German politicians are continuing to ignore the discussion about cannabis recreational reform. However, another important fight is underway that could have wide-ranging consequences for the medical marijuana market. It could force more people to source cannabis illegally or into the recreational markets if it is not resolved. The discussion on discount purchasing agreements for insurers, pricing cannabis, and the wider conversation around what cannabis flowers are.

In a nutshell, could cannabis flower ever be broadly categorized as a “generic medication” for medical purposes and thus be bought and priced within the market accordingly?

Although it may seem like an inexplicable question, the problem, along with most of the solutions proposed so far, will affect the price and availability of marijuana flower on the medical market. If not solved, it could also remove flower from the medical cannabis conversation forever — or severely limit it. There are even insurance reimbursements.

Further, if it is not addressed, the only people who will benefit from the status quo are those on the industry side of this conversation who are now angling for recreational reform not to mention the protection of “branded” cultivars for medicinal and other uses.

Currently the only “generic” cannabinoid medicine in the market, and defined as such under the Narcotics Act, is dronabinol — a THC isolate then diluted with a non-active oil. This isolate, which is made from cannabis flowers of varying sizes and colors, is not part of any current debate. It is an isolated cannabinoid.

Anyone with power hasn’t considered the fact that cannabis flower is preferred by patients to dronabinol. Patient rights have been ignored so far — and the “non-generic flower” conversation also seems to be heading in this general direction.

Pricing and Definitions of Medical Cannabis in Germany

This is where you can get the most basic understanding of the issue. It is still a confusing and unresolved issue to classify cannabis as a drug. It is not only a political question, but also a scientific problem.

Although the German legal and medical system tried to establish terms for pricing flowers after 2017, these rules are not universal. These can lead to devastating consequences. One of the most shameful so far, which has still not been addressed, is that while cannabis flower is not considered a finished “medicine,” patients can still be criminally charged under the Narcotics Act for growing their own because they are “abusing” and “illicitly accessing” what is deemed a “narcotic medicine” at least in this instance. Patients who are not insured or unable to obtain insurance approval must purchase cannabis at twice the cost as the pharmacies. This is the current 40% population that are not covered by insurance. This is the reason so many people are moving back to the black market instead of going through the legitimate one.

Here are some definitions that govern the trade and pricing of cannabis in medical supply chains. The German commercial cultivation licence for cannabis must be used to sell it as a finished medical product to Cansativa. Cansativa is based in Frankfurt and can only distribute the marijuana at 2.20 Euros per gram. Cansativa can then either sell it directly or to any other pharmacies licensed with pharmaceuticals. Patients can only be sold cannabis by licensed pharmacies. They must also offer the product at a set price. However, this price can only be set by law if the insurer is reimbursed.

Distributors will be able to purchase cannabis from any other source for the same price as German cultivated cannabis. The pharmacy and distributor must then split the 5.5 euro per gram. But, it is unlikely that this situation will be possible. Many distributors and growers have sold above the reference price, including Bedrocan from Holland. Cannabis pharmacies and distributors outside of Cansativa must make a lower profit margin to be reimbursed by German public insurance, which is the biggest group for sales.

However, the situation is currently changing. GMP marijuana could now be sold to licensed distributors on the market at a price of less than 2.20 euro per gram for if it was sourced in Germany. If they are included in the scheme, this would make it attractive for both patients and insurers. The German bid means that the distributors of legitimate medicinal cannabis will make more money while selling it for less. This is why so much of Germany’s industry is upset by the concept of generic discount. There are no discounts.

But the problem is not over.

What exactly is medical cannabis defined as under German law?

There are many definitions for cannabis. The first is that all cannabis flower, technically, is still considered a “narcotic” even if it is sourced from hemp with a THC level under .02% This is gradually changing, including by legal challenge.

The EU GMP certified cannabis flower is not considered to be a final medical product. They must “prepare” the flower they receive from distributors, even though in this case, all that means is that they repackage it. This also means currently cannabis flower cannot legally be considered a “generic medication.”

Because Germany has a law that covers everything, it also impacts cannabis prices in the medical market. This means that manufacturers and producers who have been allowed to make discounts for generic drugs may no longer be permitted to do so when they sell the medication in bulk to future insurers.

Only one thing has resulted from the existing regulations and definitions is a business case for three German growers as well as the exclusive, monopoly distribution agreement that was tied to them.

The Biggest Wrinkle

Insurance companies know that cannabis patients are not allowed to be limited based upon speculative claims. They also recognize the danger of using older studies, which could negate the effectiveness of cannabis for medical purposes. For the qualifying patients, they don’t like to pay even 8 euro per gram.

Thus, as of last fall, several distributors announced that they had entered into “discount agreements” with insurers for cannabis flower. This means that, just like wheelchairs and other prescription drugs that are deemed “generic,” insurers can further limit what kinds of cannabis doctors are able to prescribe, and further that patients are able to obtain for a monthly co-pay of 10 euros.

Although this alleviates price pressures on distributors that are able sell large quantities to insurance companies, it creates serious problems. A patient with a contract for cannabis from an insurance company will be limited in the amount of cannabis that they can receive. This also eliminates almost all prescription rights for doctors.

Self-payers are still completely excluded from this conversation. If flower were, finally, categorized, as a medicine in and of itself, it could legitimately be classified as a “generic,” and further, patients who are also self-payers could legitimately benefit from lower prices too. The development could lead to an entirely separate price structure for flower that’s lower than its recreational counterpart (much as it is in Massachusetts).

But, this could also create an even greater opportunity for home grown, which is something the German industry, and the government, has been criticized.

This is the beauty of this type of development. While there are differences between cultivars, and sativa and indica hybrids impact both recreational and medical users differently, along with the terpenes in the mix, it could be possible to create “bands” for certain kinds of flower that fall generally within a certain range of cannabinoid and terpene concentrations. This is what Germany has done so far, at least in terms of CBD and THC concentrations in flowers. However, self-payers still have to pay brand price prices.

But, the development has been criticised, mainly because of how well-funded and branded it is to sell extracts or flower. Money and mo’ money is the name of the game, even in a still solely medical market.

Which side wins and who loses?

It is clear that the status quo at this time is untenable. Unfortunately, much of the problem has resulted from the inability of those at power to solve real problems. This is also however, going to be a hotly fought issue by producers – all of whom want to make money by providing “unique” strains to the medical market.

But, until big, fundamental and important questions can be answered including the lack of scientific evidence that has been so shamefully not sought, or planned for, it is impossible to discount bulk sales of cannabis flowers to self-payers as well as insurers.

In the interim, however, the cannabis industry is trying desperately to continue to survive by trying to sell as many marijuana products as possible, regardless of the price.

Naturally, it is not surprising that many people suffer as a consequence.