Author: Jennifer Plankenbühler

Since its founding in 2018, Sanity Group has quickly established itself in the European cannabis market and today maintains one of the strongest pharmacy distribution networks in the German medical cannabis market, with more than 2,000 pharmacies. Currently, the company holds an estimated market share of around ten percent with its medical brands Vayamed and avaay Medical. Notably, the avaay Medical brand has become one of the leading cannabis flower brands and has seen significant sales increases since the reclassification of cannabis in Germany in April this year. Sanity will use the additional capital to improve education and simplify access to medical cannabis therapy. Moreover, Sanity is currently the only German company participating in a scientifically supervised Swiss pilot project for the distribution of recreational cannabis through licensed specialty shops in the Canton of Basel-Landschaft. The project called Grashaus Projects could serve as a blueprint for further steps in cannabis legalization also in Germany.

Expanded Import Volumes Following EU-GMP Certification

The current investment extends the previously announced supply agreement between Organigram and Sanity Group. Once Organigram obtains EU-GMP certification for its indoor cultivation and production facility in Moncton, New Brunswick, Sanity will introduce more flowers and innovative dosage forms from Canada to Germany. Organigram expects to complete its final EU-GMP inspection by the end of the calendar year. “With a commitment to responsible research, innovation, and product development, we are confident that we have chosen a partner in Organigram who will support us in taking a leading position in rapidly developing legal European markets,” says Dr. Konstantin Rutz, COO and Managing Director of Sanity Group.

“We are very pleased to complete this financing with our partners at Organigram, who have consistently proven themselves as leaders in the competitive and highly regulated Canadian cannabis market,” adds Finn Haensel, co-founder and CEO of Sanity Group. With its entry, Organigram expands Sanity Group’s investor community, which includes venture capital funds such as Redalpine, HV Capital, Cherry Ventures, Atlantic Foodlabs, Casa Verde Capital, and Navy Capital as well as well-known personalities like Will.i.am (Black Eyed Peas), Scooter Braun, German TV presenter Klaas Heufer-Umlauf, model Stefanie Giesinger, soccer professionals Mario Goetze, André Schuerrle, and Dennis Aogo, and actress Alyssa Milano.

Strong Signal for the German and European Cannabis Market

“We believe that after Canada, Germany will emerge as one of the more promising markets under a nationally legal model,” says Paolo De Luca, Chief Strategy Officer at Organigram. “With its evolving program for medical cannabis and recent limited legalization for recreational consumption, Germany may eventually adopt a full adult-use cannabis framework. This growth opportunity is magnified by positive regulatory developments in several neighbouring European jurisdictions where Sanity Group is expanding its presence.” 

Beena Goldenberg, CEO of Organigram: “Our investment in Sanity Group establishes a significant European footprint for us. Organigram benefits from Sanity’s expertise and insights in the German and (in the future) other European cannabis markets. This has the potential to provide a pathway for us to launch our own brands and industry-leading IP through Sanity’s extensive distribution network. This relationship also bolsters our European revenue generation through a significantly expanded commercial agreement.”

Developments in Germany Potentially Shaping Europe

Following the legal reforms for recreational cannabis that came into effect on April 1, 2024, the German cannabis industry is experiencing an expansion: Recently estimated at an annual rate of 500 million euros, the German market is expected to grow to two billion euros by 2027. This remarkable growth is initially reflected in a 30 to 50 percent increase in medical cannabis prescriptions since the reclassification and removal of cannabis from the Narcotics Act. Similarly, the number of imports has increased significantly, reaching over 30,000 kilograms in 2023 – an increase of more than 26 percent compared to the previous year. The progress of the German cannabis industry could thus serve as a catalyst for a more unified and progressive approach to cannabis legalization and regulation across the continent.

To achieve the primary goals of the law, including child and youth protection, the containment of the black market, and ensuring the safe product quality of cannabis products for recreational use, Finn Hänsel sees the planned pilot projects for the controlled distribution of cannabis in licensed specialty stores under Pillar 2 of the legislative initiative as a central aspect: “Of course, we welcome the long-overdue modernization of German drug policy initiated by CanG. At the same time, however, we hope that the implementation does not end with Pillar 1, but that the accumulated expertise of the industry can now also be put to use.” For recreational use, CanG will allow possession of up to 50 grams of cannabis for personal consumption in private spaces; the maximum limit for public spaces is 25 grams. Private cultivation of up to three plants will also be possible from April 1st, while collective non-commercial cultivation and controlled distribution of cannabis through cultivation associations will only be possible from July 1st, 2024.

However, to curb the illegal cannabis market, the expected very limited number of cannabis clubs and the possibility of personal cultivation are not sufficient; significant bureaucratic requirements for the establishment, licensing, and operation of a cannabis club also hinder widespread access, according to Finn Hänsel. “The substantial reduction of the black market and the associated strengthening of youth protection can only be adequately guaranteed with Pillar 2, which is why we demand its swift implementation. Valuable time is lost by postponing the two pillars.”

Incorporating Scientific Research and Industry for Increased Quality and Safety

Of central importance for answering numerous questions that have been discussed in the process of legalization is now an open-ended data collection. For example, regarding consumption behavior, physical and mental health, and societal impacts, especially concerning public safety. “Scientific pilot projects create a comparable database for assessing the effects of legal sales under different conditions. Furthermore, Pillar 2 enables the realization of the economic potential of controlled cannabis distribution as a recreational substance, which cannot be fully exploited in Pillar 1. This includes the creation of jobs with social security contributions and economic revenues from income tax and social security,” Finn Hänsel continues.

How this can work is already demonstrated by pilot projects in neighboring countries today: “Thanks to our Swiss pilot project Grashaus Projects, which we successfully initiated at the end of 2023 in collaboration with the Swiss Institute for Addiction and Health Research, we are ready to contribute to a scientifically founded implementation of cannabis legalization in Germany as well.”

Reclassification of Medicinal Cannabis to Facilitate Medical Prescription

With regard to the medical prescription of cannabis, CanG includes important facilitations for patient care as well as positive changes for the medical and pharmaceutical profession with the included Medicinal Cannabis Act (MedCanG). The reclassification away from a narcotic to a classic prescription drug contained in the CanG will particularly affect the prescription of cannabis, which has been possible in Germany since 2017. And the demand is there: “Surveys from North America show that around 80 percent of recreational cannabis users there consume cannabis not only for pleasure but also for health reasons, for example, for nervousness, stress, pain, or sleep problems. In the future, these individuals can receive a medical prescription for cannabis much more easily here than is currently the case,” explains Dr. Konstantin Rutz, COO and Managing Director of the Sanity Group. “In this context, we anticipate a significant increase in demand for medical use, as physicians can finally prescribe cannabis without the hurdles of the Narcotics Act – and thus much earlier in the patient journey than before. We see this as an important and correct step in improving the quality of life for hundreds of thousands of patients suffering from complaints such as sleep problems, stress, or chronic pain.”

For physicians, this change will mean a possible prescription on a “normal” prescription or even an e-prescription in the future. “To ensure sustainably secured patient care, we also hope for greater acceptance of cannabis therapy within medical and pharmaceutical professional groups,” Dr. Konstantin Rutz continues. “The next step to make the potentially health-promoting properties of medical cannabis widely accessible would be the elimination of the approval requirement for cost coverage by statutory health insurance.”