This week, the APPG for Industrial Hemp & CBD met in the Houses of Parliament for a discussion around the investment and economic potential of the UK’s hemp and CBD industry.
A presentation led by Co-founder and CIO of global cannabis investment firm Artemis Growth Partners, Will Muecke, suggested that London and the UK is ‘perfectly poised’ to be the ‘single centre as a hub of global cannabis financial trade’.
However, as the APPG and its members have repeatedly highlighted, this economic opportunity is being hamstrung by the UK’s Proceeds of Crime Act (POCA), not only limiting cannabis operators but also preventing trade and investment from taking place.
Yet, as highlighted by the group’s co-chair Crispin Blunt MP, ‘this is where the opportunities really begin, when serious finance and investment figures’ are given the opportunity to ‘deliver the arguments that will get politicians to reassess the position that we’ve created’.
A multi-billion pound market
Artemis Growth Partners, according to Mr Muecke, now manages assets of just under US$400m across five different investment vehicles, covering 37 companies in ‘all the legal jurisdictions that you can likely think of for cannabis’.
This includes North America, Latin America and the Caribbean, and now across various markets in Europe.
“While the investment focus early on had been on North America, Europe has emerged really as the next centre for cannabis and the most attractive area to watch globally,” Mr Muecke told the group.
He added that the wealth creation opportunity for cannabis was in seeing it take its place among peers of the pharmaceutical industry, alcohol and tobacco, and consumer products, while highlighting the disruptive potential of hemp in ‘so many different sectors’.
Mapping metrics from data on the US industry to the UK, he suggested that ‘we are potentially looking at a market that has 700,000 jobs and an annual tax revenue eclipsing £5.5bn.
Despite this clear opportunity, ‘structural, regulatory and legal impediments’ have slowed the development of the UK’s cannabis industry to ‘a near standstill’.
This means that businesses face a lack of resources, lack of access to capital, limited access to R&D funding or medical grants and limited access to vendor sales because the vendor supply industry is subject to the same POCA laws.
“There is no lending for capital projects. There’s no availability of working capital for cash flow. And there is limited to no back-office accounting support, because what is available is outrageously expensive.
“The financial world as well. We have a very important role to play in building the industry. But we also are restricted because of POCA laws.”
The UK as a financial cannabis hub
Arguing that it is critical for investors to have an active listing market for IPOs, he suggested that the UK was perfectly positioned to become the new centre of cannabis financial trade.
“Since Canada has really fallen away, there has been no emergence of a single centre as a hub of cannabis financial trade. I believe London, and the UK in general, is perfectly poised to be that financial global hub for cannabis.”
As Business of Cannabis has previously reported, the amendments that are necessary to be made to POCA, in order for the necessary supportive financial ecosystem to be created, are incredibly simple, and have already taken place in Jersey.
Mr Muecke argued that it is ‘key that we have language in the amendment to POCA that allows for listings’, and that the next step should be to ‘speak to the exchanges’, find out what they need, and work that into the amendment.
Citing the recent recommendations from the US Department of Health and Human Services (DHHS) that cannabis should be rescheduled, he said this would ‘unleash a tremendous wall of money waiting to come to cannabis’, which is currently held back by regulation.
“Every financial institution that I speak to, whether it’s a bank, a broker or an investment house, would love to play in this field. This is an industry that’s growing at 25% a year for the next five years.”
Summarising the issue at the heart of this debate, Mr Muecke suggested that ‘if we can’t get the laws to align with what my business is doing, then my business is going to take me somewhere else, and that’s a shame for the industry and a shame for me’.
While the APPG co-chair Ronnie Cowen said he felt convincing the government to make such changes was easier said than done, given that they routinely ignore the recommendations of the ACMD and are embedded in their current ‘drugs are bad’ stance, citing the recent ban on nitrous oxide.
Mr Blunt challenged this, suggesting that if the industry expects its MPs to understand these legislative intricacies by themselves, they are doing themself a disservice, and it is down to the industry to get them involved and engaged.
“This is a team game. At some point, the penny will drop.”