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Work To Start On UK Mainland’s First Commercial Cannabis Cultivation Facility For Over 20 Years

GLASS Pharms has agreed a £22.5m funding deal to build the UK mainland’s first, high-THC, commercial cultivation facility for over 20 years. 

The deal will allow the cultivator, which was established in 2019, to construct the ‘glasshouse’ facility and begin selling products by late next year, reaching cashflow positivity in its second year of trading, it says. 

Once complete, the facility in South West England, will enable Glass Pharms to become the first company in the UK to sell high-THC cannabis to third parties, after it received its commercial licence from the UK Home Office earlier this year. 

GW Pharmaceuticals, which was awarded the UK’s first commercial high-THC cannabis licence in 1998, was recently purchased by Jazz Pharmaceuticals for $7.2bn.

‘Big Milestone For Industry’ 

Glass Pharms says it has agreed Heads of Terms to finance the construction of its new two-and-a-half hectare cultivation facility, with the deal expected to be finalised in January 2022. 

Though the company will not provide details on who the investor is until the deal is finalised early next year, it is understood to be a ‘a leading infrastructure investment fund’. 

“It’s a fair amount of money because we are building in an uncompromising way and we’re making sure that we’ve got enough working capital to take it straight to being cash flow positive,” Glass Pharms’ CEO James Duckenfield said. 

Glass Pharms believes that the receipt of its commercial licence is key to achieving its ambition of becoming the ‘largest cultivator of cannabis in the UK for CBPM (cannabis based products for medicinal use)’. 

According to Mr Duckenfield not only does this mean Glass Pharms will not be competing directly with established market leaders like GW, but it also presents a more stable investment opportunity. 

“It’s a big milestone I think for the industry, and obviously very important for us,” he said. 

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“We did consider looking at an R&D licence, but wanted to actually go for the more challenging commercial licence so that we could have this uncompromising approach to the business. Whereas if we only had an R&D licence, then you’ve got much less certainty in terms of what the business can do.”

Though R&D licences allow companies to grow cannabis and use the material to develop their own products, it does not ‘allow them to commit to commercially sell that product’ elsewhere. 

“The expectation that you convert an R&D licence into a commercial licence is a path that has been proven not to be a foregone conclusion,” Mr Duckenfield added. 

Since GW Pharma received the first high-THC licence more than two decades ago, only Northern Leaf and 4C Labs, which are based in Jersey and Guernsey respectively, have received high-THC commercial licences. 

The two crown dependencies have signed a Memorandum of Understanding with the UK Home Office allowing them to ‘issue licences to cultivate, possess and supply cannabis-based product for medicinal use as a regulatory authority’. 

Carbon-Negative Facility

Glass Pharms says it will create be the world’s first carbon-negative, cannabis cultivation facility. 

The high-tech glass house structure will use electricity generated from a combination of an on-site solar power and energy generated by ‘food waste’ in an on-site green energy production plant. 

This plant prevents food going to landfill and negates the creation of methane. Any by-products from the power production, including both heat and carbon dioxide, are reintroduced into the greenhouse and used to feed, heat or cool the plants. 

Glass Pharms

Although Mr Duckenfield said that creating a carbon-negative facility are ‘definitely more expensive’, he believes the long term commercial benefits will offset the initial investment. 

“I think, albeit that the trade buyers are going to be still driven by quality and cost, consumers are now switching on to the fact that they want environmentally-responsible products. And that in turn will drive the buying behaviour of our trade buyers.

“We’re doing it because it’s the right thing to do. And it also makes commercial sense. We’re not doing it to try and make a point.”

Though the facility has been built ‘from the ground up’ with sustainability in mind, some concessions have been made in order to ensure GMP-compliant ‘treble A grade’ products can be grown. 

This includes the use of rockwool as a substrate, a product which can not only be damaging to workers’ skin and lungs but is also very environmentally taxing to manufacture. 

The UK Opportunity

The two-and-a-half hectare facility, which Glass Pharms is keeping the location confidential ‘to support site security’, is also expected to produce as much high-THC as the company needs for the next ‘four to five years’.

Its strategy is not to ‘grow as much as we can’ but rather to ‘grow with the market’ in the UK, which it expects will see exponential expansion over the coming years. 

Not only is there existing demand in the market for a domestic supplier due to the complexities of importing high-THC cannabis from abroad, but Mr Duckenfield believes there is a ‘monumental shift’ underway in terms of the medical industry’s attitudes towards cannabis. 

“There have been a couple of withdrawals of products in the UK, and it does seem that some of the product that’s arriving as medical cannabis is old stock which is being shipped via Israel or Malta and is substandard. 

“So there is an unmet need for medical cannabis that has been domestically grown in the UK.”

He went on to reference an article published in the British Medical Journal in September, which made a ‘weak recommendation’ for the use of medical cannabis to treat pain. 

“Although it’s a weak recommendation, that’s a monumental shift in terms of the medical community’s attitude towards medical cannabis. 

“It says the reason that’s a weak recommendation isn’t because of the efficacy of the drug, it is because of the acceptability that might represent to the patient.”

While GW cultivates ‘large amounts’ of high-THC cannabis in the UK, it only uses its products to extract cannabinoids and formulate its own medicines. 

“But they’re not selling to third parties…we’ve got the first commercial licence to sell to third parties,” added Mr Duckenfield.

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