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As 2023 comes to an end, it is only natural to reflect on what happened in the markets we cover. But when it comes to cannabis, the answer is “not much,” which won’t help cannabis startups that are already facing a challenging funding environment.
Namely, 2023 wasn’t the year that Germany legalized adult recreational cannabis use. That matters because that’s not what the legal cannabis market once anticipated, and whenever there is misalignment between reality and what investors expected, especially when public companies boosted said expectations, it is rarely good news. Or at least, not for everyone.
“One trend to look out for in 2024 is consolidation,” said cannabis-focused investor Matt Hawkins, a managing principal at specialized VC firm Entourage Effect Capital. “Companies have spent significant capital in preparation for a sizable commercial market in Germany. [As] the chances of that happening fade, companies might not be able to support their operations without joining forces.”
Let’s take a look at what to remember from 2023 and what to expect in 2024, with help from a brand-new global cannabis report from market intelligence firm Prohibition Partners.
What didn’t happen
The expectations that the EU’s most populated country might legalize recreational marijuana didn’t come out of thin air; this possibility was very much on the table ever since a traffic light coalition took power in Germany in December 2021. But this coalition of social democrats, liberals and greens watered down its plans so much since then that one has to wonder how well prepared it was to overcome legal challenges that shouldn’t have come as a surprise.
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