UK-based cannabis companies have struggled to dominate the British capital market, despite their strong presence. Medical cannabis has been legal in the UK since 2018. However, these companies haven't been able to list on the London Stock Exchange (LSE).
This changed for the better in September 2020, thanks to the Financial Conduct Authority (FCA). In September, The FCA came up with a set of guidelines that would allow them to list on the LSE. One of these guidelines states that companies can only list if they provide cannabis for medical use.
This change has given hope to a multitude of UK-based cannabis companies. 2021 might be off to a slow start, but these companies have hit the ground running. A number of them are racing to be the first to list on the LSE.
At The Extract, we have no doubt that we'll see more and more companies on the LSE, as the year goes by. However, some companies are already in the final stages, speaking to investors about IPOs, as they prepare to list.
Who are these companies?
With companies scrambling to be the first to list on the LSE, we're bound to see the majority of UK-based cannabis companies throwing their hats into the ring. That being said, these listings all depend on FCA guidelines — and whether or not these companies meet them.
However, we're currently aware of three companies that are already vying for the first LSE listing. According to the Financial Times, these companies are MGC Pharmaceuticals, Kanabo, and Emmac.
MGC Pharmaceuticals is an Australian biopharmaceutical company. They are in the process of developing an epilepsy drug, made from cannabis. They also make and sell a variety of high-quality CBD tinctures.
We're pleased to report that MGC Pharmaceuticals is in the final stages of preparing to list on the LSE. They're looking to raise a minimum of £5 million, with their initial public offering.
Kanabo, based in Israel, is the second company vying for the listing. They already have a hold on the UK market, given that they sell CBD products in the UK and Germany. Avihu Tamir, Kanabo's founder, has worked closely with the FCA since the ruling.
Furthermore, Kanabo is already reaching out to investors. We expect that they will launch their initial public offering by February.
Finally, Emmac, a cannabis group based in Europe, has also expressed an interest in an LSE listing. As one of Europe's largest cannabis groups, it's no surprise that Emmac makes for a strong contender.
According to Antonia Constanzo — their co-founder and chief executive, the FCA's announcement was a welcome one. “We have a few options on the table and one is listing in London,” said Mr. Constanzo.
What does this mean for the cannabis industry in the UK?
With the number of companies preparing to list on the LSE, we have no doubt that there's more to come. In fact, the UK could see a smorgasbord of medical cannabis companies on the LSE, before the end of 2021.
This is a welcome change, given the fact that many companies have prepared to list for years. This will be the first opportunity they have to actually do so.
Furthermore, listing on the LSE requires a sizeable initial public offering. Therefore, we could see a multitude of venture capitalists and investors turning to the cannabis industry. This is a step in the right direction.
With more funding, these medical cannabis companies can continue their research, giving the public concrete evidence that CBD can improve lives.
At The Extract, we look forward to seeing who will be the first to list, and what they go on to achieve with their success.