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Lidl Supermarket Faces Issues Over CBD Products Across Europe

One of the world’s largest grocery stores faces repeated problems over “cannabis” products in its European outlets

The going has not been easy for Lidl this summer on the cannabis front. The supermarket giant, with over 12,000 brick and mortar stores across Europe and the United States has now run into its second contretemps over “CBD” in a single month

Last month, in the middle of August, the supermarket chain faced considerable embarrassment after the Munich police raided a Lidl store in the city. By the end of the month, Lidl Ireland had also pulled two hemp products due to concerns over unduly high levels of THC. One of those products was for an organic hemp seed oil product and the other was for that good old standby, hemp tea. They also sent warnings of the recalls to their shops across the country.

Customers are being asked to refrain from consuming the products and to return them to the store of purchase for a full refund.

Even individually, the incidents are embarrassing to Lidl Corporate, an international German company with US headquarters in Arlington Virginia and150 storefronts across the country. In Europe, the chain has a footprint in almost every country.

Taken together, even the largest retailers are now facing the biggest issues that the entire cannabis industry from mom-and-pop hemp farmers to larger players, has struggled with now for the better part of five years – certainly on the CBD front.

Changing Cannabis Policy Globally

It is certainly easy to understand why a global grocery store has gotten it so wrong on cannabis. It is still easy to do. In the United States, CBD products are legit in state markets thanks to the 2018 Farm Bill. In Europe, CBD has been declared “not a narcotic” on the EU level by the European Commission. However, on a country-by-country basis, there is still a great deal of confusion. In Germany, for example, cannabis is still part of the German Narcotics Act, no matter that the government is now actively funding several CBD and hemp experiments.

There is no “global” standard – which makes corporate decision-making difficult to do – although other large corporations like Apple and Amazon are clearly moving in this direction also.

Ultimately, full and final cannabis reform is still a global goal – even as countries and regions begin to make headway.

The International Cannabis Business Conference is back! Make sure to check our website and social media for recordings of sessions and stay tuned!

Consolidation In The German Cannabis Market? “High-Priced Will No Longer Exist”

Attorney Peter Homberg, partner at business law firm Dentons, spoke with krautinvest.de ahead of the International Cannabis Business Conference about potential changes to medical cannabis prescribing, pending market consolidation, IP-protected forms of application, clinical trials, cannabis IPOs, uniform EU-wide rules for medical cannabis, and more.

Key Facts:

  • Complex reimbursement practices on the GKV side will be maintained.
  • A way for exclusivity of own products: Patent forms of application.
  • Clinical studies: We always experience surprises – the required effectiveness cannot always be proven. A negative outcome can have an impact on the overall market.
  • In one to two years, the next German cannabis companies will be ready for a successful IPO.
  • The EU is becoming a supplier market.
  • We need uniform standards for medical cannabis in the EU.

krautinvest.de: Hello Mr. Homberg. Since March 2017, medical cannabis has enjoyed a special position in the pharmaceutical industry. Flowers and cannabis extracts, not only finished medicinal products, are allowed to be prescribed. Patient:s must be chronically ill and other treatments have been tried beforehand. There is an authorization requirement. Will this process continue in the coming years?

Peter Homberg: We have to look at two processes: First, the issue of reimbursement. And secondly, the documentation obligation vis-à-vis the BfArM: Which patient is prescribed which application with which success?

I assume that the current complex reimbursement practice on the part of the GKV will be maintained. The GKV funds want to check very carefully who receives cannabis as medicine, in order to avoid at all costs that patients who do not fulfill the prerequisite receive cannabis. The documentation obligation will also be with us for a while, as will the fundamentally positive therapy-open approach.

In this context, we should not forget that in 2017 the legal basis for prescriptions via the detour as “Rezepturarzneimittel” was created very quickly. In the initial phase, this led to an incredible reimbursement level of 20 euros or more per gram because of the “pharmacy surcharge” for prescription drugs. In the meantime, we are already experiencing a price erosion – hardly anyone is still selling for the maximum price of 9.52 euros, which has applied since the new price regulation.

krautinvest.de: In the case of cannabis flower, companies are not incentivized to research because there is no or little chance of patentability. In which cases can researching cannabis companies protect their IP and how?

