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Germany’s expanding medical cannabis market is a boon for Canadian companies
Canadian cannabis companies are supplying nearly half of Germany’s booming medical market, one of the few bright spots in the industry.
Canada leads Germany’s medical cannabis imports, supplying 43% of all dried flower in the first quarter of this year as demand surges following cannabis reform.
Canadian producers are cashing in abroad, with companies like Organigram, Decibel, and Village Farms posting major gains — international sales more than doubled, and margins expanded significantly.
Germany is now the key growth market, offering higher profits than Canada’s domestic sales and prompting companies like Tilray to shift inventory overseas to meet demand.
Canadian cannabis companies are supplying nearly half of Germany’s booming medical market, one of the few bright spots in an industry that has struggled to sustain growth the last few years.
And it appears there’s plenty of room for them to run.
In the first quarter of this year, Canada accounted for 43.1% of the 37,223 kilograms of imported dried flower to Germany, according to the Federal Institute for Drugs and Medical Devices (BfArM).
Canada’s first-quarter exports of 16,057 kilograms were nearly half the amount (33,155 kilograms) the country exported to Germany in all of 2024.
Growth has been fueled by several factors, including:
The Cannabis Act, enacted in April 2024 which removed cannabis from Germany’s narcotics list.
Expansion of the country’s medical marijuana patient registry, estimated at 900,000 in May, a fourfold increase from a year earlier, according to Artemis Growth Partners, a private equity firm that invests in cannabis companies.
The cost of regulated medical cannabis is significantly lower than illicit flower.
Exported cannabis generates much higher margins than domestic sales in Canada.
“Canada is in a great position,” Frederico Gomes, an analyst at ATB Capital Markets who covers the sector, told Cultivated. “I think it's going to remain the main exporter of high quality cannabis to markets like Germany.”
In a May investor note, Gomes signaled the tide may be turning for publicly traded Canadian companies, long mired in failed consolidations, elusive profitability, and equity dilution.
“We believe the sector could be approaching an inflection point driven by two tailwinds,” he wrote.
First, rapid international sales growth in Germany, the United Kingdom, Poland and Australia, and second, domestic price improvements due to cultivation closures and product diverted to higher-margin international markets.
These advantages are materializing on the balance sheet, with ATB-tracked cannabis companies increasing overall sales 25% on average in their last quarter compared to a year earlier. International revenue more than doubled, up 107%, while adjusted EBITDA margins, a key metric of financial performance, expanded 657 basis points year-over-year, Gomes said.
Inside the numbers
The most recent round of quarterly reports highlights the seismic market shift in Germany — and to a lesser extent other international markets — and the strong position Canadian suppliers are in to meet growing demand.
Organigram posted record revenue of $65.6 million Canadian dollars (CAD) in the March quarter, up 74% year-over-year.
The increase was driven by its $90 million December cash-and-stock purchase of Motif Labs, a vape and infused pre-rolls maker, and international sales, which increased a whopping 177% year-over-year to $6.1 million.
The Toronto-based company, which has supply agreements with partners in Germany, the UK, and Australia, expects sales in the international segment, and particularly Germany, to further increase in the second half of the year.
It has also invested at least $21 million CAD into Sanity Group, a leading German cannabis company and one of its largest customers.The strategic partner has submitted applications for recreational cannabis pilot projects in Berlin, Frankfurt, Düsseldorf, and Bremen.
“Of the markets that we anticipate to be the biggest levers to growth, Germany is top of the list,” Organigram Chief Strategy Officer Paolo De Luca told Cultivated. “We haven't seen that leveling off of supply and demand yet, and we expect it to continue to grow.”
International sales at Decibel Cannabis Company skyrocketed 527% to $2.2 million CAD in the first quarter compared to the same period a year ago.
The gains were primarily driven by its exporting unit, AgMedica Bioscience, which was acquired last year from Callisto Capital. in a $6.3 million convertible debt-and-stock deal.
When the deal was announced, AgMedica was touted as the cornerstone of its international strategy.
Decibel CEO Ben Sze is bullish on his company’s growth prospects in Germany due to the overall size of the market and barriers to entry, which include high capital costs for facility build-ups, the lengthy process of securing European Union Good Manufacturing Practice certification and limited domestic production capabilities.
“International markets are going to continue to grow year over year,” he said. “For 2025 and probably for the first half of 2026, it's going to be heavily driven by Germany.”
No signs of a slowdown
Village Farms International in the first quarter saw sales of higher margin medical exports from Canada skyrocket 285% year-over-year to $7.7 million CAD, with shipping volumes increasing in Germany, Australia, and the UK.
The strong segment growth puts the Vancouver, British Columbia-based company on a path to triple international sales this year, a projection highlighted in its first quarter earnings report.
In the report, Village Farms also said it holds leading cultivars in the German market through third-party distributors.
“The international demand, we are not able to meet it with our supply right now,” Sam Gibbons, senior vice president of corporate affairs, told Cultivated.
“It is substantial, and it's not showing any signs of slowing down.”
The margin play
International business brings much higher margins on essentially the same product, a key metric for suppliers and investors.
That’s because of Canada’s high excise tax levied on recreational sales, which is about $1 per gram.
“When you're paying close to 70% or more of your sales to the government in the form of excise tax, that's why the demand from these international markets is so attractive for us to try to meet,” Gibbons added.
Buoyed by international sales, Village Farms improved gross margins to 36% in the first quarter, up from 25% a year earlier.
The arbitrage is enticing other international competitors to divert more product to Germany.
Tilray Brands took a $3.2 million “timing impact” hit in its February quarter as part of a strategic growth initiative redirecting product from Canada to international markets, according to its quarterly financial report.
“Given the increasing demand in Germany and the margins in Germany are the highest in the international markets, we are also allocating more of our inventory to that market to further enhance our profitability,” Tilray Chairman and CEO Irwin Simon said in an April 8 earnings call.
The company, which didn’t respond to Cultivated inquiries for this story, is now supplying cannabis flower to Germany from cultivation facilities in Canada, Portugal and Germany.
“In general, international markets are more profitable,” ABS’ Gomes wrote in an investor note. “So if you're looking for profitability, you would export as much as you can.”