Benjamin-Alexandre Jeanroy, of Paris-based cannabis consultancy Augur Associates, outlines his vision for the emerging European adult-use markets

This article was first published in English on Business Cann and in French on Newsweed

CANNABIS prohibition in Europe has been a failure.

It has not only failed to protect citizens, especially young people, but it has also placed a heavy burden on public finances whilst allowing criminal groups to thrive. 

Inspired by early 20th Century conservative policy movements in South Africa, Egypt and the US, cannabis prohibition is now being reversed in a growing number of these jurisdictions. 

Europe has stood still until now. Following Uruguay in 2013, Canada in 2018, and Mexico in 2021, Switzerland and the Netherlands began their own legalisation moves in 2021. 

Luxembourg and Malta are exploring novel decriminalization schemes, so as we move past the binary choice in favour or not of legalisation, where should the rest of the continent – and in particular Germany – head next?

Countering Black Market – A Priority

Cannabis legalisation remains highly complex. Its success relies on operational implementation and strategic choices made in line with the chosen – explicit and implicit – goals of the reform. 

In a European context, this should focus on several specific objectives. They could serve as the basis for realistic, sustainable and evolving regulatory models that will finally enable states to regain control of a situation that previous public authorities have allowed to fester for far too long. 

These objectives are concerned primarily with:

-fighting back the criminal market;

-giving meaning anew to the rule of law, to properly protect the youth, and refocus on use disorders;

-developing a sustainable and vibrant European cannabis industry.

They could be financed by direct and sensible tax revenues and controlled by a regulatory authority. Several dimensions must be taken into account for the success of this strategy: 

Cost – the price must initially be below the black market price

Supply – avoid limits on the type of product and the concentration of active ingredients;

Accessibility – overly restrictive limits on the maximum purchase quantity, or prohibition on delivery and online sales,

And finally inclusiveness – social justice factors should be central.

The latter is perhaps structurally the most important challenge. In that regard, the UK charity Release has published a report highlighting 14 guiding social equity principles to be integrated into a future legally-regulated cannabis market. 

In a complementary fashion, the transnational NGO the International Drug Policy Consortium, has published its principles for the responsible legal regulation of cannabis. 

Another exceptionally robust work is to be found with the Transform Drug Policy Foundation, whether with their Blueprint for Cannabis Regulation or their comprehensive overview of cannabis regulation in Canada; as-well as with the Cannabis Sustainable Development Toolkit from FAAAT.

Making Cannabis Accessible

Today, European users have almost instant access to cannabis, via an increasingly sophisticated illegal supply, accessible throughout the continent, with a large number of physical and online distribution entry points. 

Therefore, a successful legal transition must incorporate similar levels of accessibility and convenience for distribution. 

For example; specialised shops, social clubs, online purchase and home delivery. Distribution licences may also be made conditional to staff training in basic knowledge of cannabis and harm reduction.

Legalisation policy makers must learn from current foreign mistakes and not strangle economic actors with costly and abusive regulations that would form a strong barrier to entry for small producers, and by ripple effect, allow the black market to thrive.

Uruguay found creative ways to tackle the issue. Retail in pharmacies was one of these. Initially co-opting the publicly-legitimate and economic pharmacy sector, it quickly became one of the major hurdles of the regulation, severely impacting the capacity to compete against the black market.

State monopolies have shown their limitations. Without a competitive market, pricing strategies, appropriate taxation and non-discriminatory access, no efficient legalisation can be achieved. 

As a consequence, crime remains and states continue to mobilise resources without meaningful results, while fuelling prohibitive discourses. Quebec is also a good example of such regulations still embedded in prohibitionist biases.

Not Another Quebec, Please!

By over-regulating – THC limits, and production quotas – public authorities perpetuated a system that is not fit-for-purpose, leading to major stock-outs, long queues at sales outlets, and a generally disappointing access scheme.

Elsewhere in Canada, while price and availability remain a strong component of the competitiveness of the legal market, the issue lies more with product quality. 

Luckily, things are improving with newly-arrived micro-producers, whose craft, quality crops challenge larger established medical cannabis producers.

An exciting development is that of the Dutch cultivation scheme, an experimentation to legally supply coffee shops in select voluntary cities. 

Albeit laboriously, 10 growers were approved with a range of cannabis varieties able to satisfy the diversity, sophistication, and intensity of the demand. Effects on crime reduction, public health, and the environment, will be measured. Producers will not be required to be pharmaceutical grade.

Germany – Europe’s heavyweight – can set some of the continent’s cannabis regulatory standards. However, being the biggest market for medical use doesn’t guarantee success.  

Standardisation Analysis Is Key

Medical cannabis companies, in regard to so-called ‘recreational’ users, may not be the most appropriate to influence future adult-use regulations. 

Indeed, the difference between these two markets not only lies in their distinct production and  distribution processes, but in their very raison d’être. 

