Sports Business // 07/26/2023

Cannabis Legalization: Green Gold or Pothead Pandemic?

Sarina Scharpf

Is smoking pot the new skating? With the legalization of cannabis, the scene drug could soon become a lifestyle trend - and German brands are already preparing to write success stories like Supreme. After all, the legalization of cannabis is a hotly debated topic worldwide and is just around the corner in Germany. Why a drug could become a lifestyle trend and economic booster.

What actually is cannabis?

It is one of the oldest useful plants: Hemp, also known as cannabis, hashish or marijuana. Various cultures have been using the plant's diverse properties for thousands of years - from ropes made from its fibers, to oil from its seeds, to intoxicants made from its dried flowers and leaves. Today, hemp is already being used successfully: Not only in the textile industry - sports brands also use the material for innovative products, the like ISPO Award winner Leki proves.

But what is actually in it, in the much discussed plant? It contains 750 chemical substances, around 100 of which are cannabinoids. A substance that also occurs in the human body as an endocannabinoid. Of the cannabinoids contained in the cannabis plant, very few are psychoactive - only the active ingredient tetrahydrocannabinol (THC) is intoxicating.

In the future, cannabis will presumably move further into the spotlight, because things will soon get serious: legalization is drawing ever closer.

Intoxicant or growth market?

330 billion dollars - that's the global turnover in drug trafficking. An incredible sum. So why not make at least part of it a legal market and profit economically? Some countries are already showing how it can be done:

1. USA: Prime examples from the USA show how successfully companies are using the green gold. Marijuana is already legalized in 22 states, giving 158 million people access to the high. In 2021, sales were $25 billion. The Cannabis Data Company BDSA predicts that cannabis sales in the U.S. will continue to rise and could reach $40 billion in 2026. So it's a real growth market. One of the world's most successful cannabis companies comes from the USA - Curaleaf. The brand's market capitalization is a whopping $3.46 billion.

2nd Netherlands: The Netherlands is the global pioneer in terms of legalization. Since 1976, it has been possible to buy cannabis in coffee shops. And the market is booming here as well: In 2023, sales are expected to reach 12 million euros with an annual growth rate of 15.7%. By 2028, sales are expected to reach 2.5 million euros. However, while consumption is legal, the supply chain, i.e. cultivation and wholesale, is not yet - forcing coffee shops to source the products illegally.

3rd Thailand: Something is also moving in the cannabis market in Asia. Thailand was the first Asian country to legalize cannabis in 2022 - at least for industrial and medical use. However, since marijuana is no longer on the list of illegal drugs, consumption is possible. One important reason: legalization is intended to boost the economy, which has been weakened by the pandemic. The government has even donated one million hemp plants to private households for this purpose, with the aim of supporting production. The market is seen as a megatrend and many companies are already investing. According to forecasts by Cannabis Catalysts, sales in 2024 are expected to reach 1.8 billion US dollars are expected in 2024.

3rd Spain: A role model for German legalization: Since the 1990s, cannabis lovers in Spain have been consuming cannabis in so-called cannabis social clubs, thanks to a loophole created by legalization activists. Full legalization is already being discussed. Since 2022, the use for medical purposes is allowed and creates a turnover of about 20 million euros in 2023.

4.Canada: The legal high is possible in Canada since 2018 and shows how successful the market can be. Total sales are forecast to reach 3.6 billion euros in 2023 and grow to 7.7 billion euros by 2028. The two most successful companies include Tilray and Aurora Cannabis. The stock market values of both brands speak for themselves: Tilray records 872 million euros, Aurora 181 million euros.

Will legalization lead to us being surrounded by a pandemic of potheads smoking pot? Probably not. In 2018, the European Monitoring Center for Drugs and Drug Addiction held in a report on cannabis legislation stated, "No simple correlation can be found between changes in the law and the prevalence of cannabis use."

Instead, legalization positively impacts many different areas:

  1. Increasing tax revenue: Overall, legalization of cannabis in Germany could lead to the state taking in an additional 4.7 billion euros or so. In Spain, taxes and social security contributions are expected to reach 3 billion euros with legalization.
  2. Creation of new jobs: Competition economist Prof. Dr. Justus Haucap of the Düsseldorf Institute for Competition Economics (DICE) at Heinrich Heine University in Düsseldorf (HHU) estimates that legalization will create around 27,000 legal jobs.
  3. Strengthening the healthcare system: Cannabis is already used in medicine for treatment, for example for chronic pain. Legalization would facilitate access to medical marijuana and promote its research.
  4. Promoting tourism: Around 1.5 million tourists visit the coffee shops in Amsterdam every year. Legalization could also promote gastronomy in Germany's metropolises.

