The sixth annual Cannabis Invest UK conference took place in the heart of London last week, bringing together cannabis business, investment, and financial leaders to explore the latest investment themes and trends in the European cannabis industry.
The event, organised by research and advisory services company Bloom Analytic and sponsored by cannabis investment banking firm T Capital, alongside international law firm Gowling WLG, shone a spotlight on the latest developments in the UK, Germany, and the pharmaceutical cannabis industry.
As the industry emerges from a year of financial stagnation, regulatory advancements and consistent market growth led to a sense of optimism among the three panel sessions, with suggestions that ‘the turning point is happening.’
UK Cannabis
The conference began with a discussion on the state of the UK’s medical cannabis industry, which, according to Prohibition Partners’ latest European Cannabis Report, is now the second largest market in Europe.
Asked what the current challenges of operating in the UK market were, CEO of Hilltop Leaf, Hamish Clegg said the problem was less with regulation and more with resources.
He suggested that the UK’s medical cannabis system is largely pharmaceutically focused, with clear and robust regulations for companies to follow. The difficulty comes due to the lack of resources and funding available to the regulator, and ‘operating a small business and waiting 12 months for an inspection.’
Furthermore, despite expectations the UK government will change this year, amending regulation was ‘so far down the priority list’ for both parties that regulation was unlikely to change in the near future.
This was echoed by Kanabo’s CEO Avihu Tamir, who suggested that the high level of regulation but low margins in the UK means something was ‘not working here.’
“Assuming regulation is not going to change and margins are not going to shift overnight, the change in the market will only come with volume. Many people outside of the industry are skeptical, but I think there is a tipping point, look at Australia as an example. It’s something that will come.”
We are pleased to be hosting the 6th annual Cannabis Invest UK conference Jan 31 with @GowlingWLG_UK. For information about presenting companies and to request access to the event, email us at info@bloompoint.co.uk. pic.twitter.com/rtKeELxfy5
— Bloom Analytic (@bloom_analytic) January 17, 2024
He added that the only way to reach this volume would be ‘market education,’ suggesting that ‘as an unlicensed medicine you cannot market; if we are trying to educate the market this needs to change.’
Mr Clegg said he believed this tipping point may have already been reached: “We talk about challenges but we’re growing consistently every single month. My challenge is importing and storing enough product to meet demand. That turning point is happening, the market is here.”
Turning to developments outside of the UK, he suggested that the removal of cannabis from the list of narcotics in Germany, now expected to take place in April, would ‘suck in a lot of product and see companies discover those break-even margins and EBITDA levels,’ helping bring the scale needed to help patients.
Octopus Ventures Will Gibb suggested that Germany would be an interesting case study in shifting public opinion in the UK.
Mr Tamir agreed, suggesting that Germany would mark a ‘proof of concept,’ and spark a legitimate debate about why cannabis liberalisation can happen in Europe but not here.
However, he suggested that should the SAFER Banking act manage to pass in the US, there will be an ‘immediate effect on US MSOs,’ helping drive up the share price of cannabis companies across the globe and driving more attention from investors.
German Declassification
This thread was picked up by the following panel, in which Artemis Growth Partners’ Co-Founder Will Mueke suggested that ‘there is a wall of money waiting to come in’ to the industry.
He added that while he believed rescheduling of cannabis in the US ‘will happen, likely this year,’ the fallout from this change would take a number of years to clear up, and ‘the real excitement is what’s happening in Germany.’
Although the timeline and overall future of German reclassification have recently been brought into question amid opposition from within the government, Mr Mueke said that the market remains ‘attractive’ for investors even without the proposed changes, and that the problem was a lack of market capitalisation.
However, when reclassification does take place, he believes that growth in patient numbers would be supercharged.
Currently, he argued, around six in seven potential cannabis patients are currently being turned down for a prescription, but the change would see the rate of self-treating patients returning to the legal medical market skyrocket.
CEO of German medical cannabis company Bloomwell Group Nik Kouparanis followed this, explaining that currently the entry barrier to becoming a cannabis patient was very high, but that ‘this will change with reclassification.’
He continued that he believed these changes would see the market double in value, adding that he could ‘not have written a better law for medical cannabis.’
Pharmaceutical Cannabis
Next, the conversation turned to the pharmaceutical industry, and what steps cannabis businesses could take to encourage big pharma to open their deep pockets and invest in the space.
Brains Bioceuticals’ President Terry O’Regan said that while the pharmaceutical industry is definitely interested in the cannabis space, much of the current research being carried out was ‘not the right kind of studies.’
“I think we have to start playing by the rules of pharma. I think we have to divorce pharma from other opportunities in the sector. There’s sufficient real-world evidence to say that ‘cannabis is a viable alternative. While there is space for that, if we’re talking about attracting pharma it’s a different set of rules. Until we have randomized double-blind trials there won’t be any adoption,” he explained.
Touching on the complexity of cannabis, and the issues this raises in terms of conducting these studies, he said there were a number of studies taking place focusing on five separate cannabinoids, which he suggested were unlikely to shift the dial as pharma companies want to ‘pinpoint specific compounds that make a difference.’
Dr Sebastian Vaughan, CEO of Phytome Life Sciences, disagreed with this, suggesting that the ‘botanical pathway’ provided a route to developing medicines without the separation of compounds and clinical trials.
Turning back to the prospect of rescheduling in the US, and the recent publication of the HHS recommendations, Somai Pharmaceuticals CEO Michael Sassano suggested this could help encourage regulators to open up to cannabis across the globe, a topic he covered for Business of Cannabis recently.
“Regulators have always been the Achilles heel of this industry. From my point of view, you have a report that pretty much spells out that cannabis is safer than other drugs on the market.
“They cite 6m patients and 30,000 doctors. Can you imagine being a regulator somewhere which can’t afford the money to do this type of research. This is the first time a regulator has put this in writing; they see the benefits both medically and scientifically. Someone more powerful than me saying ‘yeah cannabis does work.'”
The panel did not fully agree on this point; however, with both Dr Vaughan and Mr O’Regan suggesting they were skeptical that this would mark a ‘step change’ in attitudes.
Mr O’Regan said that, in his experience, regulators have been becoming ‘far more conservative’ to protect themselves, citing the UK’s FSA as an example.