The former exists to respond to therapeutic needs of patients; the latter, to overcome the illicit market. While the former needs, to a certain extent, to be regulated by pharmaceutical rules, dubbing the latter in a similar fashion shows a deep misunderstanding of the adult-use market and what its consumers are looking for and ready to pay for.

Most of today’s medical companies cannot produce cannabis that will compete in quality with what is available in the street, even if it can be looked upon as ‘cleaner’. By definition, pharmaceutical quality production will tend towards stabilisation and reproducibility, as-well-as a limited pool of seed varieties. 

This is the exact opposite of what an adult-use market needs. 

Under the guise of quality and safety its more-or-less a front for corporate greed, and a limitation on the right to grow is essentially a relic of prohibition – inhibiting reform from the word go. 

It’s drug policy 101 – if you do not properly regulate to answer the demand, illicit markets will.

By contrast, allowing production and distribution of cannabis through a flexible and financially-accessible licensing system, and appropriate regulation, can ensure compliance with health standards for human consumption without falling into the pharmaceutical realm.

Cannabis production could be controlled by the implementation of a seed-to-consumer tracing system following sanitary and phytosanitary standards of other agricultural products. 

A system of public subsidies for analyses should also be contemplated in order to make product control accessible to all at the various links in the production chain.

In the short term, the regulatory authority could also set up its own analysis units in order to ensure optimal price reduction and quality control throughout the production and processing chain. 

In the long term, a proper analysis framework and standardisation are what is solely required for quality control in the adult use market: one that ensures the product is fit for consumption with no pesticides, heavy metals, and mould, and can determine the exact composition of the product.  

Right To Grow – A Civil Right

To complement these market dimensions, it remains essential to allow personal cultivation, which represents only a fraction of users and will continue to exist regardless. 

This right must be granted, as it is fundamentally based on individual freedom. In addition to being a structural part of the history of the modern cannabis reform movement, it also echoes many European examples of legal private production of alcohol and tobacco. 

Cannabis Social Clubs (CSC) should also be allowed in order to create virtuous, non-commercial, short-circuit eco-systems. They are great tools to foster a fine-tuned policy of harm reduction for users and producers alike, while pooling resources to produce and share harvest. 

When properly regulated, such as the proposal of the Catalan parliament in 2015, it gives sufficient control on the production by the CSC, to assure quality standards for the consumers. Research has shown peer-supervised consumption within CSC to be less risky. 

With no profit incentive to increase sales CSC’s offer a more prudent and public health-oriented alternative allowing to counterbalance larger-scale retail markets dominated by commercial interests. 

In that spirit, the whole regulation process around the private sector should rely upon Ecological, Social, and Governance (ESG) guidelines, encompassed within the UN 2030 Sustainable Development Goals. This last framework allows for cannabis to make an impactful difference in our world.

In this spirit, the Social and Solidarity Economy sector is probably the best suited to respond competitively to the needs of millions of consumers. It also provides a structure that avoids falling into a pure mercantilism, detrimental to public health. If producers are to be free to experiment with different models, adherence to the rules of organic or living soil production should therefore be encouraged.

Wine Drinkers Don’t Need EU-GACP Grapes

In addition to the passive protection offered by the Nagoya UN Protocol on Access to Genetic Resources, it is essential to deploy proactive sustainable development and conservation strategies. 

To use the Capsicum analogy, Appellations of Origin (AOs) and Geographical Indications can be relevant tools to enhance the market value of quality, specificities, and organic properties linked to the origin and traditional practises of cultivation and/or processing.

When drinking, consumers are not looking for EU-GACP grapes turned into wine within EU-GMP facilities. 

Consumers will look at the cepage, the land, the AOs and other quality indicators; an organic label perhaps, and the year of production. 

For a similarly sophisticated cannabis market, consumers will pay attention to genetic information and cultivar lineage, cannabinoids and terpenes quantified presence; how and where it was produced; but also increasingly if it was grown sustainably and organically, hence progressively, it’s terroir. 

Continental Europe (Albania, Greece, Southern Spain), but also overseas territories of France, the Netherlands, or the Canary islands, could establish standards for designating areas of origin for cannabis products and facilitate establishing AOs for each of the practises, standards, and varieties applicable to cannabis within specific geographical areas. 

Like the wine market, there will be shares for cheap and lower-quality products, as well as for highly qualitative  – yet accessible – products. And similarly, once a consumer tastes good wine or cannabis, it is very hard to go back. 

Subjecting cannabis to both logics – market and non-profit – will significantly shrink illicit markets: by allowing for the combination of free choice of products and prices, making the aspiration of adequate-competitive accessibility and a sufficiently-high quality of service. 

Such supply and quality allow for prevention, education and harm reduction decent policies, focusing in particular on vulnerable groups and people at risk.

By becoming mainstream in that fashion, cannabis can forge its own path. Global experiences give valuable insights for Germany and the greater EU to follow: success is based on contextually based, agile, goal-driven, realistic and sustainable regulations.