Czech Republic to Follow Germany in Legalizing Recreational Pot by 2024

In late 2021, Malta became the first European Union country to fully legalize recreational marijuana. In September 2022, Germany announced it would also legalize recreational cannabis. (Sources: (Source: "Malta Update: It's Official, President Signs Cannabis Legalization Bill Into Law," Benzinga, December 20, 2021 and “Germany’s Adult Use Cannabis Laws Steeped in Optimism and Uncertainty at the Moment,” Benzinga, September 21, 2022.)

Now the Czech Republic says it will follow in Germany's footsteps. Both countries are expected to legalize recreational marijuana by early 2024. (Source: “Czech Republic On the Way to Legalizing Cannabis,” Deutsche Welle, November 2, 2022.)

The Czech coalition government is working on a bill that will regulate the cannabis industry The legislation is expected to be presented in March 2023 and come into effect by January 2024.

In an October Facebook post, Jindřich Vobořil, the Czech Republic's former national drug coordinator, wrote (in Czech), “However, we are in direct contact with our colleagues from Germany and we have repeatedly confirmed that we want to coordinate, even practically by consulting each other on our proposals." (Source: “Facebook Post” Jindřich Vobořil, October 26, 2022, translated by Google Translate.)

What will that look like?

The new measures will establish the levels of tetrahydrocannabinol (THC) that each marijuana product can contain. Like in other countries, cannabis growers and retailers will likely need licenses. The amount of marijuana each adult will be allowed to purchase has yet to be established, and buyers could be required to register with the state like they currently do with medical marijuana.

One company with a first-mover advantage for when Germany and the Czech Republic legalize recreational pot is Flora Growth Corp (NASDAQ:FLGC).

The company began exporting commercial cannabidiol (CBD) products to Germany earlier this year, and it has announced plans to open 50 retail locations in Germany and the Czech Republic by the end of 2023. That means Flora Growth could end up rewarding marijuana stock investors.

Czech Republic's Cannabis Market

Even though recreational cannabis is still illegal in the Czech Republic, the country with a population of 10.7 million is one of the most liberal countries when it comes to the issue of cannabis legalization.

The Czech Republic decriminalized marijuana possession for personal use in 2010 and legalized medical marijuana in 2013. (Source: “Czech Republic Cannabis Market,” Cannabis Business Plan, last accessed November 21, 2022.)

Moreover, the country is known for cultivating hemp with high levels of THC, up to one percent, for industrial purposes. Other European countries have set their limits to about 0.2%.

Currently in the Czech Republic, a single company grows medical cannabis, which is sold by the State Cannabis Agency. It's expected that the country's marijuana legalization will result in increased demand, which could open the door to business competition.

Marijuana and hemp products have been available in Czech pharmacies since 2017 to those who have a doctor’s prescription.

Anyone else who has wanted to enjoy cannabis in the country has had to resort to the black market. That hasn't been difficult, though. The black market even includes grocery stores that sell products that contain marijuana such as drinks, chocolate, and ointments. (Source: Deutsche Welle, November 2, 2022, op. cit.)

The Czech Pirate Party, the smallest member of the Czech Republic's governing coalition government, says legalizing and taxing recreational marijuana could generate about €800.0 million ($782.0 million) annually.

Analyst Take

As mentioned earlier, the government of the Czech Republic has said its officials are working with the German government to coordinate recreational cannabis legalization. Both countries expect recreational marijuana legalization to take place in early 2024.

Medical marijuana has been legal in the Czech Republic since 2013. The legalization of recreational pot will create a whole new industry in the country, which could benefit marijuana stock investors.