Medical Cannabis & Cannabinoid Regulation 2024

The Fuse Has Been Lit for Growth in the International Cannabis Markets in 2024

Cannabis, once a niche and contentious field, has evolved into a multi-billion-dollar industry, influencing sectors such as textiles, biofuels and critical medical treatments. Historically, cannabis markets thrived in regions such as Amsterdam and China, but the liberalisation of laws in the USA and Canada has ignited global legislative revitalisation.

The cannabis industry is set for substantial growth, driven by the legalisation of recreational cannabis and the expansion of medical use. The European cannabis market is projected to reach USD6.2 billion by 2024 and USD 7.25 billion by 2029 (see the Statista Market Forecast here).

Germany has been at the forefront of cannabis regulatory reform. The “Cannabis as Medicine” Act, effective since March 2017, has permitted the use of cannabis for medical purposes. In December 2021, the new federal government included recreational cannabis legalisation in its coalition agreement. By October 2022, the federal Minister of Health presented a preliminary paper to the European Commission; and by February 2024, the Bundestag adopted the Cannabis Act (CanG), partially legalising cannabis from April 2024. The CanG allows for personal cultivation (up to three plants per adult per household) and possession (up to 50 grams privately and 25 grams publicly). Cannabis clubs can dispense up to 50 grams per month per member. Revised medical cannabis laws now allow easier market access and eliminate the need for a narcotics prescription form, among other changes.

In the Czech Republic, medical cannabis has been legal since 2013, with the first patients accessing it in 2014. While recreational use remains illegal, legalisation trends are growing, with draft laws under review. Malta, a pioneer in European cannabis legislation, legalised medical cannabis in 2018, and introduced personal cultivation and cannabis social clubs for recreational use in 2021.

Portugal decriminalised the possession of small amounts of cannabis in 2018, treating it as a misdemeanor. Current proposals aim to legalise recreational use, though political instability and the COVID-19 pandemic have delayed progress. Spain, known for its cannabis social clubs, operates in a legal gray area. While medical cannabis is not regulated, recent moves suggest Spain is working towards establishing a medical cannabis framework.

Switzerland’s pilot trials for adult-use cannabis are expanding, with around 10,000 participants. These trials assess various distribution models, including sales through pharmacies, licensed shops and social clubs, to determine the most effective regulatory framework for legalisation. The Netherlands, meanwhile, tolerates cannabis sales in coffee shops but prohibits large-scale cultivation. Recent experiments with regulated supply chains aim to reconcile these contradictions and ensure a consistent legal market.

The UK remains cautious about cannabis legalisation. Medical cannabis prescriptions are limited, and the black market thrives owing to high costs and regulatory challenges. Political support for reform varies, with some parties advocating for decriminalisation and cannabis social clubs.

Israel’s medical cannabis market is projected to grow by 70% by 2027, driven by new reforms. Japan’s cannabis market expanded sixfold to USD154 million in 2023, with CBD gaining popularity in medical and wellness sectors. Panama has made significant progress by granting licences to seven companies for manufacturing medical cannabis products.

In a ground-breaking development, the US Department of Justice proposed rescheduling cannabis as a controlled narcotic, which would:

• reduce draconian taxation on cannabis businesses;
• create research opportunities for medical cannabis;
• protect public health; and
• normalise cannabis under federal law.

These positive trends present challenges for lawmakers, industry participants and consumers with navigating the fragmented legislation that sometimes supports, but at other times undermines, these fast-paced developments.

The Cannabis Regulation 2024 Guide offers a comprehensive overview of cannabis laws across nine jurisdictions, featuring articles on trends and developments. Each jurisdiction is reviewed through an eleven-question format, facilitating easy comparison of specific issues and concerns, and providing a clear and jurisdiction-specific yet globally relevant guide to untangling the complexities of international cannabis laws.

Legislative Frameworks Struggling to Keep Up With International Developments in the Cannabis Industry

Many legislative frameworks are inadequate for handling the complexities and opportunities presented by the burgeoning global cannabis market. Outdated laws, restrictive policies, uninformed authorities and inconsistent enforcement are widespread challenges.

