🌈 A quick taster for you:
- The traffic light coalition wants to legalize weed.
- Cannabis for recreation will be grown in Germany for the first time.
- Green ETFs with a twist.
🧐 Why do I care?
The traffic light coalition wants to legalize cannabis — a hotly contested topic! The debate has hovered back and forth for ages, between cannabis being a gateway drug and it being a miracle cure. But now a heady third factor is being discussed: the economy. The governing coalition declared in its coalition agreement that cannabis may be sold in licensed stores to adults for consumption purposes. The market can always sniff out a huge deal — so let’s take a look at it today.
🔍 What exactly is happening here?
- Market entry drug
It’s not only consumers who’ll be excited about legalization: The German Hemp Association estimates that there’ll be a consumption corridor of 200 to 400 tons of cannabis per year for Germany. With an average estimated sales value of 10 euros per gram, this corresponds to an annual turnover of 2 to 4 billion euros. Businesses and investors are working on the assumption that cannabis — like tobacco and alcohol — will become a big seller. There’s a huge demand for legalized cannabis in Canada, Uruguay and many states in the USA, and Germany is hoping that it’ll be equally popular here.
- Dope Germany?
Since 2017, medicinal cannabis has been prescribed by doctors in Germany — and the German Federal Institute for Drugs and Medical Devices has officially commissioned three companies to grow weed for medical purposes. As you can imagine, there are very high safety measures and strict controls involved. The first delivery to German pharmacies was in mid-2021 — although only a comparatively tiny amount of 50 kilos, supplied by the Canadian company Aphria RX, and it was seen as being merely symbolic. However, by the summer of 2022, the company aims to have delivered a ton.
Another testing ground for many companies is the sale of CBD products. Unlike THC, CBD is not covered by the German Narcotics Act and therefore is already sold in every conceivable form including chocolate, flowers, CBD oil, and clothing. But up to now, the plants used in CBD products are mostly grown outside of Germany. Whether these plants will be grown in Germany in the future, or whether it’ll be cheaper to import them from other countries, remains to be seen.
- Green ETFs with a difference
Demand for cannabis stocks is on the rise. People always want to invest in companies that they think will increase in value, and a wide variety of cannabis funds are now forming. These funds invest in various cannabis companies, betting that the overall market will grow. However, some countries don’t allow investments in companies if that company's business is illegal in its home country. The strict regulations and differences in legislation between countries do, of course, complicate the situation of investing in cannabis funds.
🤓 What does this mean for me?
The legalization of cannabis will have an impact on future financial markets. If you’re considering making an investment, the following always applies: Before you invest any money, inform yourself with as much detail as possible about the company you’ll be investing in.
The cannabis industry is still very young. So there is always the chance that a company in your ‘green ETF’ is suddenly removed because it violates the laws of certain countries. In the end, investing in cannabis is a highly speculative and risky business!