Peter Homberg: There are different approaches by the industry to gain exclusivity for their products. They certainly can’t do that if they are only growing and distributing flower. One way is to patent forms of application – such as inhalation devices or patches, etc. Of course, there is also the option of bringing finished medicines to market. However, this requires extensive clinical trials, and from my many years in the pharmaceutical industry I know all too well that we always experience surprises in the process, i.e. that the required efficacy cannot always be proven. Admittedly, the situation is somewhat different with cannabis; after all, the companion survey already shows that cannabis has a positive effect. Nevertheless, there is a risk that a clinical trial with a negative outcome for one indication may have an impact on the overall market.

krautinvest.de: What kind of investment costs are we talking about here?

Peter Homberg: For a clinical trial with a cannabis product up to the end of clinical phase 2b, sums of between 80 and 150 million are conceivable, depending on the indication. This is less than for other pharmaceutical products, since, for example, no extensive toxicity testing is required. We already know: Cannabis is safe.

krautinvest.de: Some cannabis companies are already looking at an IPO, partly in order to raise such investments. In Canada, we saw share prices plummet after the initial hype. Are German cannabis companies ready for the IPO?

Peter Homberg: The IPO is one of the variants for raising capital for entrepreneurial activities. If I want to research and grow as an entrepreneur, I need capital. For an IPO, however, I firstly need a good and convincing storyline and secondly I need to have proven sustainability. For this, cannabis companies in Germany are on a very good path, but they are still relatively young. I therefore think that in one to two years, the first companies will be ready for a successful IPO.

We have also seen companies elsewhere that have gone public without proving sustainable profit – in Canada, for example. In my view, companies should first demonstrate some form of profitability in order to manage a successful IPO. In addition, a stable and comprehensible business plan should be a matter of course. Ultimately, the crucial question is how big the companies are and how much capital they can raise.

krautinvest.de: There are now around 100 wholesalers in Germany. Will we see more M&A in the future?

Peter Homberg: We will certainly see consolidation in the German market. In perspective, we will not see 30 to 40 distributors for medical cannabis products in the German market. At what prices the cannabis distributors will sell is difficult to predict. However, in my view, the high prices from the early days will no longer exist. I think that in the meantime you have to cut back and it will also only become clear who is willing to buy.

krautinvest.de: And what will change beyond distribution and research?

Peter Homberg: In the short term, we will certainly see one or the other supplier of cannabis flowers and extracts in Europe. I am thinking, for example, of companies from Portugal, Spain, Greece or even Malta. The EU will therefore turn into a supplier market, which could lead to further pressure on current prices. It also remains to be seen how much “German cannabis” will contribute to this.

krautinvest.de: Keyword EU. EU-wide cannabis programs are partly declared superfluous. Entrepreneurs, on the other hand, complain about a highly fragmented regulatory market at the national level. Germany leads the EU by a wide margin. Do we need our own uniform rules at country and EU level for medical cannabis?

Peter Homberg: Absolutely: Yes! We need uniform standards both within the EU and at the national level. Accordingly, in March 2019, a European Parliament resolution was submitted to the Commission to implement a uniform framework for cannabis at the EU level. Currently, the Commission is working on a directive for the harmonization of the European market for cannabis in European countries. This is also urgently needed. Because all member states of the European Union handle medical cannabis differently, which is very unfavorable for the European single market. This is exactly why the European Cannabis Association was founded. At the ECA, we are particularly committed to industry-friendly harmonization.

