Harris Bricken: A Peek at German Marijuana Legalization

Some of the details of German marijuana legalization were given over to the German press last week. Yesterday though, the government’s plan for German marijuana legalization was approved by the Federal Cabinet.

We’ve blogged about Germany’s steady progress to legalization a few times now (see here and here), and it appears that the Germans are staying true to their promise of implementing legalization in the near future. Our overall prediction is that a legalization wave is coming to Europe, and Germany will be a key player.

In any event, we now have some of the high level details of the German legalization plan. This plan will next be sent to the European Commission for a review before it goes to German lawmakers to actually put together the operative legislation.

The road to German marijuana legalization

Back in July, Germany concluded a series of public hearings around legalization with stakeholders, countries that already have legalization, industry experts, and those groups opposed to legalization. In the hearings, it sounded like the German government was hugely concerned with eliminating its illegal market. Also during the hearings, other nations attested to how their legalization experiments suffered under illegal markets.

The hearings also focused on the significant amount of tax revenue Germany could net if legalization is successfully implemented. And like all countries dealing with the issue, Germany will also need to grapple with the social cost of legalization – namely, how to prioritize safety and education amongst its youth. This topic also has been a large focus of Germany’s hearings.

German marijuana legalization: some key factors

The German government is proposing that anyone 18 years old and up may purchase and possess up to 20-30 grams (i.e., .7 ounces to approximately 1 ounce for those of us on this side of the pond) of marijuana. And individuals will be able to conduct home grows of up to three female plants. Not a ton, but at least some form of home grow is permitted.

A super interesting limitation (which we do not see here in the states for flower) that was apparently previously proposed was that the THC in all products would be capped at 15%, and if you’re 18-21 years old, you were only allowed to buy products containing up to 10% THC. However, the official German plan released yesterday doesn’t contain those limitations except for customers 18-21. Note though that the key issues paper (discussed below) is a bit vague on this point and says that the upper limits for persons under 21 are TBD.

Similar to the states, marijuana businesses will need to have minimum distance buffers between them and schools and youth facilities. Unlike our state setups here, no amount of advertising, promotions, or marketing will be allowed around cannabis products, and packaging and labeling will have to be relatively plain (and will have heavily regulated disclosure requirements).

While German marijuana businesses will need to pursue licensing to make and sell adult use marijuana, the government is also contemplating allowing for the sale of marijuana in existing pharmacies. Consumption lounges and online sales are also being considered in an effort to stamp out the illegal market in order to increase access and convenience.

Regarding taxes, which is a major pain point in America, it looks like there will be both a sales tax and a “cannabis” tax that will be based on THC content but that cannot be so high as to exceed illegal market prices. And even if Germany legalizes, its plan is not to permit foreign imports–the expectation is that marijuana will be grown in Germany.

When will Germany legalize marijuana?

Karl Lauterbach, the country’s Health Minister, released a “key issues paper” yesterday, and the world can expect to see an actual copy of the draft law probably sometime in the new year.

The downsides of marijuana legalization in Germany

It’s clear from the above that Germany is truly concerned about the illicit market within its borders and about the health and safety of its people. However, concepts like capping THC content so severely and prohibiting advertising really don’t lend themselves to successfully competing with the illegal market.

I think Germany gets it regarding the issues of access and convenience; if you make cannabis too hard to go and buy, you’re going to fuel the illegal market (and bully for them for also contemplating the use of pharmacies as well as consumption-focused locations). At the same time, Germany needs to be mindful of the applicable taxes to ensure that businesses can remain competitive while balancing the social cost of this experiment. Also, to ignore the power of international trade around cannabis is also curious. Germany can easily take a page from Canada and Uruguay to assess the actual risks of cannabis import and export despite existing international laws and treaties.

The legalization plan will now go to the European Commission for review and approval (or rejection and a re-write), and we’ll definitely be blogging about that draft legislation once it’s released next year.

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Tracy Gallegos – Partner – Fox Rothschild

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Nate Reed – CMR Real Estate Network

Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

William Bogot – Fox Rothschild

Valerio Romano, Attorney – VGR Law Firm, PC

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Tracy Gallegos – Associate Fox Rothschild

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Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

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Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
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