Another important aspect: Cannabis opens up a new market for original business concepts and start-ups. New companies can emerge that specialize in the production, processing and enjoyment of cannabis, and existing brands can expand their product range.

Prime examples from the USA show how successfully companies are using the green gold. Marijuana has already been legalized in 22 states, giving 158 million people access to the high. In the process, legalized cannabis brands provided more than 100,000 jobs in 2021. A year later, that number was nearly half a million workers*. And sales? In 2021, it was $25 billion. The Cannabis Data Company BDSA predicts that cannabis sales in the U.S. will continue to grow and could reach $40 billion by 2026. So it's a real growth market.

International opportunities for legalization in Germany

After the legalizations, the cannabis industry experienced a great hype in the countries. In some places, the gold-rush atmosphere is now being followed by a phase of consolidation. Take Canada, for example: In Canada, billions of dollars were invested in production and expansion, only to now observe overcapacity. According to the Canadian Ministry of Health, 468 tons have even been destroyed. The biggest brands are suffering especially, with Tilray, Canopy Growth, and Aurora Cannabis seeing their share prices plummet over the past year.

One hope on the horizon: legalization in Germany. Experts believe demand could reach 400 tons per year - a huge growth opportunity for international suppliers. It remains questionable how the import of cannabis will be possible, as import and export for consumption purposes is only allowed with rare licenses according to United Nations conventions. Tilray and Aurora Cannabis in particular could therefore benefit, as the established companies already produce their medical cannabis products in Germany.

And where does the rest of the cannabis medicine for the German market come from? Out of around 25,000 cultivation licenses worldwide, only 20 producers* hold a license to import into Germany. One of these companies is Cantourage from Berlin. Their co-founder Patrick Hoffmann is sure: "In the coming years, there will be a strong demand for cannabis medicines and even stimulants both in Germany and in the European Union."

Right now, Cantourage is already working with 19 partners from 14 countries, including Canada and Israel, but also Lesotho, South Africa, Uganda and Zimbabwe. The company sources the raw material from them and imports it to Germany for further processing as a licensed company. "Africa has a quasi responsibility to play a leading role in the cultivation and processing of cannabis," Hoffmann said. This is the only way to meet the growing demand.

How brands prepare

Auriey: Cannabis accessories with style
Auriey has been inspired by the USA and is already tilling the field for the new market. The Munich-based company is creating a real lifestyle trend with its stylish smoking accessories: no more ordinary headshops or bongs with kitschy cannabis leaf designs! "We looked around at the American and Canadian markets. There exists a whole other world around the topic of cannabis. And we took that as our model," Anna Grafe-Busch and Philipp von Frankenberg, the founders* of Auriey, tell With modern and aesthetic bongs, grinders, pipes, papers and other paraphernalia, they show how noble the consumption of cannabis can be. They are fighting to change the stereotype of unmotivated stoners and the supposed danger of hashish as a gateway drug in society. Anna: "You don't have to be a stoner if you smoke pot. You can also just smoke a joint every now and then."

Auriey's stylish accessories are already going down well, and Anna and Philipp think there's a good chance demand for cannabis legalization will soar. "After all, this is something that is completely new in the making. It's never been done before: that you decriminalize something that you declared a drug after almost 100 years and make it a stimulant. That's unprecedented."

So it pays to be prepared! Above all, the trend shift from scene intoxicant to lifestyle could be exciting: "We are deliberately positioning ourselves as a lifestyle brand. Because cannabis could develop in the same way as the skateboard market, for example, where brands like Supreme have expanded into fashion or other lifestyle areas independently of the sport. That's what we're betting on."

Naturali CBD: Opportunities for CBD stores.
"There's an insane amount of potential," reveals Philipp Raabe, co-founder of Naturali CBD. They already sell legal cannabis products as a CBD store - from flowers to hash to oils. Since legalization will also make it possible to dispense THC products in licensed specialty stores, many CBD stores are already waiting in the wings and arming themselves. Philipp observes an ever-increasing demand from customers: "The interest is extremely high. We are getting more and more requests for seeds, seeds or THC-containing weed." Many companies are ready and would immediately take products in the assortment. "Since you are not allowed to buy from suppliers before legalization, it will probably take several weeks and then the stores and the business with THC products will boom." The expert expects immediate sales growth of 40 percent, which after the initial euphoria will level off at a plus of 20 to 30 percent.

