Cannabis group Curaleaf targets German windfall

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Curaleaf, one of the world’s largest cannabis companies, expects to start selling the drug for recreational purposes in Germany by the end of next year, targeting a potential windfall after Olaf Scholz’s government agreed to broaden its use.

Germany’s ruling coalition approved plans this week to decriminalise cannabis for recreational use, legislation that is designed to cut drug crime and is expected to be approved by the country’s parliament.

New York-based Curaleaf expects the market for recreational use in Germany will grow significantly following the legalisation. According to a survey cited by the government, 4.5mn Germans claimed to have smoked marijuana at least once last year.

“Many people will be coming into cannabis for the first time and trying it out,” said Miles Worne, president of Curaleaf International, a London-based subsidiary of the US company. He pointed to how recreational sales of cannabis have surpassed those for medical use in American states that have lifted restrictions in recent years.

“We will do everything we can to build up the business,” said Worne, adding that he expected to start selling to customers in Germany by the end of 2024.

Under the plan approved this week, adults will initially be allowed to buy up to 50g of the plant a month from not-for-profit clubs or cultivate up to three plants at home. A second phase, which does not yet have a start date, will trial limited commercial sales — from which Curaleaf expects to benefit.

Health minister Karl Lauterbach said the new legislation was aimed at restricting illegal trade of cannabis and reducing drug crime, but that the government would at the same time try to lower the number of people using it recreationally through a public awareness campaign.

Worne said the German government and businesses would have to work together to “beat the black market”, a reference to those who already supply the drug.

In Canada, the first big industrial country to legalise marijuana, cannabis companies have struggled to compete with black market dealers, who offer services such as home delivery and often lower prices.

While Curaleaf made 60 per cent of its $1.3bn in revenue last year from customers using the drug for recreation, profits have been harder to generate in the nascent and heavily regulated legal industry. The group reported a loss of $370mn last year.

Stephen Murphy, chief executive and co-founder of London-based cannabis consultancy Prohibition Partners, said he expected delays to the German rollout of the new plans “as with any domestic policy related to cannabis”.

Most cannabis companies in Germany did not expect the change would generate significant revenues quickly, he said, but added that the medical market would benefit from the move as public awareness around cannabis would “grow the patient base and make it easier to access”.

Worne agreed that “the general reappraisal of cannabis” was likely to boost the company’s existing medical business.