Article: 80% of Germany’s medical cannabis startups set to die a painful death

Medical cannabis accounts for one of the most hyped products in Germany over the last five years, with the development of an abundance of local and international companies poised to service the local medical consumer —people prescribed cannabis by their doctor for serious health problems.

Cannabis is in the news this week, with the German government approving draft legislation on Wednesday to legalise some recreational cannabis use.

But less focus is given to the health of the nearly 200 companies competing for the medical consumer.

I wanted to get an insight into the state of the sector, so I reached out to professional associations, analysts, investors, and the companies themselves.

Most people requested anonymity but shared a dire picture of a sector with the prediction that 80 percent of current startups will fail.

This article dives into how we got here, the challenges for the sector, and what happens next.

Medical cannabis is a tough industry

Stephen Murphy is co-founder and CEO of Prohibition Partners, a B2B media, data and technology cannabis group. He characterised the challenge as:

“Businesses are trying to create something that has never been done before with both feet tied while trying to climb up a hill. It really is exceptionally difficult. And as for first-time founders, it is even harder.”

The challenge of getting a prescription for medical cannabis.

Doctors in Germany have been prescribing cannabis to patients since 2017. Yet it still proves challenging. Patients typically need long-term chronic pain unsuccessfully treated by pharmaceuticals such as opioids.

Dr Alessandro Rossoni, co-founder & Managing Director of Nimbus Health, explained:

“Effectively, money is generated for the industry when a doctor writes down your product on a patient’s prescription. So if you have a strong brand and a good product, but for some reason, you cannot reach the point of prescription, then you’re not selling anything.”

Currently, medical cannabis is split between that covered by public health insurance companies and private (self-pay) patients.

And when it comes to the public purse, it’s far easier for doctors to prescribe opioids or other pain medication over cannabis. Doctors need to apply for a prescription to be paid for by the public health insurer. Each application can take over an hour, and one in three is rejected.

Rossoni attributes this to an expectation to protect tax dollars against those who are not seriously ill.

A recent survey by the Cannabis Self Help Network in Germany reveals:

  • 62 percent can’t find a doctor willing to prescribe
  • 23 percent have a doctor willing to prescribe cannabis, but the health insurance does not cover the costs
  • 11 percent can get cannabis covered by public health insurance and have found a doctor
  • 5 percent have a cost commitment from the health insurance company, but can’t find a doctor who will prescribe it for me

But it’s also worth remembering that it’s not always easy to get painkillers prescribed in the first place. It’s not uncommon in Germany to give birth with nothing stronger than ibuprofen, and unbelievably homoeopathic treatments are still prescribed by medical doctors and as of 2020, covered by 70 percent of government medical plans.

Therefore it’s hardly surprising that half of medical cannabis users are private or self-payers meaning they pay a private clinic such as Canify Clinics in Berlin for their medical consultations and prescriptions.

Several people raised the issue of a subset of longer-term cannabis consumers who switched to prescriptions for ease of purchase. It’s unclear whether this group will pivot to recreational cannabis once decriminalised later this year.

An oversaturated market

Everyone I spoke to spoke of an oversupply of local cannabis companies – some German, and some from other countries such as Canada with a local presence. This means a large pool of companies are competing for the same prescriptions.

Read the full article at  https://tech.eu/2023/08/18/80-of-german-medical-cannabis-startups-will-die/

Primary Sponsors


Get Connected

Karma Koala Podcast

Top Marijuana Blog