Germany’s €1 billion cannabis market faces government pushback after two years of legal growth

Executive summary: Germany’s legal cannabis market reached about €1 billion in sales two years after the Scholz‑led liberalization, but the government is now reconsidering the law. As the EU’s biggest cannabis market, any policy reversal could affect industry revenues, tax receipts, and public‑health outcomes across the bloc.

Who is involved: Key actors include the German federal government (Chancellor Olaf Scholz and coalition partners), cannabis producers and retailers, industry associations, and EU regulatory bodies.

Likely next: Lawmakers are expected to draft amendment proposals in the coming weeks, with industry groups preparing lobbying efforts and possible legal challenges if restrictions are imposed.

Since the legalization initiative launched under Chancellor Olaf Scholz, Germany’s legal cannabis sector has grown to approximately €1 billion in annual sales, making it the largest market in the European Union. In recent days, members of the governing coalition have signaled a willingness to revisit the law, citing concerns over public health and the rise of other illicit substances. The announcement has triggered uncertainty among cultivators, retailers and ancillary service providers who have invested based on the existing regulatory framework. No formal legislative proposal has been introduced yet, but the debate signals a potential shift in Germany’s drug policy direction.

Timeline

2026-08-23 — Cannabis legale, in due anni la Germania è diventata il più grande mercato Ue. Il governo non ci sta (la Repubblica — Economia)
2026-08-06 — Lo sprint delle imprese italiane che investono in Germania (Il Sole 24 Ore — Economia)

Analysis — what this means

Likely next events

German Bundestag committee to hold a hearing on cannabis regulation on 12 September 2026.
Cannabis Industry Association to submit a policy paper proposing a tax‑based framework by 15 September 2026.
Federal Ministry of Health to publish a risk‑assessment report on cannabis use by 30 September 2026.
Possible referendum on recreational cannabis limits scheduled for spring 2027.

Sectors affected

Cannabis cultivation
Retail dispensaries
Testing and packaging services
Ancillary logistics

Regulatory implications

Potential amendment to the Narcotics Act (Betäubungsmittelgesetz) to raise the THC threshold for personal possession from 5 g to 2 g
Review of licensing caps for large‑scale cultivation facilities, possibly limiting new permits to 10 per year
EU Commission may initiate a monitoring procedure under the free‑movement of goods rules to ensure non‑discriminatory market access

Historical parallels

Washington, D.C. attempted to roll back cannabis legalization in 2015 after a voter‑approved initiative, ultimately maintaining the law
Portugal’s 2001 decriminalization of all drugs has been cited as a stable model despite periodic political pressure
Canada’s 2018 federal legalization led to provincial adjustments in Alberta and Quebec regarding retail density and advertising restrictions