Why investors are seeking the highs of cannabis investments.
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Growing or investing in cannabis isn’t often something most people openly acknowledge they are doing, but as it is now well documented, the medicinal benefit of cannabis is a growing opportunity globally, with the UK surprisingly leading this growth.
Prohibition Partners European Cannabis Report: 7th Edition suggests the cannabis market in the UK alone could be worth over £1bn by 2026.
So, what exactly is medicinal cannabis? Well, medicinal cannabis is a broad term that refers to the treatment of specific symptoms of severe diseases such as epilepsy and multiple sclerosis using cannabis-based medicines, such as cannabidiol. In addition, there are softer benefits associated stress relief and relaxation.
The growth in cannabis farm facilities across the UK and Europe is a direct response to the demands of a growing patient market, and a more receptive Health Service, to its benefits.
Whilst the vast majority of patients are only able to access medicinal cannabis through private prescriptions, there is a surge of popular opinion and rallying, demanding that the NHS expands its support of the prescribing of medicinal cannabis-based drugs to those who otherwise would have a significantly lower quality of life due to severe and incurable illnesses.
This emergence of approved and regulated drugs, coupled with the gradual relaxation of legislations around medicinal use is contributing to a growing demand for high quality, carefully grown cannabis plants.
Legal medical cannabis farming is proliferating in many countries, including the UK. In 2018 a United Nations report revealed that Britain was the world’s largest producer of legal cannabis, producing 95 tons of marijuana in 2016 for medicinal and scientific use – 44.9 per cent of the world’s total. It was also the largest exporter of the drug, exporting 70 per cent of the world’s total and according to a report by the International Narcotics Control Board, in 2019, the UK still produced more legal cannabis than any other country – over 320 tonnes of it.
And it is this growth, coupled with relaxed legislation that has many investors itching to put their money into legalised cannabis production, forecasting that the UK may follow the path of Canada and California, and soften legislation around recreational use.
It remains true though, that despite the legal landscape being forever changed when medicinal cannabis was legalised in the UK in 2018, it is still very much an industry in its infancy, and any investment in this arena could potentially be a unique growth opportunity, but only for longer term investors.
As you would expect, the process of becoming a certified medicinal cannabis producer is far from straight-forward despite it being a fully legal market.
It remains a hugely regulated industry, meaning those who are interested in investing face many initial challenges to get started and become fully licenced, as well as satisfying the Home Office that your crop is completely traceable, and providing assurances about production quality, security and legal compliance.
High security, climate-controlled environments, often off the beaten track for extra safety are needed to create the perfect growing environment. High energy costs to nurture a consistent growing environment, as well as extensive crop development to ensure consistency in the amounts and quality of CBD per plant, add to the high levels of investment needed.
These factors attract astute investors, with multiple research and growing facilities in the UK having raised significant funding for their endeavours.
One such facility is Hilltop Leaf, which recently secured a £2m investment from Traditum Private Equity. The funding will enable Hilltop to make its first commercial sales and scale its infrastructure to become one of the largest UK producers of medicinal cannabis products for the specialist prescription market. Hilltop Leaf has already completed construction of an 11,000 sq m production facility in southern Scotland. It holds a Manufacturers ‘Specials’ Licence and Wholesaler Dealer Authorisation from the Medicines and Healthcare Products Regulatory Agency.
The company will produce pharmaceutical-grade cannabis-based products for medicinal use in humans (CBPMs) which will ultimately be processed on site. When fully operational, it has the potential to supply over 10% of the UK market and create dozens of local jobs.
Hilltop Leaf was founded in 2019 by Hamish Clegg, a former financier and serial entrepreneur, with father and son Neil and Will Ewart who have a track record in windfarms and agriculture. The company has a research partnership with Nottingham Trent University which specialises in testing and clinical trials.
It’s CEO, Hamish Clegg, said: ‘We are building a business around the three key pillars of health innovation, environmental sustainability, and community impact. Although medicinal cannabis use is growing, the UK relies solely on imports and we understand there is a problem with the reliability of the supply chain.
“We aim to provide an affordable, high quality solution to treat conditions ranging from chronic pain to severe epilepsy, while easing pressure on the NHS. We plan to rival other countries such as Canada, Germany and Israel with our own reliable supply from the hills of Scotland.”
Another facility in the UK attracting interest is GW Pharmaceuticals site at Wissington and its research facility at Kent Science Park. Other companies include Sativa Investments, whose own headquarters is in Somerset. In 2019 it announced it was planning a £10m, 7.5-acre greenhouse in rural Wiltshire
Whilst there are plenty of opportunities for investors, it remains important that investors have the right advice to hand, to validate the extensive procedure that is necessary to gain home office approval and become an authorised grower in what remains a highly regulated market.
To find out more about Traditum Private Equity investments in the Health and Healthtech sector, get in touch: hello@traditum.co.uk
Reference articles:
https://www.cityam.com/uks-cannabis-industry-could-be-worth-more-than-1bn-by-2026-says-new-analysis/
https://prohibitionpartners.com/reports/the-european-cannabis-report-7th-edition/
