Cannabis groups race to become first to win London listing – Financial Times


Cannabis companies are vying to be first of their kind to list on the London Stock Exchange after the UK financial watchdog last year gave the green light to manufacturers of products that use the drug for medical purposes.

Kanabo, which is developing a means to distribute cannabis-derived products for medical patients through vaporisers, is in talks with investors during a roadshow ahead of an expected initial public offering next month. 

MGC Pharmaceuticals, which sells THC tinctures and is developing a cannabis-based epilepsy drug, is in the final stages of preparing to list in London and hopes to raise up to £5m.

The country legalised medicinal cannabis in 2018 but companies in the sector struggled to tap into the UK capital market owing to uncertainty over listing regulations. This prompted the Financial Conduct Authority to set out rules last September that would open the door to those providing the drug for medical use.

Tel Aviv-based Kanabo will be floated through a reverse takeover of a special purpose acquisition company (Spac) called Spinnaker Opportunities, which listed on the LSE in 2017.

Kanabo, which also sells products for CBD consumers in the UK and Germany, has been in talks with the FCA since the ruling. Although the start-up is still awaiting final approval from the regulator, founder Avihu Tamir said the FCA had given enough reassurance to proceed with the IPO plans. 

Mr Tamir said the FCA had been “great” to work with and had provided clear guidance about what was needed to list in London.

The European medical cannabis market was valued at €330m in 2020, according to data provider Brightfield Group. The market for CBD, a cannabinoid that is not classified as a drug and can be sold over the counter, was valued at €1.4bn in the same year, according to Hanway Associates.

The money that MGC is looking to raise will be used to fund phase 2 clinical trials of its cannabis-based epilepsy drug as well as a phase 3 trial of a plant-based treatment for Covid-19 and other infectious diseases that give rise to pneumonia.

“Most of our operations and manufacturing is in Europe, so it makes sense to have the base here, and the LSE is one of the largest stock exchanges in the world,” said MGC Pharma’s chief executive Roby Zomer.

The company, which was founded in 2015, had originally turned to Australia for funding as the cannabis market in Europe at that time was in its infancy.

Emmac, one of Europe’s largest cannabis groups, has also previously flagged its intention to float in London. 

Antonio Costanzo, co-founder and chief executive, told the Financial Times that “we have a few options on the table and one is listing in London”, adding that the FCA’s announcement last year had been “welcome”.

The second licence under UK rules — and the first in more than 20 years — has also recently been granted to grow medical marijuana on a commercial basis. Jersey-based start-up Northern Leaf was in December awarded the permit to grow cannabis for medical use by the government of Jersey under UK Home Office rules. It plans to start supplying drugmakers in the UK, Denmark, Germany, Spain and Portugal by the end of this year.

“Demand is increasing globally and the market is currently undersupplied,” said Campbell Dunlop, chief executive.

This article originally appeared here in

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