Cannabis reform in Germany: How Tilray could benefit.

Last Updated: 8. März 2024By

In just a few weeks, it could be time. You probably already have an idea: It’s about the partial legalization of cannabis as a recreational drug in Germany. Recently, the new cannabis law of the traffic light government passed the Bundestag and now has to go through the Bundesrat. Experts expect significant resistance there, which could cause delays or even individual changes in the text of the law.

But what many don’t have on their radar is that the cannabis reform not only concerns „recreational weed“, but also the medically used substance. The focus is on the already existing Medicinal Cannabis Act (MedCanG), which has been regulating the use of the drug as a therapeutic substance since 2017 – for example in the treatment of pain, insomnia or depressive moods.

Germany: Big cannabis players play the medical card

But what does all of this have to do with you as an investor? Well, quite simply: Originally, the cannabis industry had hoped for far-reaching legalization in Germany, i.e. a release of „recreational weed“ for retail. As a result, the large cannabis companies that are already active in Germany could have produced the drug on a large scale and sold it, for example, to coffee shops. But as is known, the federal government had to throw these plans overboard because of the strict EU regulations and now only wants to allow cannabis for home cultivation and cultivation within the framework of so-called cannabis clubs. The big producers are essentially left out of this concept.

Accordingly, the players are now focusing entirely on medicinal cannabis. In fact, the planned changes to the MedCanG offer growth potential for the industry, even if they are rather specific. Among the players is the US company Tilray. Tilray is one of the few companies that is already allowed to grow cannabis in Germany. At the location in Neumünster, the Americans have been growing and harvesting flowers for a few years now and selling them through a legal intermediary, the state cannabis agency, to local pharmacies.

Reform for medicinal cannabis: Tilray sees billion-dollar potential

Now, the management of Tilray has published a forecast that is quite impressive. According to this, the Americans expect that the planned changes to the MedCanG alone would generate an additional revenue potential of USD 3 billion in Germany. This would certainly be a welcome boost for the notoriously struggling company and its shareholders. Below you can see the revenue and profit development of Tilray:


In the 2023 financial year (as of the end of May 2023), the company not only had to accept (slight) revenue decline due to negative currency effects, but also a billion-dollar loss, which was mainly due to impairments. At least operationally (EBITDA), Tilray was profitable in the 12 months to the end of May 2023. And in the second half of 2023, the company was able to increase its sales again and keep net losses in check – probably also thanks to its successes in the alcohol business. In recent years, Tilray has bought several craft beer breweries in the USA in order to compensate for the regulatory risk surrounding cannabis.

MedCanG: What is supposed to change?

But what does Tilray specifically expect from its business in Germany? If the changes to the MedCanG come into force, medical cannabis would no longer be classified as a narcotic. Doctors could therefore prescribe the substance through a regular prescription. This would eliminate bureaucratic efforts for medical practices, which could ultimately lead to more frequent prescriptions.

At the same time, the cannabis agency as an intermediary would be eliminated. This means that manufacturers of medicinal cannabis can market and distribute their harvest themselves in the future. However, these transactions are still subject to strict supervision by the Federal Institute for Drugs and Medical Devices and various state authorities.

Last but not least, the Europe-wide tenders for new production capacities are to be eliminated and replaced by a licensing procedure. This is intended to strengthen domestic production and significantly accelerate approval processes. Tilray, as an already established and legal grower in Germany, would probably benefit from this. The company expects a fivefold increase in production in the Federal Republic and a doubling of sales. In addition, Tilray already operates a large distribution platform in this country, to which more than 13,000 pharmacies, wholesalers and distributors are connected.

My conclusion for you

The new cannabis regulations could help companies like Tilray to get ahead, if they actually come into force – and this despite the fact that there are currently no plans for a far-reaching legalization as a recreational drug in Germany. As an investor, however, my opinion is that you should still approach cannabis stocks with caution. The regulatory environment is and remains highly volatile. For example, a future federal government, led by the CDU, could try to overturn the reforms in the medical sector. You should always factor in these risks, which also arise in other markets worldwide.

In any case, the Tilray share has been a sad story so far. Since its IPO in 2018, the stock has lost more than 95% of its value.

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