Summary

• The Financial Conduct Authority has allowed Medicinal Cannabis Companies to list on LSE
• The use of cannabis for recreation activities continue to remain strictly prohibited
• In recent times, realising the medical importance, several countries have set new regulations for the sale and use of cannabis for curing ailments.

Cannabis use in medical sciences has given its consumption a new dimension. There has been huge investment going on in the field and a lot more is expected to happen over the course in the coming years with reference to the development of medicinal cannabis in the UK.

The UK’s financial regulator in a landmark decision has allowed companies foraying into the domain of medicinal cannabis to float on the world’s largest stock exchange, London Stock Exchange (LSE) with the correct home office license.

However, the use of cannabis for recreation activities is still strictly prohibited. The Financial Conduct Authority (FCA) will still keep the doors closed for businesses that grow and sell recreational cannabis, and they would not be allowed to list in London.

Also read: What’s Trending in The Cannabis Space; A Look At The UK market

The evolving landscape of the Cannabis Industry

Since ancient times, Cannabis had been used by civilisations for treating ailments such as gout, malaria, rheumatism, and absent-mindedness along with an option for recreation. However, cannabis is often seen in the bad light by regulatory bodies and governments because of its addictive nature and its high potential for abuse.

But realising the medical importance, several countries, including Canada and certain US states, have explored and set new regulations for the sale and use of cannabis for curing ailments. In recent years, the highly regulated sector has snowballed and is believed to become a potential gamechanger in the field of medical science. Acceptance of cannabis for treating patients diagnosed with the chronic disease along with its improved legalisation has led to the growth of the sector. According to sector experts, the global cannabis market has a lot of headroom to grow and is set to become a billion-dollar industry by 2027.

Cannabis related stocks are already under the radar for many investors as they see this sector as an untapped opportunity to churn big returns and that is why these stocks have been gaining a lot of popularity from investors these days, who wish to take advantage of the potential growth in the segment.

Legalities Related to Cannabis

Canada legalised the use of cannabis products for recreational activities in October 2018 and became the second country after Uruguay to do so.

The UK Drug market is governed by “2001 Misuse of Drugs Regulations”. Cannabis was earlier placed under Schedule 1, which meant that the drug could not be lawfully possessed or prescribed as it has no therapeutic value. In 2018, Cannabis was given a green signal in the UK and was place under Schedule 2, which meant that clinicians could prescribe the drugs, if necessary.

The MHRA (Medicines and Healthcare products Regulatory Agency) was given the responsibility to draft the guidelines for regulating and rescheduling cannabis products which can be prescribed as a medicinal product.

Cannabis Stock Investment

In 2019, the Church of England had reversed its earlier course and relaxed a self-imposed ban on investing in Cannabis directly or indirectly. Cannabis stocks, also known as pot stocks, were excluded from the investment portfolio of the Church, but later on, the ban was lifted.

The landmark decision of allowing medicinal cannabis companies to list on the LSE seems to be a big growth catalyst for the healthcare businesses investing in this specialised space. Let us have a look at companies which might seek listing securities on the LSE.

MGC Pharmaceuticals

MGC Pharmaceuticals, which is also listed on Australian Securities Exchange, has accelerated plans to list on the London’s broader equity benchmark index, LSE.

MGC Pharmaceuticals Ltd is a European biopharma company, which specialises in developing standardised yet affordable phytocannabinoid derived medicines to patients suffering from medical conditions such as dementia, epilepsy, and brain tumour. In addition, MGC Pharmaceuticals has several research collaborations with renowned academic institutions across the world.

MGC Pharmaceuticals strives to become one of the first cannabis-related companies listed in the UK on the LSE and is now expected to fast track the finalisation of its listing submission in order to achieve its objective. The company has been awaiting approval from the UK authorities on the prospectus, legal opinions, and listing documents previously submitted in December 2019. As per the company and its advisors from UK the business operations fully comply with to the new listing approval requirements of the FCA.

Also read: NZ Legalising Cannabis: Is It Worth Rolling the Bill?

Why would the Medicinal Cannabis companies like to list on LSE?

Cannabis has gained huge popularity across the world due to its application in medical sciences. A lot of investment is expected to happen over the course of the next few years with reference to the development of medicinal cannabis in the UK.

Due to pandemic, major healthcare businesses have diverted their funds and expertise in the research & development of coronavirus vaccine. Moreover, entities operating in the sphere of medicinal cannabis have a specific budget for this segment as it is a highly regulated and scrutinised domain.

The companies are looking to list on the LSE so that they could raise funds easily to invest heavily in their R&D units, given the prevailing conditions in the economy. The UK has the potential to become one of the leading producers of medicinal cannabis.

From an investor’s perspective, adding medicinal cannabis stocks to his portfolio would mean adding a new growth dimension along with risk diversification. This is a field of research and innovation. New discoveries in this domain could lead to growth irrespective of the health of the economy.