Updated prices for wholesale cannabis in Germany suggest that medical cannabis companies may have to kiss goodbye to the high profit margins they previously benefited from.

Approximately 650 kilograms – equivalent to 1,433 pounds – of medical cannabis in its flower form will be purchased by the German Federal Government on a quarterly basis. The valuation of this will be set at around €1.5 million, which is equivalent to approximately US$1.6 million. What this means is that the average wholesale medical cannabis price is €2.3 per gram, which works out at US$2.54.

Germany’s cultivation tender was awarded to Canadian-based Aurora Cannabis (250 kg per quarter) and Aphria (250 kg). Demecan, a cannabis cultivator headquartered in Germany, will also cultivate 150 kg for the country’s medical cannabis market. 

Each of the aforementioned cultivators will supply packaged cannabis flower to the Federal Institute for Drugs and Medical Devices (BfArM). According to authorities, a distribution application procedure will be established with time.

Per-quarter shipments of medical cannabis in Germany may increase 10 percent annually

The initial per-quarter shipment of medical cannabis will be delivered to BfArM by the end of 2020. According to reports, governments and the companies that provide Germany with its supply of pharmaceutical weed will – over a period of four years – increase the quantity by 10 percent annually.

The companies involved in Germany’s cannabis production chain will be required to grow cannabis in “bunker style” settings that are equipped with the relevant security installations. In total, the 13 lots designated for cultivation will yield 10,400 kilograms (22,928 pounds) over a four-year period; each individual lot will constitute 200kg annually.

Moreover, government officials recently touched upon the opportunities that await suppliers and dispensary owners, stating that there will be an option to purchase more than 325 kg on a quarterly basis for the same per-gram price of €2.3. Optional extra kilograms will have lower prices; which would further chip away at the average price of medical cannabis in Germany.

Medical cannabis in Germany will continue to be imported for pharmacy distribution

Germany’s supply of domestically-cultivated cannabis is not likely to satisfy the country’s swelling consumer demographic; as of June 2019, more than 60,000 patients had registered for the European country’s program. Because of this, imports are expected to be the main driver that ensures patients get an adequate supply of medicinal-grade cannabis.

Last year, 3,000 kg of medical cannabis flower was imported into Germany. During the first half of this year, 2,500 kg had already been imported, suggesting that imports for 2019 could top 6,000 kg by the time the year is up.

As the largest medical cannabis market in Europe, Germany must buck-up its efforts in producing increased quantities of the green stuff, so as to satisfy in-need patients. A lack of suppliers is contributing to high per-gram prices, which currently rest at around €20 per gram.