Germany quickly became a market leader for the CBD industry in Europe thanks to their parliament's liberal approach to regulating product types and retail channels. Until November 2019, tinctures, dietary food supplements, and cosmetics containing less than 0.2% THC were sold freely – though perhaps in a gray area - on the German market. However, in November 2019 a German court decision determined that Germany would follow the European Commission's directive on re-classification of CBD as a Novel Food. Given its position as a leader in policy-making in the region, this was an expected move from German regulators to address the situation head-on and avoid a vague, gray market. As a result, ingestible products that contain CBD now require a safety evaluation and authorization from the European Food Safety Authority (EFSA) before they can be sold and marketed in the country. Germany's ban on unprocessed flower products is still in effect, although inhalable CBD products such as vapes are still permitted and maintain their popularity.

CBD products have begun to thrive both in and outside of regulated cannabis channels in Germany, with products sold both by prescription through the state's medical program, and among the general public through mainstream channels such as e-commerce, pharmacies, bio grocers and smoke shops. Given the cannabinoid's eligibility to be covered under health insurance and its exemption from the authorization requirement when sold as a prescribed medication, it is expected that any CBD ingestible product growth will come from the medical cannabis channels until the first Novel Foods-authorized products hit the market, likely in 2021. Once these authorizations go through, oil, capsules, and a variety of edibles and beverages are expected to find their way back to mainstream channels with vigor, given their newly-clarified legal status.

Due to COVID-19 and its impacts on distribution channels and supply chains, consumer purchasing habits and priorities, it is expected that the German CBD market will experience a slight decline in 2020. However, Europe's largest CBD market will bounce back in 2021 and continue its steady growth from there.
 

Regulatory Analysis

In November 2019, a German court decision determined that the country would fall in line with the European Commission's Novel Food policy, meaning CBD-infused ingestible products would not be permitted on the market without having obtained a pre-marketing authorization or the required licenses to be sold as medicine by prescription. This decision was first made by Gießen Administrative Court (VG Gießen), which denied an appeal made by a company located in the district of Hesse - culminating in the company's being forced by local authorities to recall its CBD food products and stop selling them. This assessment is now supported by multiple German courts and the Federal Office of Consumer Protection and Food Safety (BVL).

Another agency - the Federal Agency for Pharmaceutical and Medical Products (BfArM), which also oversees Germany’s medical cannabis industry - covers CBD-infused cosmetics. Their stance is that “cosmetics containing hemp derivatives may be permitted if they are not meant to be orally consumed and can be demonstrated not to be misused for intoxication.” The specific steps that need to be taken to formally authorize CBD cosmetics remain unclear, however, which has left doubt in the minds of manufacturers and merchants and driven some chains in Germany to stop stocking these products.

Beyond any restrictions borne from the Novel Foods authorization process, manufacturers and retailers in the space must consider additional cannabis content limitations placed on ingestible items (5 mg/L for edible oils, 0.15 mg/L for all other foods and 0.005 mg/L for non-alcoholic and alcoholic beverages) by the Federal Institute for Health Protection of Consumers and Veterinary Medicine (BfR), as well as Germany’s Federal Office of Consumer Protection and Food Safety, which declared in early 2019 that food containing CBD needs prior approval to be sold in Germany.

Competitive Landscape

Competitors in Germany’s CBD market fall into two distinct categories (though some are currently or looking to breach both): those operating through medical cannabis channels, such as UK-based GW Pharmaceuticals which now offers Epidyolex on the German market, and those supplying the mainstream market with products like vapes, e-liquids and cosmetics (e.g., Harmony, VAAY).

Germany offers one of the largest CBD markets in Europe, and many of the heavy hitters in the global industry are trying to establish a foothold by acquiring European or German distribution networks via subsidiaries in order to enter the German market and expand across the continent. Companies like Aurora and Aphria have established a strong strategic position in the market not only by acquiring companies capable of distributing products like CBD oil and capsules in Germany’s pharmacies, but also via the acquisition of coveted medical cannabis cultivation licenses granted by the German government. For mainstream wellness-oriented companies, the focus today is largely on cornering the cosmetics and e-liquid/vape markets while seeking Novel Foods authorization (or securing partners who can do so) for ingestibles, as these products are not permitted on the formal market without it.

