Is marijuana set to blaze its way into your next investment portfolio?
Ground-breaking legislation changes to the law last November have relaxed the rules around the use of cannabis in the UK.
Doctors are now able to prescribe medical cannabis products to patients across the country, with varying amounts of the THC compound – the element of the plant that makes people feel ‘high’.
It is the CBD element that has a raft of proven and potential medical benefits, that these specialist doctors are looking for their patients to take advantage of.
It was this new legislation that has contributed to the exponential growth of cannabis CBD oil, says European marijuana brand, CannabiGold.
CannbiGold, which is distributed in the UK by Manchester-based Bionativa, was bought by Canadian producer The Green Organic Dutchman Holdings for approximately £12m, with an additional £9m in incentives and £7.5m cash investment.
The price reflects the extraordinary uptake of this liquid as countries around the world change their legislation to allow sales direct to consumers.
CannabiGold has been taken by people to maintain their wellbeing and enrich their healthy diets, but since the active compound in the plant, CBD, was legalised in the UK last year, sales have rocketed, the company says.
So, what are the new rules?
Under November’s regulation changes, specialist doctors – not GPs – are able to prescribe a series of medical cannabis treatments.
This change in the law was the result of a specially commissioned review by the government’s chief medical advisor, Dame Sally Davies.
Her review concluded that there were medical and therapeutic benefits that should be available to the public.
The UK’s Advisory Council on the Misuse of Drugs, which carried out the follow-up review, stated that doctors should be able to prescribe medicinal cannabis provided any products meet the correct safety standards. Various treatments can now help treat conditions such as epilepsy and chronic pain.
These new rules now apply in England, Scotland and Wales.
Global acceptance of the role of cannabis
The increased liberalisation of cannabis and its products across the world is starting to light fires under interested investors, who are looking to take advantage of this emerging market.
This drug is viewed as the next big trend in both medical and recreational markets in the UK, and the western world.
Last October, Canada joined Uruguay as the only two nations that have legalised the possession and recreational use of marijuana.
Canada has since become the world leader in cannabis companies, with many looking into the CBD market, as well as the recreational side of the drug.
In Canada, the explosion of the market has been compared to the gold rush – with media outlets in the country coining it the ‘Green Rush’.
As it is with any potential investment, getting involved in the early stage is normally the best route to making a successful return on that original investment.
According to British economic think tank the Adam Smith Institute, the global medical marijuana market is set to be in the region of £40bn by 2025, with growing potential markets in the US/Canada and emerging nations around the world.
And it’s not just some of the world’s leading nations that are starting to embrace marijuana, but global brands too.
It has long been stated that Coca-Cola are looking into the possibility of having a series of cannabis-infused drinks, for example.
So far, two UK companies have come to market with the aim of developing a line of cannabis-based products – Ananda Developments and Sativa Investments.
Will the UK soon follow Canada in completely legalising the drug, making investment opportunities more freely available? Only time will tell.
What has the UK’s first medical marijuana firm done so far?
London-based Sativa Investments, the UK’s first medicinal cannabis investment vehicle, has signed a Memorandum of Understanding with George Botanicals Ltd, a manufacturer, wholesaler and distributor of wellness CBD products, to purchase a 51% shareholding from its owner, Carbon Managers.
Headquartered in Frome, Somerset, George Botanicals has been providing its customers with high-quality natural CBD products since September 2017, including vape pens, balms, E-Liquids, drops and edible gels that are shipped throughout the UK.
Sativa’s Chief Executive Officer, Geremy Thomas, is the 100% shareholder of Carbon Managers and Geremy Thomas and George Thomas are significant shareholders in Sativa and both are also Directors of Carbon Managers.
Geremy Thomas, founder and Chief Executive Officer of Sativa, comments: “George Botanicals may well be one of Sativa’s maiden investments and could provide an excellent gateway into the UK’s fast-growing CBD retail marketplace. My own original investment in George Botanicals was the precursor to the founding of Sativa as it revealed the wider opportunities across the CBD industry.
“The Company has identified two other potential transactions of a similar scale and these are now being reviewed by the Board and Sativa’s Investment Committee. As the volume and scale of potential investments increases, the Board will make sure that opportunities can be matched immediately with investment finance and will be seeking further funding rounds in the future.”
CBD products are increasingly popular. For example, last year’s figures from the Cannabis Trade Association, state that there are 310,000 regular UK users of CBD products, with around 1,500 additional users each month. With each user spending an average of £40 per month, the predicted total annualised spend is a total of £150m per year.
Foreign investment into UK market
Canada’s largest cannabis producer, InstaDose Pharma last year confirmed that it will begin trading in the UK in 2019 as it seeks to grow its global footprint and further cement its position as the industry’s leading force.
Headquartered in Burlington, Ontario the firm is the largest producer of cannabis oil in the world, with a 100,000 hectare production facility in the Democratic Republic of Congo (DRC) boasting a cultivation capacity of over 2,000,000 kilos of pure cannabis oil per year. It has a second 500 hectares facility in Colombia, producing over 30,000 kilos of cannabis oil per year.
There are thought to be around three million cannabis users in the UK with a domestic market worth £3.55bn per annum. The average UK consumer will pay around £10 per gram of cannabis but there is a growing demand for CBD oil, which is growing increasingly popular as more becomes known about its medical benefits.
Last year, the World Health Association said that CBD oil may be helpful in treatment of symptoms relating to conditions like Alzheimer’s Disease, Parkinson’s Disease, MS, cancer, depression and anxiety.
According to official figures from the Cannabis Trades Association UK, the number of cannabidiol consumers doubled last year, up from 125,000 in 2017 to 250,000 in 2018.
The application of CBD oil for consumers is widespread and the oil is already being sourced by a number of industries, including the pharmaceutical, cosmetics and beverage industries. InstaDose Pharma is expecting exponential growth for high-grade CBD oil in the UK and through its network is already in discussions with a few UK participants for strategic partnerships.
Grant F Sanders, Chairman & CEO of InstaDose Pharma comments: “The UK market is largely untapped given its infancy but we recognise its vast potential and see entrance into the UK market as key to our global expansion. We are the largest agricultural grower in the DRC and have a production capacity of up to 2,000,000 litres per year, producing CBD oil that is GMP certified and pharma grade 99.7% CBD, THC oil and CBD isolate.”