Key Trends for Cannabis in Czech Republic: New Opportunities in 2023

The global market for legalised cannabis was worth USD41 billion in 2022 and is projected to generate USD100 billion by 2027, according to Euromonitor International. In 2022, the US will command a 72% share of the worldwide cannabis industry. European countries come in second with 12% of the global value, followed by Canada with 9%. Due to its small customer base, the Czech Republic accounts for just 0.1% of the total worth of European value. Cannabis is classified as adult-use or recreational, medical and CBD.

The illicit cannabis market was estimated to be worth CZK14.5 billion or USD630 million in 2022.

In the Czech Republic, adult-use cannabis is illegal but somewhat decriminalised. Growing up to five plants is considered a misdemeanour, which carries a fine of up to EUR580 and plant confiscation as a penalty. Possession of cannabis in quantities lower than minor is not a crime. 1g of THC in less than 10g of dried flower or in less than 5g of hashish serves as the upper limit for minor amounts. Prison time is imposed for offences that are greater than five plants or minor amounts. Knowing that harvested plants are compared to minor amounts rather than the total number of plants is important. Cannabis seeds, even of THC-rich plants, are legal for sale. However, they can only be positioned as collector materials without any mention of THC concentration in the plant.

Medical cannabis is legal for sale through pharmacies by prescription since 2013. Since 2020, state medical insurance covers 90% of treatment with cannabis for up to 30g per month. This makes medical cannabis more affordable for patients and drives category growth. Local producer Elkoplast CZ was the only category player until the end of 2022. Medical cannabis’s total value was CZK9 million in 2022 and this is expected to triple by 2027.

CBD sales reached CZK100 million in 2022 and are expected to almost double in the next five years. The benefits of the products, such as pain relief and better sleep, are highlighted in the advertising. These stimulate the market by drawing customers who place high value on their health. CBD-containing products are available through e-commerce, pharmacies, drugstores, specialist shops and vending. The available formats include topicals, tinctures and sprays, flower, edibles, vapour, concentrates, beverages and capsules. The market is highly fragmented with many players, which include Euphoria Trade, CBDmat, Carun, SunState and Konopny Tata.

Recent changes in legislation

Before the last elections, the Czech government signed amendments to the Act of Addictive Substances, which broadened the opportunities for hemp cultivation. Farmers no longer need to prove the THC content in the plants. It is sufficient to prove the origin of the plant as listed in the European catalogue. Waste disposal is now at the farmers’ discretion; it is no longer considered hazardous. The permissible THC limit in industrial hemp was increased from 0.3% to 1%. The amendments also provide further liberalisation of medical cannabis production. It assumes the operation of numerous domestic producers, instead of one exclusive one before. Also, medical cannabis cultivators are legally permitted to provide processed cannabis extract to the state healthcare system in addition to dried cannabis flower. The changes became effective on 1 January 2022.

Expectations and reality

The law was changed to eliminate the existing monopoly and encourage competition in the production of medical cannabis. It was hoped that this would improve production effectiveness, drive down prices, and increase export potential. In fact, the new licensing procedure only came into force in September 2022, which is almost the end of the cultivation season in the Czech Republic. In addition, Russia’s invasion of Ukraine and the world's increased inflationary pressure have had a detrimental impact on the investment climate. So, demand for licences on medical cannabis production was low in 2022.

Additionally, it was intended to increase the production of industrial hemp and CBD by loosening restrictions on hemp cultivation. The Czech Republic currently has some of the most liberal industrial hemp laws in all of Europe. Switzerland also permits 1% THC in hemp, having highly competitive and developed hemp and CBD producing business. In the short term, local producers may face strong competition from imports from this country. 

The two sides of attitudes towards cannabis in Czech society

Over 2020-2022, Czechs became more accepting of the legalisation of adult-use cannabis. Per Euromonitor’s Cannabis surveys, this acceptance grew from 17% in 2020 to 23% in 2022. Within the next 10 years, according to 46% of respondents in the 2022 survey, adult-use cannabis is expected to be legal. This is an increase of seven percentage points from 2020.

On the other hand, 36% of survey participants believe that there is still a stigma associated with using CBD and cannabis-related products. 15% are certain that it is dangerous to consume CBD products or cannabis. Since 2020, this number has decreased by four percentage points. In 2022, 27% of respondents still believed that recreational cannabis will never be legalised, a decrease of seven percentage points from 2020.

Thus, the liberal segment of Czech society is increasingly visible in the country's internal political environment. Despite issues with alignment with EU law, the present government is working towards legalisation. It announced last week plans for controlled distribution which would involve a national consumer cannabis register and consumption caps. Additionally, the current president of the Czech Republic is seen as being in favour of legalising cannabis, increasing the potential for further liberalisation in the near future.

Conclusions

In 2023-2027, the Czech cannabis market will continue to rise at double-digit rates. Consistently softening legislation is expected to continue. At the same time, growing consumer awareness, product accessibility and diversity, a lack of market maturity, and alignment with the health and wellness trend are the main forces behind cannabis’s development. 

Liberal regulation of hemp and medical cannabis cultivation will potentially attract investment into local agriculture in the medium term. This would improve competition, force innovations, and drive down prices, hence increasing exports potential for both CBD and medical cannabis.

Adult-use cannabis legalisation may potentially follow in 2024. The Czech Republic and other nearby nations are keeping an eye on the ongoing discussions in Germany about cannabis legalisation; any steps taken in Germany in favour of legalisation could speed up the process in the Czech Republic.

Learn more about this rapidly evolving landscape in our report, Cannabis in the Czech Republic.