The expectations for legalization were huge. One of the largest recreational consumption markets in the world could be emerging, cannabis companies enthused. Specialist shops in German pedestrian zones instead of prohibition policies, legal sales instead of dealers, smoking weed from the dirty corner. Start-ups entered the market in the hope of lucrative business.

Celebrities such as Mario Götze, Moritz Bleibtreu and US rapper Snoop Dogg are investing in cannabis companies. Legalization seemed to be the next big thing and Germany as a big market also seemed promising from a foreign perspective. Providers from Switzerland, Canada and the USA have long been warming up.

Legalization only light

Now, after the Bundestag, the Bundesrat has also cleared the way for partial legalization from April 1st. But the resolutions make it clear what has been apparent for months: partial legalization for recreational consumption does not go nearly as far as was intended in the coalition agreement of the traffic light parties. Cannabis is to be removed from the Narcotics Act, where it is currently listed as a banned substance alongside other drugs and is subject to criminal penalties. Ownership and home cultivation of limited quantities should be permitted for adults in just a few days. And in clubs, members should be allowed to grow the drug and give it to each other. However, the previous plan to sell cannabis to adults in specialist shops has been postponed. This will initially be tested in model projects – the outcome is uncertain.

Partial legalization dampens euphoria

This is putting some cannabis companies in trouble, industry experts observe. The gold rush mood has long since given way to disillusionment. Things have become quiet about new cannabis business ideas from actors or footballers.

One thing is clear: There will not be a leisure market with cannabis shops like in the Netherlands and some US states in Germany for the time being. He welcomes the legislature’s decision, says Alessandro Rossoni, founder of the medical cannabis company Nimbus Health. But: “The fact that home cultivation is now allowed to a limited extent does not help the industry.” The same applies to cannabis clubs. Some cannabis companies got into trouble, others disappeared or were bought out. According to specialist media, several cannabis re-importers went bankrupt.

The Cannabis Industry Association still sees growth for the industry. “Home cultivation and cultivation clubs as self-sufficiency options are not in themselves commercial, but they require infrastructure, equipment and services,” said Lisa Haag from the Technology and Trade Department recently

Many start-ups in difficulties

In view of the hype surrounding the release, a market has also emerged for all kinds of (legal) cannabis products – from hemp shower gels to hemp tea to creams. In Munich, for example, a “hemp megastore” opened that offers around 1,000 cannabis-related products on 800 square meters. Some of it, like hemp liqueurs, falls more into the fun department.

“Opinions vary widely as to whether partial legalization will help the industry at all,” says Rossoni, whose company is part of the listed drug manufacturer Dr. Reddy’s and focuses on finished cannabis medicines. In any case, the growth story surrounding the full legalization of many start-ups has collapsed.

Higher interest rates and stingy investors

“We no longer see any significant new companies entering the market,” observes Jakob Sons, co-founder of Cansativa. The Hessian company trades in medical cannabis, with annual sales of around 17 million euros. This is complicated by increased interest rates and cautious investors – the environment for start-ups has generally become harsher. “Some companies are running out of steam,” says Sons. “We are observing the first bankruptcies in the market. Consolidation is progressing.”

Sons still sees advantages in partial legalization. The Federal Council’s decision means enormous planning security for Cansativa. “It’s not a big deal, but it’s an important step in the global trend to destigmatize cannabis.” Since cannabis is to be removed from the Narcotics Act from April, doctors will be able to prescribe medical cannabis more easily.

The reservations of medical professionals are still great. “With partial legalization, we expect significantly more cannabis patients in Germany,” says his brother and founding partner Benedikt Sons. Investments therefore focused on the medical sector. For all partners in the distribution process – from growers to retailers to pharmacies – the decision will lead to bureaucratic relief and growth, he believes.

Cannabis on prescription

Cannabis as a medicine has experienced a boom since liberalization in 2017. Sick people can have the substance prescribed by their doctor, for example for spasticity caused by multiple sclerosis or chronic pain or for complaints after cancer chemotherapy. According to market researcher Insight Health, around 77,000 cannabis patients in Germany received at least one prescription in 2023. There are also private self-payers. But the documentation requirements for doctors have so far been high. Rossoni from Nimbus Health also expects partial legalization to help here. “Acceptance among doctors is likely to increase.”

Ever since cannabis was released on prescription, there has been speculation about liberalization in recreational use. But there are great doubts about its implementation. Smoking weed in public spaces, for example, should be banned in schools, sports facilities and within sight of them – specifically within 100 meters of the entrance as the crow flies. And the cannabis clubs must be organized as non-commercial associations and require a permit that is valid for a limited period of time. Advertising is taboo, including cannabis consumption directly on site. Documentation requirements are also regulated. Rossoni is skeptical. “It remains to be seen whether this will all prove to be practical.”