Legal uncertainty in the cannabis industry stems from outdated laws that are designed to control criminal trade and licence hemp for agriculture, not to regulate a sophisticated medical and wellness sector. Rapidly changing rules create further legal uncertainty as authorities interpret and implement new regulations. Most cannabis laws are unfit for the modern industry’s objectives, and consequently the proper application of many legal concepts remains unclear and untested in courts. The fluid regulatory environment complicates product development and business planning.

International developments have positively influenced the cannabis industry and associated legislative efforts, but progress has been slow. In January 2019, the World Health Organization (WHO) recommended several relaxations on cannabis controls to the United Nations Commission on Narcotic Drugs (CND). However, most recommendations were rejected. The CND removed cannabis and cannabis resin from Schedule IV of the main international drug control convention, potentially easing medical and scientific access. The CND also declined to clarify CBD regulations, maintaining legal ambiguity around CBD products. This decision reflects recognition of cannabis’s medical benefits but also a reluctance to fully relinquish control over recreational and wellness uses.

The European Union (EU) is moving towards more consistent regulations, demonstrated by the 2020 Kanavape case. The Court of Justice of the European Union ruled that EU law supersedes national laws regarding CBD, which cannot be classified as a narcotic based on available evidence. Despite this, the European Commission has paused CBD novel food applications pending further safety evaluations by the European Food Safety Authority. Inconsistent legislation and enforcement regularly subject permissible THC thresholds to variation, hindering harmonisation and free movement of goods. Most European countries permit 0.3% THC in finished cannabis products; however, the Czech Republic and Switzerland allow 1% THC. The UK allows up to 1 mg of THC in the final product, applying a different metric altogether. These varying thresholds and metrics create significant issues for producers, whose products are often seized at customs, creating barriers to market entry and distribution.

In Germany, where cannabis legalisation made a significant leap forwards on 1 April 2024 with its first legislative “pillar”, confusion remains regarding how to implement the CanG. A major point of contention is whether cannabis clubs can consolidate the production of various clubs under one roof. At the time of writing, lawmakers seem poised to specify that this is not allowed, which could undermine the CanG’s primary goal of combating the illicit market by enabling cost-effective competition from legal cultivators.

This guide will highlight these pervasive challenges and structure its review of legislative frameworks in four primary sectors of the global cannabis industry:

• medical;
• wellness;
• recreational (or “adult use”); and
• industrial hemp.

Significant Consolidation in the Cannabis Industry in 2023 Presents a Great Opportunity for 2024

The COVID-19 pandemic significantly disrupted business operations worldwide, even affecting robust industries. Overinvestment in cannabis production facilities led to an influx of distressed assets on the market, with lower valuations across the board. Many operators struggled to sell their businesses at reduced prices. Compared to the boom years of 2020 and 2021, the size and number of M&A deals in 2023 were significantly smaller. The anticipated federal legalisation and banking reforms in the USA did not progress as hoped, adding to uncertainty and the cautious investment climate. The industry’s struggles were further compounded by rising interest rates, reduced funding availability and ongoing regulatory hurdles.

However, some positive developments emerged. Cannabis-based medicines have gained acceptance as treatment options, though much work remains to ensure broader availability. The COVID-19 pandemic spurred growth in the CBD wellness and cosmetics market, particularly via online sales. Classic cultivation-oriented business models started to give way to more innovative cannabis-based approaches. Private equity companies, looking to capitalise on low valuations, have sparked further consolidation of distressed assets, implementing strategies that have proved successful in other industries such as retail.

Summary and Outlook

The legalisation of cannabis for medical and recreational purposes is gaining momentum. Nonetheless, while over 20 European countries have introduced medical cannabis legislation, recreational legalisation remains mixed. Germany is leading with its partial legalisation, and other countries are exploring non-profit models and pilot programmes for navigating EU and UN regulations.

Political challenges and regulatory clarity remain significant hurdles. Effective regulation that balances safety and commercial interests is crucial. Despite these challenges, the trend towards legalisation in Europe is expected to continue, driven by potential economic benefits and evolving social attitudes.

2024 has already sparked optimism in the cannabis industry, and with current legislative developments, there is good reason to expect further growth in the industry.