German universal healthcare insurance permits claims on marijuana medication for patients unlike insurance here in the United States. Healthcare coverage along with higher prices and a larger demand in Germany is drawing a lot of Canadian investors attention. Should healthcare in the U.S. cover medical marijuana medication?
Canadian marijuana players have been rushing to invest and take strategic positions in the new Germany medical cannabis market since late 2016, and this trend is set to continue going forward. It’s intriguing that these cannabis firms are scrambling for this budding market when their home country is due for a long-awaited recreational marijuana legalization.
However, this is not surprising.
There is great profitability potential and huge growth opportunities to be captured in Europe – Germany in particular.
For a start, the German market is paying higher average prices for cannabis. A gram of cannabis sells at a price between €12 and €20, equivalent to between $18 and $30 in local currency. Compare this to the $7-8 average price per gram in Canada, and you’ll notice the big revenue gain.
Furthermore, the German medical marijuana market could be huge and could out-grow the Canadian one very fast.
Germany has a population of around 81 million inhabitants, which is 2.3 times larger than Canada today. Canada patient numbers grew by 16 times over two-and-a-half years from just 8,000 in June 2014 to almost 130,000 by December 2016. An estimated 0.4% of the local population is now using cannabis treatments.
If we are to see the same growth trends in Germany in the next two to three years, there could be more than 300,000 patients in no time, and the companies that manage to dominate supply in the European country could really do great.
The average Canadian marijuana patient is likely consuming about 0.7 grams of cannabis per day, while the 900 licensed patients in Germany were consuming about 1.8 grams per day by December 2016 – more than double the local average client.
Therefore, the combination of a huge population, a higher average price per gram, and a potentially higher average daily product consumption in Germany offers a lucrative business-growth opportunity for local cannabis growers.
Most noteworthy, the German cannabis legislation allows insurance claims on cannabis medication. Patients can now get “free” marijuana drugs instead of out-of-pocket purchases, hence the high sales-growth numbers reported during Aurora Cannabis Inc.’s (TSXV:ACB) announcement of its acquisition of Pedanios GmbH, a leading Germany based marijuana distributor.
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