Issues Abound in Cannabis Cultivation – What Can We Expect

When cannabis began its march towards legalization, both medically and recreationally, there were many mistakes made by state agencies issuing licenses for cultivation, manufacturing and dispensing. This was the result of self-imposed deadlines, no clear path how to go about deciding who “wins” a license and who does not and various legal hurdles concerning everything from zoning to security for facilities. And as always, let’s not forget the Federal Government’s continued ban on cannabis as a Schedule I substance.

Many believe other countries throughout the world have handled the legalization of marijuana in a more cohesive and comprehensive manner. However, a closer look reveals this is not necessarily the case. A perfect example is Germany. Germany previously allowed various companies to bid for cultivation rights. A number of companies were awarded those rights. Now…those same companies have been informed that their previously awarded bids have been withdrawn and a new award procedure will be instituted based on a decision by a German regional court.

The companies were informed that the new award would be initiated in a “timely manner,” but no specific date was provided. This is problematic on many levels. First, what of potential lawsuits from the companies who were initially awarded bids? What of companies that were denied bids in the initial award procedure? Will there be any specific bids set aside for purely German companies? What about competition from large companies from around the world? Will the bids be limited to companies who focus solely on Cannabis? What about large pharmaceutical companies who have the capital and access to research to quickly set up shop and meet any rigorous standards imposed by the German government?

Ultimately, it is not out of the realm of possibility to see litigation arising from such acts. The original bids were awarded by Bundesinstitut für Arzneimittel und Medizinprodukte (BfArM).

However, the German regional Court held that BfArM was at fault in how the bid process was conducted. All of the companies awarded the original bids have now suffered damages in the form of time delays, inability to seek out other potential opportunities, property costs (leases/security/manufacturing upgrades). What happens if the original companies do not win a bid in this second round?

What all this means is that companies must monitor the bid process and attempt to get to know the players within the field. Germany is a microcosm of what is likely going on in various other locations throughout the world, including the United States. Ineffective bid processes and other legal hurdles can leave clients in the wind after they’ve spent untold amounts of cash to qualify for a license. Being aware of the regulatory and legal hurdles present in each jurisdiction is paramount before starting these processes. A failure to do so could cause all of your hard earned investments to go up in smoke.


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