The pandemic is itself leading to an increase in demand
Anne Sophie Goninet

New Zealand's referendum last month to legalize recreational marijuana use was the first time a country put the controversial topic to a popular vote. Initial results point to a narrow defeat of the measure, which would still leave Uruguay and Canada as the only countries to fully legalize cannabis at a national level.

Still, in normal times, such a vote would have made worldwide headlines. But with COVID-19 dominating the news, it's mostly wafted under the radar.

• And yet ... In other countries, the pandemic is itself leading to an increase in demand, creating new (and old) questions about the burgeoning cannabis industry as well as the question of its legalization.

Locked down and lighting up: Recreational use of cannabis is banned in all European countries, though some have legalized it for medical use. But according to the European Monitoring Centre for Drugs and Drug Addiction, cannabis is Europe's most commonly used illicit drug, with an estimated 24.7 million users in 2019.

• The EMCDDA issued a report this summer that found that during the lockdown, occasional cannabis users had reduced their consumption but frequent users had increased it, citing reasons such as "boredom" and "anxiety."

• During the lockdown, users faced a shortage as the availability of marijuana "significantly decreased" because of the pandemic, leading to an increase of home growing of cannabis as well an increase in online searches for terms relating to domestic cultivation in various European countries.

A worker harvests cannabis in the U.S. — Photo: Jim West/ZUMA

In Germany, where the use of marijuana has been legal for treating diseases since 2017, the number of patients applying for cannabis-based treatments has been growing steadily.

• Total sales increased to €120 million in 2019, compared with €73 million the previous year, and more than 50 companies now own an import permit, Deutsche Welle reports.

• And while the country relies mostly on imports from the Netherlands and Canada, it is now looking towards ensuring domestic supply via its first local cannabis harvest at the end of 2020 — a crucial question especially since the lockdowns in Europe have taken a toll on Germany's logistics operations.

Boon for the lawyers: It's been two years since Canada legalized recreational marijuana, but the pandemic has provided an unexpected opportunity for the industry to thrive and truly compete against the black market for the first time.

• Compared with the same period last year, Canadians spent 74% more money on licensed cannabis from April to June, while spending on the black market has decreased by 5%, according to data from Statistics Canada.

• Legal sales have also generated more than $231 in July, a 15% increase compared with the previous month and the biggest monthly increase since the country legalized cannabis, Le Journal de Québec reports.

• "There's been a downturn in the black market because people are much more reluctant to go out and meet their regular cannabis dealer in the way that they were prior to the pandemic," retail marketing expert David Soberman told Global News.

An employee arranging cannabis products at the HOBO Cannabis Company during the COVID-19 pandemic in Toronto — Photo: Nathan Denette/The Canadian Press/ZUMA

Pushing for legalization: In the United States, 11 states have already legalized recreational marijuana and the pandemic seems to be pushing others to follow their lead, whether it be for economic reasons or to curb the anxiety caused by the lockdown.

• Cannabis in Hawaii is only authorized for medical use, but a new law was signed on Aug. 27 to legalize the growth of hemp in the state through the U.S. Department of Agriculture (USDA) Domestic Hemp Production Program.

• For former State Senator Will Espero, talking to local network KITV, if the state was hesitant to legalize recreational marijuana until then, the pandemic and its impact on unemployment and the state's economy have "changed the game." Marijuana tax revenue could indeed help diversify Hawaii's tourism-heavy economy.

With New Jersey set to vote in a state-wide referendum to legalize recreational marijuana for those over 21, the pandemic seems to have changed the mind of some.

• A recent poll from Brach Eichler's Cannabis Law Practice showed that 13.5% of those surveyed said the pandemic caused them to now favor legalization and that in total, 65% of the state's residents strongly supported or somewhat supported the ballot question.

• Some may have realized that cannabis could be used to treat anxiety, something many experienced during the lockdown, as the state also allowed medical cannabis dispensaries to remain open.

• For Charles Gormally, co-chair of the firm's Cannabis Law Practice, talking to local news website NJ.com, people are beginning to "accept the concept that cannabis isn't harmful ... and that it actually has a positive impact in many circumstances."

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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