US, Canadian pot firms eye Germany for growth as market stagnates at home

Organigram Global

23/07/2024 14:40

By Sourasis  Bose
       July 23 (Reuters) - North American cannabis firms,
facing prohibitive laws, an overcrowded market and a deeply
entrenched illicit sector at home are ramping up investments in
Germany after the country partly legalized marijuana use.
    Germany, the largest medical cannabis market in Europe,
decriminalized cannabis possession and small-scale home
cultivation in April, making it easier for doctors to prescribe
it.
    But only a few local companies are licensed to grow pot, and
U.S. and Canadian firms are looking to capture a slice of the
market by providing capital and exporting products to Germany.
    Industry insiders said this is mostly driven by problems at
home, with Canada plagued by an illicit market and oversupply.
In the U.S., allure has dimmed amid regulatory hurdles,
including a lack of timeline for federal legalization.
    "Canadian market is very challenging for these producers and
Germany is probably the largest opportunity for them," said
Frederico Gomes, analyst at brokerage ATB Capital Markets.
    Two German companies, including its largest cannabis
producer Demecan and online seller Bloomwell Group, told Reuters
they are in talks with US and Canadian companies for potential
investments, and more deals may be announced in the coming days.
 
    "We see a big movement in the global market. Everybody needs
to be in Germany and wants to be in Germany now," said Bloomwell
CEO Niklas Kouparanis.
    Canada's OrganiGram  OGI.TO  had in June announced a 14
million euro ($15.21 million) investment - 16.5% of its overseas
investments funds - in Berlin-based Sanity Group.
     A demand spike following decriminalization would further
encourage investors, with Cannabis research firm BDSA estimating
Germany's marijuana sales to hit $1.5 billion in 2024 and $3.7
billion by 2027. 
    Bloomwell said it added more patients in the three months
following reclassification, compared to its first four years in
business.
    Another draw is that Germany does not impose high taxes on
medical marijuana sales, keeping prices competitive to the
illicit market in contrast to Canada, OrganiGram CEO Beena
Goldenberg said.        

($1 = 0.9202 euros)

 (Reporting by Sourasis Bose in Bengaluru; Editing by Arpan
Varghese and Arun Koyyur)
 ((Sourasis.Bose@thomsonreuters.com;))