By Pam Chmiel
On April 1, 2024, Germany implemented Pillar 1 of its adult-use market, expanding upon its well-established medical cannabis program, which has been in place since 2017. The number of medical cannabis patients has skyrocketed, as it remains the only legal way to obtain cannabis besides homegrown or private club options—both of which are still governed by incomplete regulations. Unlike in the U.S., where cannabis can be purchased in dispensaries, Germany mandates a more stringent process, requiring patients to obtain a doctor’s prescription and fulfill it at a pharmacy. Many are eagerly anticipating Pillar 2 of the legal rollout, which would introduce retail sales in the adult-use market and eliminate the need for a prescription. However, the potential rise of the Christian Coalition, favored to win the next election, could delay these plans due to their strong opposition to cannabis use.
Meanwhile, Germany is building a national infrastructure based on its medical market, unlike the United States’ fractured state-by-state system, which is much harder to rein in and control. At the forefront of Germany’s emerging market is the Grünhorn Group, which commands a robust cannabis supply chain with a 20% market share among approximately 5-7 million patients in a country of 84 million. In addition to importing biomass from various countries, Grünhorn is a vertically integrated company with EU GMP manufacturing capabilities and distribution networks. They also operate the largest online pharmacy, offering products from multiple manufacturers. According to Matthias Fischer, Managing Director of Canymed, Grünhorn’s distribution partner, the company generated €33 million in revenue last year, served about 60,000 patients, and has approximately 6,000 physicians within its network.
Prioritizing Data Collection For Medical Research
Collecting data throughout its operations is a crucial part of Grünhorn’s strategy to advance medical cannabis research and inform product development with science-backed solutions for sleep, anxiety, focus, and other conditions. They gather patient feedback on the effects of specific products and use this information to collaborate with cultivation partners, producing strains that combine the necessary cannabinoids and terpenes to meet patient needs. Additionally, Grünhorn is building a comprehensive database of strains by analyzing imported biomass with a gas chromatograph machine, precisely measuring and identifying cannabinoids and terpenes. To date, they have cataloged 400-500 strains they are interested in working with. “I think the future lies in predicting and knowing which cannabinoids will effectively address specific health indications,” adds Fischer.
Germany is an Import Market
Tilray, Demecan, and Aurora are Germany’s top three licensed cultivation producers. However, according to Fischer, the quality of German cultivation isn’t on par with that of countries like Canada, Portugal, Denmark, and Colombia, forcing Grünhorn to partner with a Canadian grower. Fischer also notes that high energy costs make cultivation in Germany particularly challenging and hard to match import prices. Cantourage, one of Germany’s largest medical cannabis manufacturers, shares this perspective, maintaining partnerships with 40 cultivators across 17 countries to import their flower.
Bottlenecks In The Pharmacy System
Germany’s pharmacy dispensing system includes both retail and online sales, with many pharmacies launching websites to manage the surge in orders as the cannabis industry takes off. As Grünhorn expands its online pharmacy delivery, it is forging partnerships with local pharmacists for retail support, many of whom are on board due to the potential for increased revenue.
Since only licensed pharmacists can fulfill prescriptions, they struggle to keep up with compounding, bottling, labeling, and testing products manually. Some resort to pre-producing products to speed up the process based on patients’ common needs and solutions. Grünhorn is addressing this issue by developing custom machinery and software to efficiently scale production, overseen by pharmacists.
Ensuring product consistency is another challenge, as prescriptions are fulfilled on demand, sometimes by third parties, leading to slight variations in product formulation. “It’s like having 6,000 different factories manufacturing your product,” Fischer explains. “We are working on standardized models so our pharmacists can provide the same quality and service as we do for our online pharmacies.”
To optimize the supply chain further, Grünhorn has added a telemedicine service to connect patients directly with doctors and submit prescriptions for fulfillment. This addresses the recurring issue of doctors prescribing out-of-stock products despite having access to live stock sites, thus preventing bottlenecks.
Partnerships and Opportunities
Grünhorn’s pharmacy data reveals that 20-30% of products generate 80% of revenue, indicating a potential for future product consolidation, according to Fischer. For investors, this presents an opportunity to fund medical brands with proven track records that are ready to scale.
In addition to producing its wholesale product line, Grünhorn is well-positioned and equipped to assist other brands looking to enter the German marketplace and welcomes co-branded product partnerships. They recently announced a partnership with Somai Pharmaceuticals, based in Portugal, resulting in a two-year, €10 million manufacturing and distribution deal.
Fischer also believes AI will play a significant role in managing the industry in the future, suggesting an opportunity for those looking to enter the German market through technological innovation.
“The biggest challenge we must overcome in the next couple of years is to generate data and medical studies,” Fischer emphasizes. “We have many products with nice ideas, interested patients, and qualifying physicians, but we need more studies and proven evidence to present to new doctors and insurance companies, who are still challenging cannabinoid therapy and requesting data studies.”
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