Are Prices Going To Fall On Domestically Grown Cannabis In Germany?

germany flag

With the world in lockdown and the race for “The Vaccine” if not “The Cure” what does this bode for cannabis pricing and availability in Europe, and specifically Germany?

For now, pharmacies are absolutely in lockdown, preventive medicine mode.

But there is hope on the horizon. A new tender bid for a domestic distributor for cannabis grown in Germany has now been issued by BfArM (the German FDA). To be considered, applications must be filed electronically by April 28.

This distribution contract will run from September 2020 for several years (until 2025).

BfArM will still technically “own” the cannabis, although distributors must pick up the product at the three locations in Germany where this is grown and deliver it to pharmacies as well as store it if necessary.

The winning distributor, who must have experience in narcotics distribution, although not necessarily cannabis, will be required to have experience, insurance, and the ability to prove their track record with good distribution practices. 

The agency believes that the floss will be bundled in 50-gram containers, which the distributor will then deliver to the pharmacies.

What Will Happen To Pricing?

BfArM has set pricing at €2.3 euros a gram. With a mark-up for administrative management costs at BFArM, plus a distributor mark-up, the total price to pharmacies is expected to beat the current price they are paying (about €10 per gram). By law, pharmacies are required to mark up everything by statute, although what this overhead will be is in discussion between insurers and pharmacies right now.

The good news, however, is that for the first time since the cultivation bid was offered, pharmacies will be able to sell the drug at a price considerably less than the current prices. And this is good for everyone.

What About Imports?

There is a lot of discussion about the pricing of imports right now. Clearly, the price to beat is German domestically produced cannabis. However, everyone also knows there is not enough being grown in the country. How much insurers (to start with) will be tolerant of large deviations from the price of domestically produced cannabis is unknown. However, this development alone begins to shed light on a price band for imports that is clearly developing.

Be sure to attend the International Cannabis Business Conference in Berlin this summer for more developments on the German cannabis market.

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