About Peter

Peter Homberg is a partner in the Dentons Berlin office. He focuses on life sciences, IP, corporate law and M&A transactions in the life sciences and high-tech sector as well as in R&D and cooperation agreements, cross-border IP licensing and IP strategies. Furthermore, he has extensive experience providing legal advice on compliance issues. Additionally, he is the head of the German Life Sciences Practice and European Cannabis sector group. Peter advises inter alia companies in the pharmaceutical, diagnostics, biotechnology, medical device and medical cannabis industries—from startups to large publicly listed companies. Furthermore, he has broad transactional experience in Southeast Asia. Peter is member of the Licensing Executive Society (LES), the German Association for Intellectual Property and Copyright (GRUR), the German Institution for Arbitration (DIS) as well as the Pharma-Lizenz-Club Deutschland e.V. He regularly holds lectures at seminars and conferences. He is the author of numerous professional articles and other publications regarding corporate or IP law in the field of life sciences and medical cannabis.

At the International Cannabis Business Conference, Peter Homberg will give an update on regulatory changes in Europe and Germany regarding medical cannabis at 9:30 a.m. on Thursday, Aug. 26.

This interview was originally published in German on krautinvest.de and is syndicated with special permission: https://krautinvest.de/konsolidierung-im-cannabismarkt-die-hochpreisigkeit-wird-es-nicht-mehr-geben/

Germany’s Cannabis Vape Market Likely To Expand Rapidly

An Israeli firm has obtained a first-of-its-kind license from the German regulatory authorities for extracts for inhalation.

The German market remains one of the most interesting in Europe in terms of product approvals and entry. As of last month, an Israeli company, Panaxia, along with its German partner Neuraxpharm, obtained a first of its kind regulatory license from German authorities for the marketing and distribution of medicinal cannabis extracts for inhalation.

The vape market so far is in its infancy so far – namely because of not only approvals but cost. So far, the largest vaped cannabinoid in the country is flower – usually with a medical vape made in Germany.

With the importation of extracts for inhalation, the vape market is likely to expand rapidly – starting with the introduction of Kanabo’s vape pod and associated vape capsules.

How fast they will find acceptance, however, is a discussion that may languish simply because most medical vape products are not affordable to the average patient without specific health insurance approval first.

That said, for existing medical cannabis patients, this alternative may become an alternative their insurers will pick up – especially for those who are fed up with the hassle of vaping flower.

Alternative Product Forms on The German Market

While flos has been the most prevalent new form of the drug for the last five years or so, there are indications that the German medical market is opening to other kinds of medical cannabinoids. Dronabinol is a big part of the market here – about 1/3 of the same – including the liquid kind. Now there will be other forms of cannabinoids that doctors can choose from.

This may increase the interest of doctors in prescribing the drug – especially given medical preference for “dosing.”

What this is also likely to do is create another expensive cannabis drug that insurers are reluctant to cover – and will be more expensive than the average cannabis patient can afford.

Right now, the average cost of cannabis to a patient is still running about 1,000 euro per month if they cannot obtain health insurance approvals upfront. This is a cost that is added to by the cost of a doctor’s prescription.

Change in other words is coming again to the German cannabis market – but the biggest barrier of all to access – cost and doctor prescription, remains unsolved.

Be sure to attend the International Cannabis Business Conference when the conference returns to Berlin in August.

The Coming Vape Invasion Of Europe

The cannabis vape market is about to take off in the aftermath of last fall’s decision that CBD is not a narcotic.

It is not just the recent business news that Kanabo is upgrading its British CBD facilities to EU GMP that is heralding what is likely to be a vape explosion across Europe by this time next year – and not just on the CBD side.

Indications are popping all over that the vape trade is about to get a big boost – both from a medical market tired of chasing flos to hybrid markets in need of easier to move and sell products.

The UK market is absolutely primed to be a big market – especially with extraction facilities coming online in several places, including the Channel Islands.

Beyond the UK however, the Swiss market is beginning to see a flood of vape products (and of both the recreational and medical kind).

What are the real possibilities of a liquid market (no pun intended) in the vape trade across Europe in the next couple of years?

GMP Vs. Other Certified Vape Production

On the medical front, there is a clear need for competition in a market where there are few competitors and still-high costs. Medical vapes offer doctors at least, a more regulated dispensation and dosing option while preventing patients from smoking (as most do with flos).

Beyond the medical market, however, the Swiss, Dutch, Luxembourgian and probably Portuguese markets are opening just as the new certified product is available.

