I spent last April’s week in Berlin, Germany. I helped with an investor event at Talman House and the International Cannabis Business Conference. It was clear that Europe’s “green rush” is just beginning. I met old friends in the marijuana industry and community, as well as made new ones.
Slovenia and Czech Republic are among the European countries that have taken steps to modernize marijuana policy. Three European countries have adopted legalization policies for adult use. Malta became the first nation to adopt such measures in 2021. Luxembourg, Germany and Luxembourg followed in 2023.
Germany is the industry with the largest potential. Germany had already been the leading legal market for medical cannabis on the European continent prior to the CanG legislation. As part of the CanG law, cannabis was removed from Germany’s Narcotics list, which has resulted in a dramatic increase of domestic medical cannabis production and patient prescriptions, as well as medical cannabis products imported.
The level of excitement I felt when I met people in Germany in October was understandable. I had witnessed the start the U.S.’s green rush a decade before, in 2012. Colorado and Washington State, then the two first legalized states, were both in Colorado. It was exciting to be at the forefront of the cannabis revolution with the wind of change blowing in my face.
Members of Europe’s advocacy and industry community asked me a lot during my visit to Germany what I can teach them from what happened in North America. At the Talman and ICBC conferences in Berlin, many attendees said that I appeared to be “from the future”, and wanted to learn more about the events on the other side of the Atlantic Ocean.
Europe can learn from Canada and the states that have legalized marijuana in the U.S. to create something even better. There is only one window of opportunity, and once that time is over, Europe won’t have another chance to establish a foundation for the industry.
In both the U.S.A. and Europe, the patchwork of regulations and laws is one of the biggest similarities. As the U.S. has a number of separate state markets, while the majority of cannabis activities remain prohibited on the federal level of government, so too does the European Union have a series of member-nation states that operate under confusing or conflicting European Union agreements.
The U.S. public policy puzzle has taught European lawmakers that harmonized regulations and laws are essential to success. The U.S. has not been able to find these ingredients, which have kept the industry from reaching it’s full potential. This, in turn, prevented the society from gaining the benefits of a flourishing legal cannabis market. In the U.S., federal prohibition has also hindered research for a number of years and limits the country’s cannabis industry to participate in broader global communities.
Two dozen U.S. states have legalized adult-use marijuana, and many are home to active recreational cannabis industries. The other states are either not operating adult-use marijuana industries but will be soon or continue to outlaw sales. European policymakers could learn valuable lessons by studying the legal states and their prohibition counterparts.
The disjointed marijuana laws of the U.S. have led to the continued growth in unregulated cannabis sales in U.S. prohibition states. Consumers from prohibition states often cross state borders to purchase cannabis in states where legalization and prohibition are both present. The prohibition states are then completely left out of the taxes and fees that the cannabis industry generates from these purchases.
The legal cannabis industry in the states which allow for cannabis commerce can generate substantial revenue that is used to fund public projects benefiting all citizens. Taxes and fees on cannabis in legal states will generate more than $9,000 billion between 2021 and 2024. State-legal cannabis industries also support over 400,000 jobs in the U.S.
In addition to saving money, the decision not to enforce failed cannabis prohibitions also frees up resources for criminal justice departments, allowing them more time and energy to fight real crimes. This is beneficial to all of society, no matter if they consume cannabis. The U.S. prohibition states are losing out both on the revenue that a legal cannabis industry generates for the state and government, as well as the savings in enforcement associated with the legalization.
It is also a burden to many operators who are legal in the U.S. because of this fragmented approach. Each state has their own laws and regulations in the U.S., so multi-state operators must develop customized business and compliance model for each jurisdiction. This increases costs, and has a negative impact on the ability of these entities to contribute positively to local economies and government coffers.
It would be prudent for the European Union to acknowledge that there are winners and losers in U.S. cannabis policies. The legal states reap the rewards of legalization while prohibition states continue to suffer the direct and indirect costs associated with clinging on to prohibition. By pursuing an harmonised approach to cannabis industry and policy, the European continent could become a region that is a winner.
Canada is a great example of how a market can become regulated when policies and regulations allow consumers and medical patients to have consistent national access. Canada has legalized marijuana nationwide, unlike in the U.S. While individual provinces have local laws, it is possible to purchase legal cannabis products across Canada. All Canadian adults are able to order cannabis legally through the postal service.
Canada’s legal market has nearly displaced unregulated markets in just a few short years. A recent data analysis by a team of international researchers found that the Canadian cannabis industry has an ‘estimated legal market capture of 78%,’ and there was a “substantial transition in expenditures from the illegal to the legal market.”
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Canada has shown that, if cannabis is available in legal form and consumers have many options to choose from, they are more likely to buy it through regulated channels than unregulated ones. This transition has a significant impact on the economy and public health.
Deloitte conducted an economic analysis that estimated the cannabis industry had made over $43.5 Billion in contributions to Canada’s GDP. Cannabis companies invested approximately $4.4 billion directly into Canada’s economic system during this time period. The remaining GDP boost was attributed to “indirect” and “induced contributions”.
It is important to note that not all aspects of Canada’s experience with legalization have been positive. Some of Canada’s biggest cannabis companies made business decisions that were clearly influenced by hype and emotion. The financial ramifications have been disastrous. In the aftermath of legalization, billions of dollars literally burned up. This should be a warning to entrepreneurs and investors from the other side.
Europe has reached a turning point in its history. Politicians, industry representatives, and advocates have the opportunity to do something unique. Europe could become an example for how cannabis regulations and policies can be modernized in a fair, balanced way.
As I reflect on my decades-long cannabis activism and the fact that I was able to watch the legalization of cannabis from the front row, it is clear to me that some things were done right and others completely incorrectly. My personal wish is that Europe will learn from North America to make the most of their current opportunities and not squander the opportunity it has.
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Mike Latimer is the photographer.
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