Germany Going Legal – Play It With This U.S. Leader

Germany just gave cannabis investors a reason to celebrate. This week, news broke that leaders of the incoming German administration have already reached an agreement to legalize and tax adult use cannabis in Germany.

Here are some more details from Marijuana Moment.

Party leaders in Germany’s incoming government coalition have reached an agreement to legalize marijuana nationwide.

The legalization legislation is expected to be introduced during the upcoming legislative session. It will also provide broader drug harm reduction services and restrict advertising of tobacco and alcohol, along with cannabis.

And while the lawmakers emphasized that the objective of the reform is not to boost tax revenue for the country, FDP said in its election manifesto that taxing cannabis like cigarettes could generate €1 billion annually.

Germany legalized medical cannabis in 2017 and the market has been growing rapidly in the last two years. Possession and consumption have also been decriminalized in Germany. This measure will create a framework to legalize, regulate and tax adult use cannabis in a similar way that alcohol is taxed and regulated.

Two Reasons this is Great New for Cannabis Stocks

This is a very big moment for Germany and the entire European Union.

Germany Could Be a Huge Cannabis Market: Germany has a population of 140 million, making it the largest and richest country in the European Union. If Germany goes legal it would likely grow into one of the largest cannabis markets in the world. Cannabis market research firm Prohibition Partners predicts that annual sales could hit $3.6 billion by 2025.

Germany Sets the Stage for More EU Countries to Legalize: Just as important, if Germany goes legal it sets the stage for other European Union countries to follow. The European Union has a population of around 740 million, about twice the size of the U.S. Many analysts are predicting that Europe will grow into the largest cannabis market in the world. According to a report from market-research firm Research and Markets, the European Union cannabis market is expected to reach $37 billion by 2027.

Naturally investors want to know how they can play the trend. Today I am going to reveal why an early industry leader in the U.S. is actually a great way to invest in the German and European cannabis markets.

Curaleaf Holdings (CSE: CURL, OTC: CURLF) is one of the largest U.S. cannabis companies with a market cap of $7 billion. Headquartered in Wakefield, Massachussets, Curaleaf has an impressive portfolio of permits, dispensaries and grow ups in some of the fastest growing cannabis markets in the U.S.

  • 23 operating state
  • 101 local dispensaries
  • 22 cultivation sites
  • 30 processing sites
  • 350,000 registered patients

While Curaleaf is thriving in the U.S. the company has also been making big moves to expand into Europe. In March Curaleaf bought one of the largest medical cannabis companies in the European Union for $286 million. Here are some more details from the press release.

Curaleaf Holdings, Inc. has signed a definitive agreement to acquire EMMAC Life Sciences Limited (“EMMAC”), the largest vertically integrated independent cannabis company in Europe for base consideration of approximately US$286 million.

As Europe’s largest vertically integrated independent cannabis company, EMMAC’s platform brings cultivation, EU-GMP processing, distribution, and R&D operations across several key European medical cannabis markets, including the United Kingdom, Germany, Italy, Spain and Portugal. EMMAC also has an operational presence and partnerships in European Union countries that are enacting new medical cannabis access programs. EMMAC’s Portugal based cultivation facility is an industry leader in cannabis flower production cost.

After the acquisition was complete, Curaleaf didn’t waste any time tapping into the German market. In May Curaleaf announced that its wholly owned subsidiary Adven GMBH launched a line of medical cannabis products in Germany. Here are some more details from the press release.

The initial launch of a high THC oil product aims to meet immediate patient demand and will be extended over the course of the year to incorporate a number of different strengths and THC/CBD formulations in both oil and flower formats, addressing a wide range of patient needs.

On November 1 Curaleaf announced that it was rebranding all of its international subsidiaries as Curaleaf International. This is a great move for Curaleaf to strengthen its brand identity in Europe and further streamline operations.

As you can see Curaleaf is making big moves in Europe and Germany and with Germany setting the stage to go legal these moves should lead to ig revenue growth in the region in the next few years.

Curaleaf is Down 45% from the 52-Week High

Curaleaf has been weak with the broader cannabis market in 2020 and shares are down about 45% from the 52-week high. Although Curaleaf has been reporting impressive revenue growth, shares are down because investors are disappointed there hasn’t been more progress on legalization in 2021 with democrats taking control of the presidency and both chambers of congress. Looking forward I expect more progress on legalization and I expect Curaleaf to keep growing and both of those factors should support shares. Take a look at the 12-month chart below.

The Big Picture on Germany and Curaleaf

Germany is making moves to go legal and Curaleaf is in position to capitalize with its recent expansion into the European Union, product launches and re branding. Looking forward, Germany is the tip of the iceberg, other European countries should follow, and I expect that to be a strong revenue driver for Curaleaf.

Author Michael Vodicka owns shares of Curaleaf Holdings.


About the Author & Cannabis Stock Trades

Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.

Michael Vodicka

Mr. Vodicka brings his expertise and guidance to the members of Cannabis Stock Trades.

Join Cannabis Stock Trades for Mr. Vodicka’s exclusive analysis, trade alerts, and model portfolio.