Europe-based Distributors:

MediHemp (Deep Nature Project)

Austria-based MediHemp and sister company VetriHemp offer a robust menu of CBD (and some CBG) products including oils, capsules, and pet products. The company’s outdoor-grown products are certified organic from “seed to sale”, and now available in 10 European countries. MediHemp has seen great success in Germany and aims to maintain its competitive advantage by not only continuing to deliver quality products from its current portfolio but diversifying and expanding both its product line and distribution channels there.

VAAY (Sanity Group)

Owned by medical cannabis company Sanity Group, the VAAY brand was launched in 2020 and quickly made its name in the local CBD market with a variety of product formats - from bath bombs and sport recovery creams to vapes and tinctures. Largely due to relatively new regulations surrounding ingestible CBD, infused topicals now offer an attractive alternative to companies looking to expand their footprints in Germany’s mainstream CBD market. VAAY is well-positioned to thrive in this regulatory environment due to both its breadth of topical products and recent entry onto the online and physical shelves of major beauty retailer Douglas, which boasts 2,400 stores across Europe.

Vitadol

Berlin-based Vitadol markets a variety of CBD oils, with a range of concentrations from low (4%) to medium (10%) to high (27%). The company emphasizes that all of its products are vegan, pesticide-free, non-GMO and offer full-spectrum extract rather than isolate, as well as containing minimal (0% to <0.2%) THC content. Vitadol oils have a strong online presence and have recently become available through German pharmacies (over-the-counter).

Harmony Ltd.

Founded in 2014, Harmony manufactures products such as CBD-based skincare products and tinctures, but has traditionally been known for its vape/e-liquid products. The company’s founder, Antonin Cohen, has been a strong advocate for CBD in the region, helping launch the trade association ACTIVE to promote sound guidelines and regulations across Europe, and in the meantime has taken a conservative approach to launching and promoting CBD products, ensuring they are compliant with local and regional regulatory requirements. For this reason, Harmony is expected to sustain its share of the German market in the near- and longer-terms as its vapes remain a mainstay and cosmetics portfolio is growing, while ingestible products have been forced out of the formal market through at least 2021 due to Novel Foods policy.

This list is not exhaustive, a number of additional companies have a significant foothold in Germany. For detailed profiles of various companies thriving in the country and region, see our European Competitive Landscape Page.

Distribution Analysis

Germans purchase CBD products from a wide variety of distribution channels, both mainstream and medical. E-commerce and vape shops have been the most common mainstream sales channels, although pharmacies, drugstores, bio grocers and even CBD/hemp shops are growing in importance.

Though e-commerce is likely to maintain a stronghold in the German market – especially given COVID-related retail restrictions and self-imposed crowd avoidance – pharmacies will be an increasingly important channel for CBD products for the foreseeable future. Prescribed medical CBD products can only be sold through this channel and have a great likelihood of being covered by health insurance rather than paid for out-of-pocket. By contrast, consumers purchasing outside this channel must cover product costs entirely themselves. A greater volume of CBD-dominant medical products has begun to enter the market in 2020, including GW Pharma’s Epidyolex (formerly only available through a small pilot program), leading to a large uptick in prescription CBD products in 2020. In addition, many mainstream distributors with extensive existing networks bring over-the-counter CBD products to market via pharmacy, thus this channel will continue to drive traffic as CBD becomes more accepted and additional products make their way onto shelves.

Beyond pharmacies, many companies are looking to expand their mainstream brick-and-mortar presence. Many are targeting the shelves of retail chains where they can eventually scale, such as Rossmann and DM drugstores, Aldi and Lidl grocers, etc. Retail chains are expected to outpace e-commerce in the longer term, but this will not take place until Novel Foods-authorized product can be made broadly available to these more risk-averse retailers.

Other important channels include smoke and vape shops that sell tobacco and e-cigarettes, which are exempt from Novel Foods and remain popular as consumers continue switching from tobacco-based products to CBD-based products. While CBD/hemp specialty shops continue to open up around Germany, they are particularly vulnerable to raids given that they often carry (explicitly illegal) hemp flower – a primary target among authorities thus far – and because they are now also subject to enforcement of Novel Food policy on ingestible items.

Due to differences in regulatory approach, prescription CBD product purchasing patterns are quite distinct, favoring tinctures and capsules. When purchased through the medical market, most CBD products are covered by insurance, meaning that price is not as limiting a factor when it comes to expensive medicinals such as those listed above. Furthermore, ingestibles are only currently legally available through medical channels, driving consumers to this market when they need regular, reliable access to these product formats.