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The Growth of Cannabis Companies in Europe

While cannabis companies have yet to see meaningful federal progress in the U.S., the dominoes are beginning to fall in Europe now that Germany has announced its proposed reforms.

Cash Marijuana Cannabis Plant Stock

While the hoped-for marijuana stock catalyst of federal reform continues to go nowhere in the U.S., Europe just offered a major breakthrough that will create big sales growth for cannabis companies with exposure to the continent.

The breakthrough came last week when Germany announced its proposed recreational use legalization program.

True, the proposed changes got bad reviews from several cannabis sector analysts. They worry that Germany won’t greenlight the buildout of commercial dispensaries right away. Instead, Germany’s proposed reform calls for distribution through nonprofit “cannabis social clubs.” Another concern is that home grow will be permitted. This theoretically could reduce demand for commercially grown cannabis offered by publicly traded companies that you can invest in.


But the pessimists are overlooking a key aspect of the reform. Germany will decriminalize cannabis by taking it off the list of illegal narcotics. Possession of up to 25 grams of cannabis for personal use will be legal.

The change will lead to the expanded use of medical marijuana, which is already legal in Germany. “This essentially means anyone will be allowed to apply for a medical use card. It becomes virtually like a recreational use program,” said one cannabis executive. “We could not have asked for a better law. We are going to see very good growth in Europe.”

As for the home-grow provision, the plant count is low at three per person. Besides, a lot of people have trouble growing potent cannabis on their own because of the time demand and the need for special equipment.

Germany’s plan actually does open the path for dispensaries, but only gradually. The country will allow the licensing of a limited number of dispensaries for five years in some parts of Germany. Like Switzerland, Germany wants this more gradual approach because it will give the government the chance to study the impact of shops on consumption trends and the illegal market. German legalization will go into effect sometime this year, and the dispensary pilot program will launch after that.

Here is another bullish factor for cannabis investors, in the German reform proposal. The plan clears the way for other countries to roll out similar programs. Expect progress in Czechoslovakia and Poland first.

The bottom line: While the announcement of Germany’s plan did little to move cannabis stocks, it is actually good news for cannabis companies that distribute product in Europe. To find out which publicly traded companies have the best exposure, consider subscribing to Cabot SX Cannabis Advisor.

Now if only U.S. lawmakers in Washington, D.C. could make progress on banking reform that favors the sector, and de-scheduling of cannabis under the Controlled Substances Act. With April 20th, or “420” just around the corner, don’t be surprised to hear announcements of revived reform proposals out of Washington, D.C.

If you’re interested in learning more about cannabis investing at home and abroad, sign up for my upcoming webinar “2 Major Catalysts for an Impending Cannabis Rebound – and 3 Ways to Play It” which will be taking place on Thursday, April 20th at 2 p.m. ET. You can register at this link.


Michael Brush is an award-winning Manhattan-based financial writer who writes a stock market column for MarketWatch. He is editor of Brush Up on Stocks, an investment newsletter. Brush previously covered the stock market, business and economics for the New York Times, the Economist Group, MSN Money, and Money magazine.