Where does joint cultivation end and a business begin?

Joint cultivation ends where the association no longer serves exclusively the non-commercial home cultivation of its members. The law draws this boundary through the purpose of the cultivation association, the legal form, the circle of participants and the type of handover. Trade in cannabis remains prohibited (§ 2 para. 1 no. 4 KCanG) and is punishable (§ 34 para. 1 no. 4 KCanG). Commercial conduct can be a particularly serious case (§ 34 para. 3 sentence 2 no. 1 KCanG). Where the boundary runs in an individual case, this article cannot judge. It names the legal key points.

Purpose and legal form

Cultivation associations are registered non-profit associations or registered cooperatives. Their exclusive purpose is the joint non-commercial home cultivation and the passing on of cannabis for personal consumption by and to members, the passing on of propagation material, and the provision of information to members on cannabis-specific addiction prevention and counselling (§ 1 no. 13 KCanG). If this purpose is missing from the articles, the licence must be refused (§ 12 para. 1 sentence 1 no. 5 letter a KCanG). For cooperatives, the articles must provide that profit is not distributed to members and is credited to reserves (§ 12 para. 1 sentence 1 no. 5 letter e KCanG). The association sets membership fees or ongoing contributions in its articles to fulfil this purpose (§ 24 KCanG).

Passing on only to members

Associations may pass on cannabis only within the fenced-off premises, from member to member, with both present in person, for personal consumption, and with age and membership checked (§ 19 para. 2 KCanG). Maximum quantities apply (§ 19 para. 3 KCanG). Shipping and delivery are prohibited (§ 19 para. 4 KCanG). A trader addresses any customer, whereas an association addresses a fixed circle of members, which is limited to at most 500 persons (§ 16 para. 2 KCanG). Members must be at least 18 years old and have a place of residence or habitual abode in Germany (§ 16 paras. 1 and 4 KCanG), and each person may be a member of only one association (§ 16 para. 2 sentence 2 KCanG).

Cultivation only by members

Cannabis may only be grown jointly by members (§ 17 para. 1 sentence 1 KCanG), and members must actively take part (§ 17 para. 2 KCanG). Marginally employed persons may only be involved in cultivation or passing on if they are members. Other paid employees and non-members may only carry out activities that are not directly connected with cultivation or passing on (§ 17 para. 1 sentences 2 to 4 KCanG). A breach is a regulatory offence (§ 36 para. 1 nos. 12, 13 and 13a KCanG). Cultivation by a service provider or investor is therefore not intended.

Advertising and sponsorship ban

Advertising and any form of sponsorship for cannabis and for cultivation associations are prohibited (§ 6 KCanG). Under § 1 no. 14 KCanG, advertising is any form of commercial communication aimed at directly or indirectly promoting the consumption or passing on of cannabis, through any channel. A breach is a regulatory offence (§ 36 para. 1 no. 5 KCanG). In addition, the association may not make its premises recognisable from outside by advertising signs or conspicuous design elements (§ 23 para. 2 KCanG). Whether a particular external presentation is information or already advertising is assessed in individual cases by the competent authority. Associations should therefore express themselves with restraint. The article Why are clubs not allowed to advertise? covers the ban in more detail.

Compensation for propagation material

If an association passes on propagation material to other associations or to adult non-members, it must claim reimbursement of the costs incurred in obtaining it from the recipient (§ 25 KCanG). Making a profit is therefore not intended.

When the question becomes difficult

The boundary becomes difficult with structures that look like a company from the outside, for example with remuneration, shareholdings or distribution models that are based on turnover. The law recognises paid employees, but only regulates the restrictions on cultivation and passing on. Whether a specific arrangement is permissible is decided by the competent authority and, in case of dispute, by the courts. A lawyer specialising in the field can review the articles and practice. This guide does not name amounts.

What the articles and operations should record

• the exclusive purpose under § 1 no. 13 KCanG, with membership fees as financing,
• a minimum membership period of three months and a link to residence (§ 12 para. 1 sentence 1 no. 5 KCanG),
• participation of members in cultivation,
• documentation of every handover (§ 26 KCanG).

The founding phase is the right time to have the articles reviewed. Later amendments should be made with advice.

What clubs and members can do

Members can recognise a reputable association by its licence notice, by clear processes and by the fact that it does not advertise. The difference between club and home cultivation is explained in What is the difference between home cultivation and a club? Whether clubs may make profits is covered in May cannabis social clubs make profits? The legal form is described in What legal form must clubs have? General information is available in the cultivation associations and clubs section.