It is precisely through legalization that the quality of cannabis can be ensured through state controls and consumers do not run the risk of buying stretched and contaminated substances.

Naturali is already in contact with several companies that currently produce medical cannabis. "Their plants have stable genetics and are very safe." A sustainable and local source of supply could also develop from the non-profit cultivation of the future Cannabis Social Clubs (CSC), according to Philipp Raabe. The prerequisite, he says, is that the appropriate skills are built up there and quality control is established to ensure that products do not show any fertilizer residues or other impurities. Philipp Raabe is certain: "CBD stores may have a better starting position in terms of licensing than companies that are just starting out in the industry."

Booth of legalization in various EU countries

  • Austria: Legalization of cannabis is currently ruled out.
  • Switzerland: Switzerland legalized cannabis for medical purposes in 2022. There are pilot projects for legalization for recreational purposes.
  • France: Legalization for consumption purposes is also not planned in France. Pilot projects for medical use are underway here.
  • Czech Republic: Cannabis is illegal as an intoxicant in the Czech Republic. It may be prescribed for medical purposes.
  • Italy: In Italy, the consumption of cannabis is not allowed. However, the cultivation of hemp as a raw material (without THC) has been possible since 2016.
  • Sweden: Sweden operates a zero-tolerance drug policy. Only CBD products without THC content are legal.

Between psychoses and healing: effects on health

According to a research report, 9.3 percent of 12- to 17-year-old Germans have already used cannabis. The figure for 18- to 25-year-olds is a full 50.8 percent. But what does it actually do to the body? Despite some benefits, cannabis, like alcohol, can cause significant damage to health - especially for teenagers and adolescents. For them, use can lead to brain development disorders, which can manifest in decreased attention, poor memory, and increased risk of mental illnesses, such as schizophrenia, depression, or anxiety disorders.

Smoking cannabis, in particular, is problematic. Numerous toxic and carcinogenic substances are released that can damage the lungs. The "American Lung Association" therefore clearly warns against the consequences of smoking marijuana. Cannabis can also affect the cardiovascular system, especially at high doses. Pulse and high blood pressure increase, blood vessels dilate. With regular use, there is a risk of permanent cardiac arrhythmias and vascular damage.

It is unclear whether there is a risk of psychological dependence through regular use, as is the widespread opinion that cannabis is a gateway drug to harder drugs.

One promising application of cannabis is in the treatment of chronic pain. Cannabis is thought to reduce pain perception and inhibit inflammation. This makes it a possible alternative for patients who do not respond adequately to conventional painkillers or who have to deal with side effects.

In addition, cannabis is also used to treat certain neurological conditions such as epilepsy. It has been shown to be effective in reducing the number of epileptic seizures. Another promising aspect of cannabis is its potential role in treating anxiety disorders and depression. For example, it has been linked to improved mood and reduced anxiety without the psychological side effects of conventional medications.

In addition to its potential medical benefits, cannabis also has effects on the endocannabinoid system, which plays a role in regulating various bodily functions. It can help promote relaxation and stress reduction.

Cannabis in sports: no miracle cure for peak performance

The discussion about the influence of cannabis on athletic performance has gained momentum in recent years. The case of American sprinter Sha'Carri Richardson in particular has caught the attention of the sports world. Due to a positive test for THC, she was excluded from the 2012 Olympic Games.

According to the World Anti-Doping Agency (WADA), the drug is one of the illegal doping substances. And not just because of its anxiety-relieving effect: according to WADA, cannabis endangers health and violates ethics, sportsmanship, honesty and fair play.

But does cannabis really enhance performance? Most studies come to the conclusion: No. Endurance and strength, important elements in most athletic disciplines, are not directly positively influenced by the consumption of marijuana. But indirectly: the anxiety-relieving effect, the relaxation of the muscles, the reduced sensation of pain, the deep sleep are all effects of the plant, which can support athletes under pressure, training load, injuries or fears. Especially in high-risk sports.

Consumption is also widespread in other areas, for example to support recovery. In the NFL, for example, 89 percent of players use marijuana, estimates football player Martellus Bennet. NBA players are now even allowed to smoke pot without penalty.

However, side effects can be severe. Use can cause dizziness, lightheadedness and coordination problems, increase blood pressure and heart rate, slow reaction time and disrupt sense of time. Side effects that result in the increasing risk of injury. Also: cannabis contains numerous toxic substances that can cause lung damage when the substance is smoked. Certainly not something that athletes crave.

Share article
Sarina Scharpf
Topics in this article