Classified as an essential product in some American states, cannabis sales almost double in the US. Canada also sees growth in demand after lower than expected profits from legalization. Is cannabis as important as milk or bread? Although it sounds like a bad joke, marijuana has been receiving authorities’ blessing during the covid-19 pandemic. In some states, cannabis stores were able to remain open during quarantine, just like supermarkets and bakeries.
“It shows how deeply cannabis is rooted in society,” says Stephen Murphy, an industry analyst, of the decision by some American states to classify cannabis as an “essential product”.
Prohibition Partners, Murphy’s firm, is one that symbolizes the hype for the plant. The company, which defines itself as independent, has 40 employees in London, Barcelona and Dublin and analyzes the world cannabis market, carrying out economic, scientific and political studies.
The coronavirus crisis would have shown how investors in all sectors became more cautious, a trend that, of course, is also seen in the cannabis sector. “The industry is still new, it needs a lot of money for lobbying, machinery, technology and personnel. We see that some companies have a lot more difficulties in getting resources,” says Murphy.
This difficulty may be related to the negative image associated with marijuana producers. In addition to the bad reputation of potheads, several companies have already sunk – and with them, the money of many investors. Especially in Canada, where marijuana was completely legalized in 2018, the return to the industry turned out to be disappointing, without the expected profit explosion. For this reason too, the shares of almost all companies in the sector plummeted.
“Investors are again realistic about the potential of cannabis,” says Murphy. Many companies froze expansion plans and laid off employees. The plant’s most valuable company, Canopy Growth, has reduced its activities in Latin America and Africa, for example.
Sales records thanks to mandatory quarantine
Since the beginning of the new coronavirus pandemic, however, the sector has been providing positive news. In some days of March, before the announcement of isolation in the United States, sales of marijuana almost doubled compared to previous months. In Canada, purchases have also increased, at a time when bars and restaurants are closed.
To date, Canada is the only developed country in which cannabis is fully legalized. New Zealand wants to hold a popular referendum on the topic on September 19. And the United States could be next after the presidential election in November, Murphy believes. Cannabis is legalized entirely or solely for medical purposes in 33 of the 50 American states, but remains banned at the federal level. “Nobody will want to waste the electoral potential of this issue, not even [o presidente americano Donald] Trump, “says Murphy.
In Germany, recreational use of marijuana is prohibited. But for more than three years, patients have been able to consume herbal medicines to treat some diseases. In some cases, health insurance bears the costs. According to data from the Federal Institute of Pharmaceutical and Medicinal Products (BfArM), the numbers grew continuously until the end of 2019.
In total, profit on medical cannabis in Germany totaled € 120 million last year. But the market is increasingly disputed: so far, more than 50 companies are allowed to import the product, according to the specialized magazine Marijuana Business Daily.
It is not yet known whether the coronavirus crisis influenced the sector’s profits in the European country. But Jürgen Neumeyer, president of the Association of Cannabis Industry Companies, which aims to represent the interests of companies in the cannabis industry, points out that “the number of patients has not increased for a long time”.
According to Neumeyer, the lack of protective clothing in Germany may have left scars on the market. Cannabis plants are checked at pharmacies across the country, and portioning is also done locally. Since many patients who use medical marijuana belong to the risk group, pharmacists need to wear protective equipment in this work. In addition, fewer patients are going to the doctor, which can negatively influence the number of cannabis prescriptions for medical use.
Cannabis harvest in Germany?
Germany still receives a lot of cannabis from the Netherlands and Canada. But for Murphy, the coronavirus pandemic also has an effect on product logistics. Even before the spread of the virus, pharmacists and patients complained of bottlenecks in the supply, which should be solved through controlled planting of marijuana in the country.
At the time of release for medical use, in 2017, the German government initiated a bidding process in this regard, but the process stalled several times and needed to be restarted. In April last year, the Federal Institute of Pharmaceutical and Medicinal Products chose three companies for planting.
By the end of 2020, these companies have an obligation to supply the agency with the first harvest of cannabis, that is, the federal government. To DW, BfArM replied that the pandemic has not changed anything in this objective. However, Neumeyer says he is less optimistic. He continues to see the goals as “very ambitious”.
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Deutsche Welle is Germany’s international broadcaster and produces independent journalism in 30 languages.