The Cannabis Industry And Post Covid Recovery In Europe
The cannabis industry in Europe is about to get a big shot in the arm. That starts in Germany, where companies are hiring at a pace not seen, ever. The companies now in this space from a production and distribution perspective, are on the front lines of government incentives and bailouts because they are, by definition, regulated pharmaceutically certified companies with federal licenses.
In Germany at least so far, there is no discussion of kurzarbeit, the German term for the shortened weeks the government subsidizes even for public companies in times of severe economic turndown. German cannabis companies just don’t need it. Business is too good. They are all too busy hiring. And in the cannabiz here, perhaps influenced by discussions abroad, but certainly also by digital health solutions domestically, the entire industry is expanding. Literally incrementally.
While the jobs that appear from the largest companies at least are for highly qualified personnel with skills that also require certification outside of the industry itself (see doctors, pharmacists and medical sales professionals). Not to mention lawyers. And of course, digital skill sets, from programming, to SEO are increasingly in hot demand.
Just like they are increasingly other places. A recent industry study found that there are likely to be more jobs within the cannabis industry than in IT in the United States by the end of the year. That is unlikely to happen in Europe, much less Germany. Nevertheless, highly skilled IT workers are needed everywhere for this industry to grow.
That however, is one of the few similarities that the industry has in Europe to other places. And that also spells good news for companies in this sector.
Prices Are Dropping
The other good news is that prices are finally beginning to drop in a country where cannabis has been, theoretically, available, to the 90% of Germans who have public health insurance here. That the numbers have remained so low has more to do with insurer reluctance to cover the high costs of the past, not to mention doctor’s basic reluctance to prescribe it.
That is not the case for the privately insured. While it may take awhile to find a doctor, in the larger cities, most pain specialists by now have heard of cannabis. If you present a convincing case, obtaining the prescription is certainly not as hard as it was. However, because the cost of legal cannabis is still at least one third to twice the price of what is available on the black market, this whole segment of medical users is currently in a tough place. As this begins to change, however, it will have a direct impact on overall sales. That is now clearly coming if not given a big helping hand this spring as Germany changed the complicated process of reimbursement and reminded the production community that any overages beyond the original contracted amount under the bid have to be also sold at much lower prices.
At a price of 1.87 euro a gram wholesale, in other words, this market is finally starting to normalize, although look for more of this trend. And this too will have an impact on overall sales, if not the growth of an industry to deliver the product in the first place.
Recreational Reform Is On The Agenda
Despite all the fuss about certain cannabinoids beyond THC in Europe right now, notably, CBD, there are also clearly new notes now heard, albeit faintly in the melody of reform in Europe. Namely Luxembourg is going full Monty recreational in about 18 months. This, plus presumably other international influences from within Europe (see Holland, Denmark and Switzerland for starters, if not Greece, Spain, Poland, Italy and N. Macedonia beyond that), the UK and potentially New Zealand, means that the entire conversation is now opening up.
While this is unlikely to lead to coffee shops in Berlin in the next several years, over the border, Dutch establishments are going to be a lot more regulated. This too will have an impact on the discussion in Germany about greater access, lower prices and a final end to prohibition.
This journey in other words is still in process. The train in some ways, is actually only just leaving the station.
How Do Post Covid Relief Funds Play Into This?
The German government in particular, has implemented a huge packet of economic incentives and bailout supports in response to Covid. There are a number of ways firms that are already established as well as start-ups can begin to avail themselves of government funds (including in the form of grants, not just loans).
1. Any expense Covid-proofing a business, which includes implementing telework options, becomes a tax deduction. Right now this means that all the new firms coming into the industry can also potentially see some relief in a universe where prices are continue on a downward trend.
2. Loans, and in some cases outright investments, including in the form of tax relief, are available to any company in Germany with the right corporate paperwork, a cash flow and customers. To the extent that these tools were used to incentivize companies to invest here in the first place, this trend will only exacerbate with the growth of medical domestic consumption (at minimum). The CBD discussion will also clarify, and that too will create revenue streams that
3. There are starting to be trickles of start-up funds available, even to freelancers, and also to those who work on the strictly digital side of the industry (and not just in form of marketing and PR). The digital side of the industry in Europe is going to be big — even if complex including due to regulatory issues.
Fast Forward a Decade…
While it may be hard to see now, it is also clear that there is a role in helping to stop or ameliorate the pandemic via cannabinoid treatment. When this finally becomes proven by independent clinical trials, now underway in several countries in the world, there is going to be no stopping the development of this industry. Give it 18 months.
What is happening, now, in other words, is that the seeding of the last several years has finally taken root against a growing market and greater reform. And that is an exciting thing to see.
Cannabis reform, however, and the support of this industry is clearly on the map for economic redevelopment of Europe in the aftermath of Covid. The first signs are already here.
