Luxembourg The Parliament of Luxembourg has adopted a law on the use of medicinal cannabis. After the international trade in cannabis shares threatened to be compromised as a result of the - until July - illegal status of medicinal cannabis in Luxembourg, everything went very fast.
On 28 June 2018, the Parliament of Luxembourg adopted a law on the medicinal use of cannabis. Cannabis may now be prescribed in the form of flowers or over-the-counter drugs to alleviate chronic pain and nausea as well as vomiting when undergoing chemotherapy and muscle cramps when suffering from multiple sclerosis. At the same time, the members of Parliament have – literally at the last minute – made it possible for many investors in cannabis shares to keep their Deutsche Börse AG cannabis shares, which are being held for safekeeping in Luxembourg, in future as well.
A week of uncertainty
Cannabis industry shareholders experienced major uncertainty on June 22. It looked like shares of cannabis producers that were traded in Germany and which had been held for safekeeping in Luxembourg for three years now, would have to be removed from the grand duchy. Clearstream Banking SA, the company that holds the German securities for safekeeping in Luxembourg, stated the following:
“In its capacity as central custodian, Clearstream Banking SA has received guidelines from the CSSF (Commission de Surveillance du Secteur Financier), the local supervising authority in Luxembourg, for the handling of cannabis/marijuana-related securities. Under Luxembourg law, cannabis/marijuana is considered an illegal sector. This guideline prevents Clearstream from accepting new requests to settle or hold securities of this kind.”
Shares that are held for safekeeping in Luxembourg are subject to this law, as a result of which the trade in medicinal cannabis, which would be legal elsewhere, was considered illegal by the Luxembourg authorities until the adoption of the law on 28 June.
Clearstream holds all shares that are traded on Deutsche Börse, in Luxembourg for safekeeping. Clearstream was formed as the result of the merger of its predecessor Deutsche Börse Clearing AG (formerly Deutscher Kassenverein AG) and Cedel International into Clearstream S.A. in 2003.
“This regulation concerns cannabis, marijuana and similar substances (e.g. cannabinoids) which are illegal under Luxembourg law. Currently, the regulation relates to cannabis/marijuana. The regulation relates to companies and their securities, whose core business focus lies in the cannabis sector. It also relates to companies that have the majority of their investments in the cannabis sector, for example via subsidiary companies. Large pharmaceutical firms that offer some products containing cannabis/cannabinoids within their wide product assortment (for example Bayer, Novartis) are not affected.”
These comments were issued by the Deutsche Börse press office as late as 26 June 2018, in answer to the question regarding the criteria the Luxembourg parent company had used in composing its controversial list.
Recreational cannabis still not allowed on the stock market
Neither Deutsche Börse AG nor its parent company in Luxembourg could have known at this stage that the House of Representatives would legalise medicinal cannabis only two days after the press office’s statement quoted above, with Parliament thereby providing a legal basis for safeguarding the controversial stocks. In fact, the Parliamentary session of 28 June, in which draft law no. 7253 was unanimously adopted, had not been announced in the sessions diary of the House, as is customary.
Although the draft law had already been in the drawer since February, its adoption took place overnight. In parliamentary procedures, this is more than unusual. In view of the year-long struggle by the physician and ADR MP Jean Colombera and the slow pace of the Luxembourg legislator up to that point, the sudden haste and the chain of events between Clearstream’s announcement of 22 June and the adoption of the law on 28 June do have something of an aftertaste to them.
Clearstream responded immediately and updated the list the next day. Companies that exclusively produce medicinal cannabis that is licensed by the government were struck off. However, the stock safeguarding prohibition will continue to apply to companies that grow or sell cannabis for recreational use in Canada or the US.
Strictly speaking, the safeguarding of stocks in depot had been illegal ever since the first trade in Frankfurt in 2015; something that went unnoticed – or was condoned – by the Luxembourg authorities until June 2018.
Cannabis petition gets required votes in record time
Now that medicinal cannabis has been legalised, the MPs in Luxembourg will have to debate recreational cannabis next. The “Legalise Cannabis through Coffeeshops” petition received more than 5,000 votes within 24 hours, far more than the 4,500 needed. However, Parliament is not expected to act as swiftly with regard to debating this petition as it did when adopting the medicinal cannabis law.