Countdown to the election with KFN+: Cannabis policy reform?

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Seven weeks before the Bundestag elections: What is the current starting situation in the party landscape? What are the chances of reforming cannabis policy in Germany – and is perhaps even full legalisation likely? What could jeopardise reform, even if legalisation has already been decided?

A guest contribution by Kai-Friedrich Niermann (originally published on Krautinvest)

The Bündnis 90/Die Grünen party has been clearly positioning itself for the legalisation of cannabis for years. With the Cannabis Control Act, they have also created the regulatory blueprint for legalisation. The projection of the Forschungsgruppe Wahlen (Election Research Group) from May saw the Greens with 25% even one percentage point ahead of the CDU. This means that the Greens could even provide the German chancellor. In this constellation, several coalitions are possible, from black-green to a traffic light coalition (Greens, SPD, FDP), possibly even a left-wing government of Greens, SPD and Left.

Everything is still open

Experience shows that these numbers are subject to further fluctuations until the actual election evening. The Greens are also coming under increasing fire, especially their candidate for chancellor. Unfortunate proposals, such as an increase in fuel prices shortly before the election, or clumsy gestures, such as Laschet’s laugh at the flood victims, could then lead to changes once again.

However, the Greens‘ high level in the polls should not fall much below 20% again, so they will definitely be needed for government participation.

Jamaica coalition?

In 2017, a so-called Jamaica coalition (CDU, Greens, FDP) was mathematically possible, or a grand coalition. The SPD signalled on election night that it was not available for another grand coalition, so that the parties of a possible Jamaica coalition first began coalition negotiations.

The Cannabis Control Act was part of the coalition negotiations. In the preliminary coalition agreement, the following passage was found: „[We will initiate a cannabis control law. With this, we want to effectively decriminalise cannabis users and create legal licensed dispensaries for cannabis with effective youth and health protection].“

The square brackets within this section indicated that this point was still a matter of negotiation, and had not yet been finally confirmed as part of the coalition agreement.
On 19 November 2017, FDP leader Christian Lindner then declared the termination of the Jamaica explorations, which had been underway for a good four weeks, because he would rather not govern at all than govern falsely. This decision then led to a 3rd edition of the Grand Coalition. In the coalition agreement of the grand coalition, there were no regulations on cannabis at any point, with the result that there has been a standstill in cannabis policy for the last four years.

Possible coalitions after the 2021 federal elections

The FDP will certainly not be able to break off negotiations on participation in a new government after four weeks, thus plunging the country into another government crisis if it is seriously needed for government participation. But it also cannot be ruled out that, depending on the outcome of election night, complicated constellations will emerge that will require negotiations into the new year.

Election promises on cannabis – to keep or to break?

It remains to be seen whether the Greens will stick to their demand for the introduction of a cannabis control law, or whether the draft law will be used as a bargaining chip in the coalition negotiations to push through other goals, for example in environmental protection or social policy. Given the years of demands for this law and a reform of cannabis policy (the Cannabis Control Act was first debated in the Bundestag in 2015) and the approx. 4-5 million regular users in Germany, it is currently hard to imagine that the Greens will break their election promise. Another 4 years of stalemate on this issue will probably not be forgiven by a large number of voters.

For the first time, a head of government will not stand for re-election. The outcome of the election and the formation of the government is therefore completely open. Who the people trust to lead the country in which coalition is the big question. The fragmentation of the political camps, as we know it from other European democracies, will possibly lead to more difficult coalition negotiations and conditions after the Bundestag elections.

Almost any constellation can therefore be considered at present. In every likely possible constellation, however, at least one party is in favour of cannabis policy reform and regulated dispensaries. Moreover, in 2021 we have a different situation than in 2017, as we can observe internationally that legalisation works and has exclusively positive effects on society in terms of consumer protection, civil liberties, jobs and tax revenue.

Even if legalisation is adopted, this could jeopardise the reform

Using the Green Party’s Cannabis Control Act as a regulatory blueprint, let’s take a look at the most important restrictions that could actually seriously jeopardise legalisation. We find both restrictions in § 21 CannKontrollG. According to this, cannabis shops may not be operated in the direct vicinity of schools or other facilities for children and young people. And secondly, the Laender can set minimum distances between specialist cannabis shops as well as restrictions on the number of specialist cannabis shops.

