federal reform can open those doors. And has begun to. And when that happens, change will happen faster here than just about anywhere else than Israel or even Canada.

Why?

So far, Germany has done more institutionally to integrate cannabis into federal scheduling and dispensation procedures than any other legalizing country to date. That includes, at least in theory, coverage of the drug under public health insurance.

So what is holding up the show this time?

A great deal of this is supply. There is, as of yet, no formal German domestic cultivation program. It has been proposed, but is so far in limbo due to several legal battles. The last and most serious – which is heading towards a real klage or lawsuit – will be the oral arguments of a German team – Lexamed GmbH which feels it was unfairly left out of the grow bid consideration earlier in the year.

Whether or not they will prevail is an interesting question. And one which will linger at least until December 20 when the oral arguments in the case are heard. If not the formation of the new government after that.

Why Is The Suit Significant?

There are access issues still very much at play on the international scene and the German lawsuit is only one reflection of them. Access being defined by the right to enter the market in the first place, and then by whom?

In Canada that is coming down to the right to sell. In Germany, it is still the right to grow. In the U.S. it is still very much both.

In American states right now, the issue of state-created monopolies is a big one and will probably continue. See Florida, although this is hardly the first state where limited license distribution has been highly controversial.

In many Canadian provinces and some European countries so far, similar limited licensing schemes have now run into lawsuits. In fact, the only European governments so far, which have persisted with a government monopoly on production are Italy and Turkey.

However governments clearly have no intention of opening up cannabis production to just anyone. See Deutschland this past spring. As soon as the grow bid was announced in April, large, deep-pocketed Canadian producers immediately appeared to have been given the upper hand. The bid was written in language which specifically excluded German-only initiatives.

The big stumbling block had mainly to do with previous experience in a federally licensed production environment. That is defendable under both UN regulations and existing and pending trade deals. However, by definition, that also excluded everyone but Canadian, Italian, Uruguayan, Israeli and Dutch growers.

In practice, it actually excluded everyone but the Dutch and the Canadians.

The Deutsch lawsuit will have to convince German judges that growers with no prior experience at this level can meet medical production standards and output requirements now set by the Health Ministry. And that is going to be tough – at least this go round. Especially as it is already widely acknowledged that the official estimates of even immediately qualifying patients are far too low and as a result, the first production quota requirements are too.

However, the suit may well fail for another reason. In addition to experience, there is a need to have a large line of credit. The European market is not cheap. To build, to hire, or to operate in. And German pharma is the deep end of the ocean to begin with when it comes to regulatory process. Cultivation of cannabis has a few more wrinkles thrown on top of that.

The conventional wisdom on the ground at present is that the new government – whatever it might be – will move forward on further reform quickly. Why? It appears that the cannabis question is the only thing all the parties can agree on. That means, in short order next year, a great more clarity on forward motion.

It also means that, given the pressing needs, there will be the awarding of at least several emergency grow licenses to those external companies still interested in the original terms of the bid. However, it will also probably involve a second round of bids that in turn, open the door to domestic production. By all-German firms.

The Growth of Other Cannabis Production Centers & The Rise Of Exports

What all the fuss over procedure has also clearly done is send several firms looking for market presence to other neighbouring countries. It is not too far a stretch to say that new medical production facilities in Portugal, Denmark and Slovenia all saw their genesis this year as a result of the difficulties in obtaining a grow license in Germany.

What the delay over local production has also done is create highly beaten path for import licences instead. And those too so far, appear to have gone to not only Canadian-associated producers (and in the case of Slovenia, an Australian firm), but ones all in line for some kind of production rights as announced by the companies themselves.

Even this slight tempering of the dramatic medical supply shortage now across Europe is still not likely to delay announcement of some forward step in Germany in the beginning of the year. What it has done, however, is firmly establish the right of licensed firms to transport medical cannabis at least across country borders.

And that, no matter how sluggish, old-fashioned and outdated it appears at first blush, puts the EU light years (or at least several years) ahead of the U.S. (and even Canada) on some critical fronts.

It means that medical production is clearly kicking off here for mainstream distribution through the medical system – and across borders. It means that medical users will be the first focus of the cannabis revolution here for years to come.

No matter how “unfancy” or unbranded that might be.

And that, for all its stumbles, falls and flubs to date, is a win for not only patients, but the overall issue of reform and market development beyond that.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Marguerite Arnold

Marguerite Arnold is a veteran investigative and markets journalist, American expat and author. She has covered the cannabis industry from Germany for the last six years. Her book, Green: The First Year of Modern American Cannabis Reform about the American market in 2014 has just been republished as she is writing the sequel about Europe and the global revolution this year. Green II: Spreading Like Kudzu will be published in 2020. She is also a noted technologist and entrepreneur. Her blockchain-based digital prescription platform MedPayRx was just shortlisted by the German Ministry of Health as one of the "Top 20" use cases for blockchain in healthcare.

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