Expect to see an explosion of sales – and across the board – just about everywhere in Europe.

The ramp-up is also coming after a raft of bad press for the extraction market – including by medical doctors who examined contents and labeling of particularly CBD extract all over Europe.

With a vape cartridge and certified extract market coming online and further sales channels to sell the product, it is very likely that pent up demand, new trials in several countries of both the medical and recreational kind, will see much higher sales for this vertical of the cannabis market – certainly by next spring.

To get the latest updates on the European cannabis market be sure to visit the International Cannabis Business Conference when it returns to Berlin in August.

The Unsung Hero Of Cannabis Compliance: Track-And-Trace

The legal cannabis industry is a two-way street. On one side you have cannabis regulators whose goal is to protect public safety, build the guardrails for a well-functioning market, and be good stewards of the freedoms that cannabis activists have fought so hard for.

On the other side you have cannabis companies that create and deliver innovative products while still complying with those regulatory guardrails. It only takes one cannabis company operating ‘out of bounds’ to sully the reputation of the entire industry, at least to some degree. Laws, rules, and regulations are in place for good reason in the legal cannabis industry – to mitigate public health issues (among other things).

One of the most vital components of an effective compliance strategy is seed-to-sale tracking software. For those that are not familiar with the concept, seed-to-sale tracking software is essentially exactly what it sounds like – it tracks cannabis from start to finish. A cannabis seed or clone is assigned a number and tracked throughout its life and the cannabis that the plant yields (and the products that are derived from it) is then tracked through the point of sale.

In the majority of states in the United States where the cannabis industry legally operates the use of seed-to-sale tracking software is required. It’s a requirement that will no doubt become a standard feature of the legal cannabis industry everywhere that it exists in the future.

“Cannabis legalization immediately tasks state governments with a host of challenging demands, including protecting public health, establishing new testing and tracking protocols, and securing the regulated market against illicit product.” says Lewis Koski, COO of Metrc, a leading cannabis industry tracking software company.

Metrc designed the first seed-to-sale tracking system in close collaboration with state regulators in Colorado in 2011, and now has over 220,000 users across the United States – more than any other vendor of its type. Metrc has tracked over $15 billion in legal cannabis sales.

“In states with legal sales, cannabis businesses are required to account for their inventory at every stage of its development and production. Metrc’s system tracks every legal product back to the original source plant, giving state cannabis agencies the tools to ensure no illicit cannabis enters the regulated market, and no cannabis products are diverted and sold unlawfully elsewhere. Product destruction and disposal are similarly monitored to prevent diversion and unlawful sale.” Koski went on to say.

As with any large industry, product recalls occur in the cannabis industry from time to time despite the best efforts by responsible cannabis companies. Just as unforeseen product safety issues can arise with lettuce and automobiles, so too can the same occur with cannabis flower and other cannabis products. It is extremely important that product recall efforts be as streamlined as possible for the sake of public health, and seed-to-sale tracking is at the heart of those efforts.

“Metrc’s centralized database allows regulators to quickly identify, isolate, and recall plants and packages that have tested positive for contamination and deemed unsafe.” points out Lewis Koski.

Seed-to-sale tracking software also serves another important role in the emerging cannabis industry, which is something that Lewis Koski of Metrc points out as well. Data from the software can be used by lawmakers, regulators, and industry members to make the cannabis industry better for everyone.

“Data from robust track-and-trace systems can also streamline compliance, support government agencies and their ability to keep up with the fast-paced cannabis industry, and offer insights on sales growth and tax revenue.” Koski said.

Find out more about seed-to-sale tracking software’s vital role in the emerging cannabis industry at our upcoming events in Berlin, Germany (August 25-27) and Zurich, Switzerland (August 31 – September 1). Grab your tickets now to take advantage of early-bird pricing!

Cannabis Tea With The Queen?

GW Pharmaceuticals wins the prestigious Queen’s Award for Enterprise 2021 – what next for the British market?