Minimum distances to facilities for children and adolescents follow from the guiding principle of the draft law to want to do justice to a social responsibility and the protection of young people. By limiting the number of specialised shops at the Länder level, the aim is to prevent a price war and, accordingly, predatory competition. We know similar regulations with the Pharmacy Act, which can limit the number of pharmacies by area so that a permanent supply of the population with medicines is guaranteed.

Whether and how the Laender can make use of this in legal terms is not clear from the draft CannKontrollG. The legal-technical way via an authorisation to issue ordinances was not chosen here.

If the federal states were to make excessive use of this provision, it could thwart the entire legalisation effort. As we have seen in comparable experiences from the USA (for example California) and Canada, too few outlets were licensed there and accordingly the black market could initially continue to maintain a greater importance.

In many inner-city areas, there are numerous facilities for children and young people (schools, day-care centres, kindergartens, youth centres, etc.), so that minimum distances may not be observed at all. Such a restriction, applied excessively, could lead to cannabis shops only being allowed outside city centres, for example in commercial areas. There, it has been recognised for decades that so-called places of entertainment such as discotheques, nightclubs and gambling houses are perfectly permissible.

If such a regulation were to become law in a similarly vague way, the CDU/CSU, forced into legalisation in a coalition, could prevent the emergence of an effective regulated market in the federal states, for example. And afterwards they could refer to their arguments against legalisation, for example that the black market cannot be dried up with legalisation.

All interest groups, and especially the industry, are called upon to get involved in the decision-making process in good time and to work towards a clear, functioning regulation.

On the taxation of THC cannabis

Cannabis taxation will also be a crucial lever to incentivise consumers to move from the black market to the regulated market. Of course, controlled quality also plays a role, but prices significantly higher than €10 per gram will deter many consumers and cause them to continue to stock up on the black market.

A cannabis tax of €2.60 for dried flowers is realistic as an initial tax amount, as suggested in the Haucap study. The Cannabis Control Act foresees 4 € per gram, the FDP’s programme completely unrealistic 10 € for 100 mg THC, which can drive the price per gram up to 30 €. For the legislator, the primary goal should be to dry up the black market, and thus to be able to achieve one of the main goals of the reform. There is still time for tax increases as the regulated market develops.

Again, it will be important for the industry to get involved early in the discussions on the level of this tax.

If agreement on legalisation is indeed not possible

The desire for change and transformation in politics is strong after 16 years of Merkel government. Given the numerous job losses due to the Corona pandemic, and the simple legislative adjusting screw that can be turned, it would be negligent not to seize this opportunity for positive social change. Especially in terms of decriminalisation, economic growth, new jobs and more effective youth and consumer protection.

If immediate legalisation cannot be achieved, however, at least decriminalisation of consumers can be expected. Another complete standstill in reform policy, as has been the case since 2017, is extremely unlikely. It would be possible that the new coaltion agree on model projects. Model projects are supposed to explore the dangers and preconditions of legally dispensing cannabis to adults. However, the data situation is currently already extraordinarily good due to the worldwide developments in the states that have fully legalised cannabis. Further model projects for scientific research are not really necessary and first of all cause a great delay and above all great costs with regard to the study design and the accompanying, scientific evaluation. The knowledge gain of such model projects is then likely to be low in the end, as controlled and regulated delivery to adults is the only alternative.

About Kai-Friedrich Niermann
Kai-Friedrich Niermann has been a lawyer since 2003 and has been advising exclusively on cannabis with a focus on regulatory requirements since 2018. He regularly speaks at international cannabis conferences on topics related to the German and European legal framework for cannabis. Most recently, he spoke at the ICBC 2020 Virtual global Symposium, Re:publica 2019 and EuroAMCBC in Prague on the legal framework for a future recreational cannabis market in Germany, at the First Asian Hemp Summit in Hong Kong and at the Cannabis Law Institute in New York. He regularly publishes articles, e.g. on the Prohibition Partners platform and in legal journals. Kai and his law firm KFN+ advise major CBD and medical cannabis companies and he is legal advisor to the European Industrial Hemp Association (EIHA), which has submitted a joint application to the EU Commission for approval as a Novel Food for various CBD products.