How will the war in Ukraine affect the European cannabis industry?

When Russian tanks rolled into Ukraine last Thursday, perhaps the last thing on anyone’s mind was how Europe’s biggest ground war since World War II would affect the burgeoning cannabis industry.

The reality has set in, however, and it is clear to many in the cannabis space, at least in Europe, that the pending reform issues so important to the post-COVID industry, if not other issues inherent in a globally connected world, may stall.

What is affected, what stays the same?

Production and supply chain issues in Europe

One of the issues that will remain untouched is the cannabis supply chain. Currently, Germany sources some of the cannabis it uses for the medicinal market domestically. In addition, cannabis is entering the country from places not previously directly affected by the outbreak of hostilities. These include Denmark, Portugal, Spain, Holland, Greece, Colombia, Uruguay, Australia, Lesotho and Uganda as well as the first trickle of manufactured products from Israel.

Franziska Katterbach, President for Europe at Khiron Life Sciences, based in Frankfurt and the UK, said on the phone: “We do not expect any impact from the war on our supply chain.”

However, the industry is likely to be affected by higher energy costs. Germany and Holland are the two countries in Europe hardest hit by rising gas prices resulting directly from the conflict. Great Britain suffers too. The requirement for the EU GMP certification required for all medicinal cannabis products prescribed and consumed here is that everything must be grown indoors. It is also an energy and water guzzler.

A little more pessimistic is Alain Menghé à Menghé, CEO of Lio Pharmaceuticals, a German distributor that is building a manufacturing center in Solingen near Düsseldorf. He expects the outbreak of hostilities to affect the entire industry, albeit not directly. “Unfortunately, the situation is already leading to higher energy prices that will impact everyone in the industry who needs to transport, store or manufacture the plant or medicines made from it,” he said.

Pricing issues are one of the biggest issues in the medical market right now — namely, insurers’ willingness to approve cannabis-related drugs.

The impact on the Ukrainian cannabis industry

The cannabis industry has a long history here. During the Soviet era, the country was one of the largest growers of industrial hemp. Cannabis with higher THC levels was also routinely grown, albeit at rock bottom, creating a large user base.

More recently, the legalization movement has prevailed here. A Cannabis Freedom March took place in October 2017, sparking the modern movement here to legalize the drug for medicinal and recreational uses.

According to local proponents, the Russian invasion will essentially destroy the local cannabis industry. Thanks to several years of lobbying, including the Ukrainian Medical Cannabis Association, there have been a few victories. Before last Thursday it was possible to get a prescription for medicinal cannabis, but it was very difficult to get it and legal supplies.

However, this does not mean that there was no impetus for reform, although local experts did not expect any changes in the next five years. There have also been repeated attempts to bring cannabis reform into the political debate – all failed.

In 2019, the Ukrainian Cannabis Association submitted a proposal to Parliament to consider legalizing medicinal use. In 2020, a national poll showed that 65% of the population supported medical reform. As of 2021, drugs containing nabilone, nabiximol and dronabinol were sold in the country. Until last Thursday, cannabis was technically illegal in the country, although people were allowed to grow up to 10 shrubs for personal use.

Given the current conditions in the country, it is very likely that the illegal market will see a major boom, starting with the wartime disruption of everything, an inevitable black market and unavailability of medicines.

Political and personal issues

One of the biggest ramifications of the war beyond Ukraine is likely to be the political ramifications everywhere else. This is especially true in Germany, where politicians have already mentioned that COVID would push back all leisure talk. War is another distraction. This applies to Germany just as it currently does to all EU countries and Great Britain.

According to Menghé à Menghé, “Deprioritising issues other than war could slow the dynamics of regulatory change.”

In addition, there are other considerations that people on the Cannatech side of the equation also feel – namely, the direct effects of war. Ziya Gaziyev, the CEO of Berlin-based HelloMary, an AI-centric marketplace and platform, has part of his local programming team in Ukraine. “We are very worried about our friends and colleagues,” he said. “Obviously this affects us directly personally. However, this will not impact our programming efforts or deadlines as our core team is spread across multiple countries.”

Why legalization shouldn’t be slowed down

Right now, it’s crucial for the cannabis industry to take charge of its own destiny. The vertical has been recognized around the world as good for economies, as a strong employer and of course as a maker of highly potent drugs, even if people are still unwilling to support full reform.

Given its “flower power” past, no matter how corporate it has become, this is also generally an industry made up of people who are pro-peace and pro-diplomatic.

Delaying changes because of what are perceived as more important and pressing issues will only exacerbate patients’ difficulties in obtaining the drug. And the escalation of war will only increase a suffering that not even cannabis can solve.