GW Pharmaceuticals, the sole British medical cannabis cultivator and producer, known mostly for Sativex and Epidiolex – has been granted a prestigious award. Namely the Queen’s Award for Enterprise. For those unfamiliar with the prize, it is a tradition that has been around since 1966 when it was first established, by Royal Warrant, to promote British companies who exported their products.

The fact that a cannabis company might win the award is, in its own way, an industry first. However, when it comes to the history of GW Pharma, this should not be surprising. The company was established at the end of the last century as the only British company that could cultivate cannabis for pharmaceutical purposes.

Today, the company’s drugs for MS (Sativex) and a form of child epilepsy (Epidiolex) are exported globally. 

The biggest problem of course for acceptance – if not sales? Both drugs are on the highly expensive side of the equation. So much so that the country’s own health department – the National Health Service – did not cover it until a bulk purchase with the company could be negotiated (within the last 24 months).

Studies have also shown that drug tolerance (within a year) is an issue the company has still to negotiate.

Beyond that of course, the politics around creating a monopoly on medical cannabis production while denying the same medicine to the British public (also while former Prime Minister Theresa May’s husband was a major shareholder) has always rankled the rest of the industry. 

The reality? Reform so far in the UK has come, in fact, in spite of, not because of GW Pharma.

What Next?

At this point, after several years of imports from other places – starting with cannabis oil that treats epilepsy and other conditions that GW Pharma medications do not – the entire cannabis discussion is already more than just one company.

Both cultivation and extraction facilities are getting off the ground – and obtaining hard to get certifications that will allow them to compete with GW Pharma for the first time. 

Beyond that, cannabis reform at least of the decrim kind is at least on the agenda of the newly elected Mayor of London Sadiq Khan. 

GW Pharma, in other words, may have won the right to have tea (or at least an audience) with good Queen Lizzie. In the meantime, the rest of the industry is evolving around it.

Be sure to book your tickets now for the International Cannabis Business Conference when it returns to Europe – Summer 2021!

Covid And Cannabis Travel This Summer

The European Commission intends to let fully vaccinated US travelers visit the European Union this summer – book your tickets now for the International Cannabis Business Conference!

In an unbelievably good sign for the overall cannabis industry as well as our conference, we are getting further confirmation that the travel corridors will be opening across Europe this summer – including for foreign visitors and for whatever purpose.

According to the reliable website Schengen Visa Info, Ursula von der Leven has announced that all vaccinated third-country citizens will be able to enter the EU for non-essential purposes.

On May 3, the European Commission presented a proposal to its Member states to allow the gradual reopening of borders for citizens of any country who have been vaccinated by one of the medicines approved by the European Medicines Agency.

This means that vaccinated travelers from non-EU countries like the US and the UK can travel to the EU by the end of June.

How to Check Avails for The International Cannabis Business Conferences?

This announcement is undoubtedly good news – and for those still waiting for some kind of signal before signing up for the conference – a final confirmation that the International Cannabis Business Conference will again rock the house across Europe this year.

However, entry to Europe is not the only consideration. So is re-entry to your home country. Check local rules and guidelines. However, this announcement by European Authorities is a good sign that other countries will continue to reform their travel corridor guidelines as the number of infections stays relatively steady and Europe begins to roll out its own vaccine programs.

A Sense of “Getting Back to Normal”?

The reality is that the evolving European cannabis industry is no stranger to the kinds of regulations and hurdles now placed in front of just about everyone because of the Pandemic. Which cannabis can cross which borders and under what circumstances have become the watchword of the German cannabis industry for starters.

Beyond that, of course, the industry has hit various snags and delays because of the Pandemic, including licensing approvals as well as the all-important networking that has so far evolved the industry to where it is today.

While it is inevitable that the Pandemic has not run its course – and there will be future travel restrictions and other complications – this announcement by the EU means that at least this summer, the cannabis industry itself can meet, network, and forward the agenda and next steps of what is yet to come.

The industry never sleeps.

Be sure to book your tickets for the International Cannabis Business Conference in Europe this summer!

