It's A Win-Win: Why Both The United States And Germany Would Benefit From US Cannabis Exports

By Niklas Kouparanis, CEO, Bloomwell Group

With adult-use cannabis set to be legalized by the incoming government in Germany, attention has now turned to the massive regulatory hurdles the nation will face as these new policies are rolled out. One of the primary challenges Germany’s medicinal cannabis rollout tackled in 2017 was demand that greatly overwhelmed supply. We expect that demand for the adult use market will be even greater, meaning that now is the time to begin planning for where that supply will come from. 

The clear solution to this problem is importing cannabis from other nations where it has been legalized, something that Germany already does within our medicinal market. Of course, it will be very challenging to allow exports within international law – but in Germany we say ‘Wo ein Wille ist, ist auch ein Weg’, or where there’s a will there’s a way. Ideally, one of the major markets we’d turn to would be the United States, home to some of the world’s biggest producers of the plant. However, the US does not allow cannabis exports on a federal level aside from a few very narrow exceptions. Opening up these channels and permitting international cannabis trade would be a win-win for both Germany and the US, with Germany able to obtain a reliable supply of cannabis to sustain demand, and the United States benefiting from expanded sales on a global scale.

Germany’s cannabis market will rely heavily on imports 

In the short term, demand is expected to be about 200 tonnes annually once adult use sales in Germany begin. Economist Justus Haucap has predicted that demand could even double to as high as 400 tonnes in the future. While there are plans for the government to allow outdoor cultivation in Germany, it is highly unlikely that outdoor production will be able to guarantee the stability needed to meet the expected demand of an adult use market. Germany will need to turn to other sources to keep up.

Almost five years after the initial rollout, Germany’s medicinal market still leans heavily on imports. Almost all products are imports, and only one company, Aphria, has distributed domestically. With the expected demand for adult-use sales significantly higher, we will certainly continue to rely on imports for the majority of our cannabis products. It is crucial for the incoming government to take this issue seriously as they establish policy, as a lack of adequate supply on the licensed market will only encourage people to continue turning to the illicit market. We have also learned this from Canada and states in the US, the success of the adult use market highly depends on prices being competitive with the illicit market and the sales infrastructure.

As it stands, Germany currently imports cannabis for medicinal use from various different nations, including Canada, Portugal, Uruguay, among others. Once adult-use regulations are in place, Germany will still rely on imports from these countries but will be working to meet an even higher demand. A clear solution to this problem would be to import cannabis from the United States. 

This means that federal laws in the United States don’t only impact US growers, they cut off a significant potential source of goods for Germany as well as other European nations who may move to legalize in the future. Individual American states produce some of the best quality cannabis in the world, and a lot of it.  With sky high demand this will be a massive missed opportunity for Germany if the United States does not change its tune on cannabis exports. 

Not allowing exports will be a missed opportunity for the United States

Of course, shifting regulations in a way that would allow states to export cannabis wouldn’t only benefit Germany. Currently, it is still illegal to export cannabis to other states, much less other nations. While there are minor exceptions to this rule, in general this means countries like Canada have a leg up on the US in cementing their role in the global cannabis market. 

The current regulations in the US dramatically limit the opportunities for cultivators to sell their products. In states like California, the price of cannabis per pound is plummeting due to a massive surplus of product. The price per pound has dropped to around $700, from $1200 in June 2021. In Oregon, a similar overproduction problem is persisting. The solution to this conundrum for US growers is to send this product where it is needed; nations like Germany who rely on imports.  

While US growers are still missing out on these daily profits from exports, there has been some movement on the issue recently. Currently, multiple legislators in the US have drafted or proposed legislation to legalize cannabis, and with that legalize imports and exports. In some cases, these bills even have bipartisan support. A current proposal by Republican South Carolina Congresswoman Nancy Mace would legalize cannabis on a federal level while also stripping many of the restrictions on imports and exports. Advocates for the bill have hailed it as a lifeline for cannabis growers in the US who are missing out on lucrative markets across borders. 

Should the United States allow for exports, it will introduce these cultivators and sellers within the United States to unprecedented new revenue streams. Cannabis growers in the US are already hampered by issues like difficulty obtaining funding and having to pay cash for their own manufacturing infrastructure, so missing out on a lucrative global market is yet another disadvantage facing these companies.

It’s a win-win for both nations, and the world 

In the end, a cannabis trade relationship between the United States and Germany is mutually beneficial not just for the nations involved, but for the global cannabis market. A global industry is the best solution to match supply and demand, and to guarantee ongoing innovation and high quality products while providing customers with competitive prices despite high taxes.

In Germany, if a stable supply cannot be maintained, consumers will end up paying the price. Costs will be higher and it will be difficult for German businesses to fulfill the ambitious taxes that have been proposed by the incoming government. In the short term, Germany will look for new supply sources, but the long term solution is to develop a relationship with cannabis suppliers in the United States.

In the United States, it is an opportunity for economic growth, opening up new opportunities for entrepreneurs to get involved in this emerging global market. With nations like Canada and Portugal already taking part, the US will miss out on the early mover opportunity if action is not taken now.  It will be difficult to enter the game at a later stage once global distribution channels have already been implemented.
About Niklas Kouparanis: 

One of the first entrepreneurs in Germany to successfully gain a foothold in the medical cannabis market. Niklas has built up several companies, most recently the Bloomwell Group, which also includes Europe's leading telemedicine company Algea Care and recently closed a seed funding round of over $10 million, the highest publicly known seed investment for a European cannabis company to date. Among investors and new board members is Curaleaf's Boris Jordan.