How Will the War in Ukraine Affect Europe’s Cannabis Industry

As we hear every day on the news, Ukraine has long been known as the breadbasket of Europe. Much of the grain grown in Europe comes from Ukraine’s fields. And it is not just wheat, corn, and other grains; in the Soviet era, Ukraine was one of the largest cultivators of industrial hemp, which has little THC in it. However, some cannabis with potency was also grown surreptitiously so that Ukrainians could enjoy the party.

The modern recreational cannabis movement began in October 2017 with a Cannabis March of Freedom, with efforts to support medical and recreational uses of cannabis. The Ukrainian Association of Cannabis lobbies for legal medical use, and in 2020, 65 percent of the country favored medical reform. As of 2021, medicines such as nabilone, nabiximol, and dronabinol, all manufactured from the marijuana plant, were available in Ukraine, and people are allowed to grow up to 10 plants for personal use.

However, it is becoming apparent that the legalization effort in Ukraine will suffer from the distractions and distortions of the Russian invasion. The reform issues in the cannabis space in Europe have been negatively affected by COVID-19, and just as there was political space and energy to tackle medical and recreational marijuana in several European countries, the war is likely to grind those to a stop.

As things currently stand, successful medical marijuana campaigns have made it possible to get prescriptions for medical cannabis in Ukraine, but it is also near impossible to fill those prescriptions. This doesn’t mean there is no active reform movement at present, but experts are not expecting any significant legal and medical change for at least the next five years, partly due to the war. Efforts to get cannabis issues into the political debate have not happened yet.

The chaos inherent in a war of attrition like the invasion of Ukraine can affect the market for illegal marijuana products. Wartime interrupts everything, including law enforcement, making medicines difficult to obtain. It also creates demand among a population just trying to get through difficult days. It may be that the cannabis black market will be very successful in Ukraine.

Germany and the Cannabis Legalization Movement

The market to watch in Europe is not Ukraine but Germany. Ukraine has a history of producing high-quality marijuana due to its agricultural history and knowledge of the market for hemp products. And the war will surely interfere with any effort to create a cannabis industry for medicine or even recreational products.

However, Germany is the largest European country in terms of population and economy. Reform efforts are underway in Germany, and the population is starting to support marijuana reform. The cannabis industry in Germany is producing effective medicines. The experiences of counties like Canada and Malta and 18 states in the US have indicated that a legal cannabis vertical is good for the economy, is a strong employer, and increases the tax base. And the intellectual history of marijuana users indicates they support peace and diplomacy.

Germany is historically a conservative country that hasn’t been open to cannabis deregulation in the past. However, people are starting to change their minds about the issue. A survey by Infratest Dimap found that 49 percent of the public supported legalization while 46 percent did not support it. In 2014, the percentage of those who favored legalization was only 30 percent. That is a big change in just a few years. Experts feel the shift in stigmatization of marijuana probably began with marijuana medicines.

When and if Germany allows for recreational and medical cannabis, the European market should follow suit in short order. Germany has long been the economic and technological leader in Europe. The country’s reputation as being cautious about social change means getting a yes vote from Germany will have a strong symbolic value in Europe.

No one knows for certain what the European market will look like. A recent study indicated that legalized cannabis could bring in €5 billion annually in taxes and saving in the justice system. Estimates for demand are that Europeans will consume 400 tons a year. Legalization could mean 27,000 new jobs, too.

But currently, the war in Ukraine is impacting the rest of Europe when it comes to producing marijuana for medical use. The anticipated big change in the cost of energy in Europe is formative for the cannabis industry because all plants have to be grown indoors.

In the recent German election, a coalition of parties that eventually won pledged to legalize cannabis. No bill or law has been presented yet, but legislative experts believe one will be passed in the next two years. Medical marijuana is legal, as is possession of small amounts of marijuana for personal use. But there are several companies developing quality products for sale when Germany legalizes recreational cannabis, and they are receiving funding from domestic and international investors.

The primary concern of those people not sure if cannabis should be legalized is hot to keep it out of the hands of people under 18 by eliminating the black market. But a few lawmakers are convinced that the goal of legalization is to establish proper regulations to produce and sell it.

The current proposal in Germany is to create licensed distribution sites where the marijuana can be tested for quality, packaged, and sales taxes can be collected. The thinking is that pharmacies would be the most appropriate distribution point since that is where medical marijuana is purchased, and they have good security. Germany wants to learn the lessons from several states in the U.S. that found that creating and regulating a new distribution system can be complex. Canada found they did not have enough government-licensed distributors when rolling out their recreational marijuana system.

Germans believe that when they legalize recreational cannabis, they will have a large demand, and the government wants to do everything right, especially keeping marijuana out of the hands of minors.