The coronavirus pandemic has taken off guard most of the countries, plunging their economies and creating chaos. However, in Germany, cannabis sales seem to be on an upward trend since the pandemic started and the market is expected to grow steadily this year. Still, the growing demand of cannabis products could have a toll in the supply chain affecting consumers in the near future.
Is cannabis as important as milk and bread? It sounds like a bad joke, but in this period, cannabis is deemed essential, at least in some US states. “This shows that cannabis is anchored in society,” said analyst Stephen Murphy, interpreting the decision of some US states to classify cannabis as an essential commodity.
Murphy’s company, Prohibition Partners, is a symbol of the hype surrounding the cannabis plant. Around 40 employees work with Murphy in London, Barcelona and Dublin. They analyze the global cannabis market, do research for business, science and politics and are independent, according to their own statements.
The coronavirus crisis has made investors, in general, more cautious. This is also seen in the cannabis sector. “The industry is still new, it needs a lot of investment in machines, technology and people. We see that some companies find it much more difficult to raise capital,” he said.
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Investors look into cannabis stocks as consumption surges during the pandemic
The economic issue is probably complicated because cannabis growers do not necessarily have a good reputation. In addition, several cannabis companies have disappeared and with them, the money of many investors. Especially in Canada the legalization of cannabis in 2018 did not bring the expected results. This is also the reason why the share prices of almost all cannabis companies are down.
“Investors have become more realistic about the potential of cannabis,” said Murphy. Many companies have slowed down their expansion plans and cut jobs. For example, the company Canopy Growth cut some of its activities in Latin America and Africa.
Since the new coronavirus outbreak, there is some good news in the cannabis industry. For example, due to the announcement of confinement, in just a few days in March cannabis companies in the United States sold almost twice as much cannabis as in previous months: more cannabis is now also being bought in Canada, while bars and restaurants remain closed.
Canada is the only industrial country, to date, where cannabis is legal in all areas. On September 19th, 2020, the public will be consulted in New Zealand about cannabis legalization. In the United States, Stephan Murphy believes that cannabis legalization will be used as an issue in the next elections. Cannabis is allowed in 33 states for medical purposes or in its entirety but prohibited by law. “No one will leave this potential voter to others, not even Trump,” Murphy said.
Sales of medical cannabis continue the upward trend in Germany
Recreational use of cannabis in Germany is not allowed. For more than three years, cannabis has been prescribed to people suffering from different illnesses. In some cases, insurance companies even pay for cannabis-based treatment. According to the figures of the German Institute for Drugs and Medical Purposes, demand has increased continuously until the end of 2019.
In total, sales of medical cannabis in Germany amounted to $130 million (€120 million) last year. This is an increasingly competitive sector as more than 50 companies now have an import permit.
Above all, the lack of protective clothing, due to the coronavirus pandemic, could have left its mark. Cannabis flowers are controlled and produced in portions in pharmacies in Germany. Since many cannabis patients belong to the risk group, all processing must be done with protective clothing.
Questions arise as the pandemic is raging havoc around the world
A large amount of cannabis is still imported in Germany from the Netherlands and Canada. However, the coronavirus crisis also has an impact on logistics, said Stephen Murphy of Prohibition Partners. Even before the spread of COVID-19, pharmacists and patients had repeatedly complained about periods of shortages. Controlled cultivation in Germany could close that gap.
In April 2019, the German Cannabis Agency chose three companies. They are obliged to deliver the first cannabis harvest to the agency by the end of 2020, but there might be changes because of the coronavirus. JürgenNeumeyer, manager of the Cannabis Industry Association, believes that this is a “very ambitious” goal.
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First published in DW, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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