Although numerous recent developments are a harbinger of progress towards looser restrictions on cannabis, currently Switzerland provides for very limited medical cannabis access, with product available through only two pharmacies, extensive product format restrictions, and an arduous exemption permit application process. As a result, only 3,000 individuals have been able to access medical product through official channels as authorized by the Federal Office of Public Health (BAG), but by the Office's own estimates, that product is only reaching about 3% of current Swiss medical cannabis patients.

The Swiss government is aware of the program's shortcomings – especially in light of a thriving local CBD market driving traffic toward less controlled channels – and is working to make regulatory adjustments to permit doctors to prescribe directly to patients, as well as considering broader insurance coverage for cannabis products. However, COVID-19 is expected to push back the finalization and materialization of a more accessible, robust medical cannabis program until 2021, as many government and doctor's offices remain shuttered during the crisis and priorities have largely shifted. Thus, patients are limited to the current framework for the time being, driving down market prospects for 2020, with greater medical growth expected in subsequent years as a more open framework takes shape and – potentially – compulsory insurance covers more cannabis patients for more needs.

Beyond the medical market, Swiss authorities have recognized that there is a high level of illicit market adult-use activity taking place in the country. As a result, in late 2019 they elected to launch an adult-use pilot program among 5,000 current cannabis users in order to observe the economic and health effects of a legal cultivation and distribution system - a promising development. Final program details are still being ironed out, but a full roll-out of the pilot is not expected to take place until 2022, delayed from its original 2020 start date due in part to the COVID-19 crisis.

In July 2011, with a revision to the Narcotic Act, use of medical cannabis became legal for patients carrying a permit (ie an exemption from the law prohibiting cannabis) granted by the Federal Office of Public Health (BAG). The regulatory hurdles patients must overcome in order to access this medicine, however, are very steep:

• Only the patient’s doctor can submit an exemption permit application on his or her behalf, and with written consent. Applications may not be submitted directly by patients.
• The application must identify a specific type of cannabis product (with the greatest likelihood of helping the individual patient, i.e., cannabis oil, dronabinol).
  • Treatment with cannabis flower and resins is prohibited, though since 2018 doctors have been permitted to prescribe "magistral formulas" (prepared by pharmacists) containing cannabis.
  • Pharmaceuticals that contain the active substances in cannabis require pre-market authorization. Currently, only one pharmaceutical cannabis product - Sativex, an oral spray prescribed to patients with spasticity due to MS - is licensed for sale in Switzerland.
• In addition, distribution channel access is limited; only two pharmacies in Switzerland sell cannabis oil or synthetically-manufactured products: Bahnhofapotheke in Langnau and Hänseler AG in Herisau.

Once approved, medical cannabis permits are valid for 12 months and then must be renewed. Health insurance coverage for cannabis is considered on a case-by-case, exceptional basis. Due to the restrictive nature of the program, per estimates by the BAG Office, 70,000-100,000 people use cannabis medicinally in Switzerland but only a few thousand have the proper authorization to purchase their products legally. The Swiss Federal Council has acknowledged the rise in demand for - and lack of access to - medical cannabis treatments, and on June 24, 2020, forwarded a dispatch to Parliament to amend the Narcotics Act, which would make regulatory adjustments to permit doctors to prescribe directly to patients. The amendment to the law would not change the current strict prerequisites for reimbursement of costs for cannabis medicinal products, however, the BAG is investigating the efficacy and cost-effectiveness of cannabis medicines and based on its results - expected in 2021 at the earliest – may reconsider coverage policy.

Looking to address the significant illicit market cannabis activity in the country, the Swiss government also proposed an adult-use pilot project in February 2019 to observe the economic and health effects of non-medicinal cannabis use. The objective of the pilot is to gather as much scientific understanding as possible regarding the use of cannabis, including its effects on public safety and the illicit drug market. The proposed pilot program limits product THC dosage and concentration, lays out strict packaging requirements, and recommends pharmacies and cannabis social clubs as potential points of sale, among various other regulations. In December 2019, the Swiss National Council approved the pilot and left the details on production and distribution to be worked out by the Council's Commission for Social Security and Health, which largely followed the original proposal but also elected to permit only Swiss-grown organic cannabis in the pilot. The framework for the program is as follows:

• Participants must be current cannabis consumers who are over the age of 18, who will be closely monitored.
• Products permitted during the trial will not be allowed to contain more than 20% THC.
• Participants will not be permitted more than ten grams of THC each month.
• Consumption will not be allowed in public areas.
• The program was set to officially begin in 2020, but a full roll-out will likely be delayed until 2022 due to unanticipated obstacles presented by the COVID-19 pandemic.
• It is meant to last a period of five years, though it may be extended by an additional two if requested by regulators.

Outside of medical exemptions and the pending pilot program, cannabis containing more than 1% THC remains classified as a narcotic and is illegal to possess and consume in Switzerland.

Sativex, manufactured by GW Pharmaceuticals, is currently the only cannabis-derived, finished pharmaceutical licensed for medical sale in the country, though manufacturers like C³ (a subsidiary of Canopy Growth Corporation in Canada) and Tilray (also a Canadian Licensed Producer) also supply medical cannabis products to Swiss distributors for the few medical patients currently permitted to access product. The launch of the adult-use pilot program and development of a significantly expanded formal medical cannabis program (rather than today's extremely limited, case-by-case medical exemption permits) will create further opportunities for cannabis companies interested in the Swiss market – particularly if said patients are made eligible for insurance coverage. Notably, however, the adult-use pilot will require all products to be organic and grown domestically.

Today, 100% of legal medical cannabis distribution in Switzerland takes place through just two pharmacies, and internal debate continues as to how - and how much - to expand access.

In January 2019, the Pharmacy Association in Zurich began advocating for a change in regulations that would allow adult-use and medical cannabis to be sold in pharmacies throughout Switzerland, a move that would increase availability substantially - Zurich alone has 110 pharmacies. However, Pharma-Suisse (the national professional association for pharmacies in Switzerland) has taken a more conservative approach, with one representative stating that the organization is in favor of the controlled distribution of cannabis for medical purposes but “not convinced” that public pharmacies are suitable locations to control the entire distribution of both medical cannabis and adult-use cannabis during the trial stage.

Since regulatory authorities are making systemic adjustments to the medical market and the launch of the adult-use pilot is on the horizon, more pharmacies - and other channels like social clubs - will inevitably be tasked with distributing legal cannabis in the coming months and years. It is anticipated that pharmacies will remain the exclusive distributor for medical cannabis, and cannabis social clubs will be the primary distributor in the adult-use pilot given that program candidates are already using cannabis, and thus have established relationships with and preferences for these venues.