Opportunities for investment in the medicinal cannabis sector

Cannabis has come a long way in recent years as it has started to shed its shady past because now it’s being considered a miracle drug that can diminish pain, help control symptoms and heal lives. No longer is it a taboo subject; it is instead a market seriously worth investing in.

In 2018, the UK joined many other countries in legalising cannabis for medicinal use, including many states in America and Canada. A few months later, the Financial Conduct Authority (FCA) announced that medicinal cannabis companies could list on the London Stock Exchange.

The announcement by the FCA then resulted in several initial public offerings (IPOs) launching on the stock market and offering investors the opportunity to buy shares in what is proving to be an emerging market.

While this is all very positive, for investors to have true confidence in this nascent market, there needs to be greater emphasis placed on making sure the commercial products can get into the hands of those who need them; at this moment in time, many elements are impeding it.

The UK could be at risk of missing the investment opportunity and establishing ourselves as market leaders in the medicinal cannabis industry.

If we do not move beyond this cautious approach, we risk the possibility of losing investment in the production, manufacturing and commercial sides of this developing sector which could be of great benefit to the UK economy as we climb back out of the pandemic bunker.

The FCA is just one of the organisations which are proceeding with caution. Their alleged fear is that the use of cannabis in the UK for recreational use is still illegal. They want to be satisfied that the activities of medicinal cannabis companies with global operations would be legal if carried out in the UK.

Opportunity for growth

The medicinal cannabis market has the potential to revolutionise the health industry and help provide the UK economy with a welcome boost.

Unfortunately, the UK is currently reliant on companies overseas and imports 100% of the medicinal cannabis prescribed to patients through a specialist consultant. This is despite actually producing a significant amount of medicinal cannabis ourselves. It’s the age old story.

Focusing more energy into developing the UK market as a self-supplier would help to speed up supply chains, lessen the FCA’s fears and help get the medication to the patients who need it with far less red tape than there is currently.

As more data comes through on trials, this will hopefully help to lessen the regulatory grip on the medicinal cannabis industry. Then, there will be an even greater opportunity for investment in the medicinal cannabis sector.

A growing body of evidence

Project Twenty21 launched in 2020 to create the UK’s largest body of evidence for the effectiveness of medicinal cannabis. They hope the findings “will provide evidence for NHS funding where the benefits of treatment with medicinal cannabis are proven to outweigh the potential risks”, said Drug Science, the organisation behind the project.

The trial so far has produced results that suggest those receiving the medicinal cannabis felt significant improvements in their quality of life. The treatments are currently being provided in those living with conditions like Epilepsy and Multiple Sclerosis.

Success stories of medicinal cannabis investment

An investment success story where medicinal cannabis is concerned is the drug Epidiolex; the first cannabis plant derived medicine approved by the US medicines regulator. The company first floated on AIM but then made a move in 2016 to Nasdaq, and in that time, the price rose to four times the original price.

UK companies like Oxford Cannabinoid Technologies (OCT) are now hoping to follow in these footsteps. OCT was listed on the London Stock Exchange a few months ago and reportedly view themselves as “the next GW Pharma Pharmaceuticals,” according to Neil Mahapatra, OCT executive chairman.

He states, “GW, like us, are one of the few firms in the cannabis space that actually requires no real progression of cannabis law in order for its business model to succeed,” he adds. “That is because [we] are using these already pre-existing channels of drug development, clinical trials and regulatory approval […] to develop our products.”

Despite its challenges, there are many opportunities for investment in the medicinal cannabis sector. Some new ones to consider are CogniCann for Alzheimer’s, CannEpil for epilepsy and CimetrA in hospitalised COVID-19 patients.

As more evidence is produced, regulations decrease, and more companies come on board, there will be even greater potential for investment in the medicinal cannabis sector, so watch this space.