State Of The Cannabis Industry: Spring 2021

Green shoots and leaves are poking up all over the place as the industry figures out how to survive the Pandemic as well as other powerful forces.

There is a sense within the industry these days that the long tail of the Pandemic might last for another couple of years, but this is no excuse for slowing down. Indeed, all over the continent, from business development meetings to organization of another kind, there is a sense of resolve that is evident. Namely, that while Covid might be still kicking ass, the industry is determined to power forward. After all, the veterans have seen bigger challenges go down (starting with any kind of legalization). Covid may be a global health emergency, but it is not the first that has helped shape the industry (starting with AIDS). 

For this reason, from the medical side to those on the CBD side of the discussion, those in the thick of business development are having a busy spring just about everywhere in Europe.

Things to Be Aware Of:

Here are a few big-ticket issues that are certainly making a difference:

  1. The CBD industry is certainly taking off and going mainstream in interesting ways – no matter the still existent hurdles (and they exist, starting with Novel Food).
  2. The medical industry is still in the nascent stages of formation – starting with compliant cultivation and production.
  3. The entire conversation is going to get far more interesting thanks to the recreational trials in Luxembourg and Switzerland. Namely, other European countries are going to be given a model to begin to follow or adapt in the face of tailwinds from a Pandemic where almost every form of economic development is on the table. This includes cannabis – and even in Germany. In the meantime, the medical conversation will continue to go forward, no matter how frustrating it can be from the front end of the trenches.
  4. Paths to market and accessibility will continue to improve, but behind all these developments is certification. Financing will become more and more dependent on the same (including going public). See the activity on the London Stock Exchange. 

The entire industry in other words, is pulling its proverbial socks up and getting ready for the next stage of development just about everywhere. Europe, certainly, is at a turning point.

The firms that will prosper in the next 24 months are those who can swiftly adapt and turn to changing market conditions.

Be sure to book your tickets now for the return of the International Cannabis Business Conference to Europe in July!

German Federal Hemp Tea Case Decided

A hemp tea seller from Braunschweig was charged with federal narcotics violation charges – but just released after a German federal court decided that they were not trying to “intoxify” anyone. The question is, what does this case really mean?

Here is the headline. The German Federal Court of Justice (BGH) has just annulled drug trafficking charges against hemp tea purveyors in Braunschweig. The district court sentenced the defendants to several months in prison but then placed them on probation. The federal court, however, dismissed the case not on the narcotics charge (in other words it did not disagree with the initial charge), but dismissed instead on the intent of the defendants to cause intoxication by distributing parts of the plants.

And here is the new confusion. According to some in the industry, this is a huge step forward – and on several fronts. Namely, if you are selling hemp flower and parts in Germany, with no intent to intoxify, even if you come in slightly “hot” on the THC side of the equation, are you set free from the restrictions of the German Narcotics Act? 

Technically, legally, no. That is where the many problems lie, no matter the other intriguing legal interpretations now floating in the blogosphere. This also has implications for all food products in the market.

According to the court decision, generally, per the opinion of some industry insiders, the more important case here is still the European Commission’s decision last fall. Namely that CBD is not a narcotic. Indeed, many in the German industry, including the company directly involved in this case, are calling for the removal of hemp from the German Narcotics Act, generally.

Until that happens, however, while the general market is absolutely going to be affected, it is not all clear sailing for the hemp and CBD industry.

What Are the Current Regulations to Watch?

When it comes to hemp, there are several big issues still in the room in Germany alone, let alone the rest of Europe. That is why harmonization of the standards across the region is so important. There has yet to be a “Farm Bill” in Europe for example, although again, the EC’s decision of last year has been a big step forward.

Beyond the discussion of “narcotic” or not, much less intent to intoxify, there are still processing and labeling discussions that fall under Novel Food, and which have also certainly not been finally addressed.

The most definitive silver lining in other words?  Hemp tea sellers are not going to get charged with drug trafficking charges again any time soon, if ever again, aus Deutschland. The rest is still evolving. Watch this space.

Sign up now for the return of the International Cannabis Business Conference to Berlin this summer!