As the year 2023 draws to a close, it is only natural to reflect on the events that occurred in the markets we cover. However, when it comes to the cannabis industry, the answer is a resounding “not much.” Unfortunately, this lack of development is not ideal for cannabis startups already facing a challenging funding environment.
Namely, 2023 was not the year that Germany finally legalized adult recreational cannabis use. This is significant because it was an expectation within the legal cannabis market that has now been deferred. Whenever there is misalignment between reality and investor expectations, particularly when public companies have amplified these expectations, it is rarely good news. In fact, it often leads to negative consequences for all involved.
“One trend to look out for in 2024 is consolidation,” stated cannabis-focused investor Matt Hawkins, a managing principal at specialized VC firm Entourage Effect Capital. “Companies have invested substantial capital in preparation for a significant commercial market in Germany. However, as the chances of that happening diminish, companies may struggle to sustain their operations without merging with others.”
In order to gain a better understanding of the events of 2023 and what lies ahead in 2024, let’s turn to a newly released global cannabis report from market intelligence firm Prohibition Partners.
What did not happen
The belief that the most populous country in the European Union might legalize recreational marijuana did not arise out of thin air. This possibility has been on the table since a “traffic light” coalition took power in Germany in December of 2021. However, over time, this coalition of social democrats, liberals, and greens significantly weakened their plans, leaving us to wonder if they were truly well-prepared to overcome predictable legal challenges.
