The London Stock Exchange’s potential as a European centre for legal cannabis companies is gathering pace with the news EXMceuticals the latest company in the sector credited with serious interest in a listing. EXM is already a public company with listings in Frankfurt and on the Canadian Securities Exchange. However, The Times reports that the grower is now exploring the option of possibly moving its primary listing to London.
EXMceuticals grows strains of cannabis plants high in CBD, or cannabidiol. The compound is believed to have medical properties useful in the treatment of a huge range of conditions from certain kinds of cancer to inflammations and anxiety.
Until recently there was very little serious medical research into the drug due to its classification alongside narcotics such as cocaine. However, in recent years CBD-strains of the plant, which have only trace levels of THC, the psychoactive compound associated with the cannabis ‘high’, have been legalised across much of Europe and North America. As well as freeing up sufferers of different conditions who believe medical cannabis helps control their symptoms to legally buy the drug, it’s also made it easier for pharmaceuticals companies to run R&D and clinical trials on cannabis-derived drugs.
UK-based GW Pharmaceuticals was the first producer of a cannabis-derived drug to gain regulatory approval in any country when the UK approved its Sativex multiple sclerosis treatment in 2010. It was subsequently also approved by the FDA and last year the company managed to secure approval for Epidiolex, its treatment for rare forms of epilepsy that have proven unresponsive to other medications.
EXMceuticals is chaired by ex-Goldman Sachs banker Jonathan Summers and is focused on the agricultural stage of the supply chain. The company is sourcing large areas of land in a number of African countries for the cheap cultivation of a CBD-rich crop. After the plants have been processed for CBD oil, EXMceuticals imports it into Portugal for sale and distribution around the rest of Europe.
Many producers of food and drinks products are also keen on creating CBD-infused lines. Coca Cola wants to make CBD-infused beverages and Ben & Jerry’s have said they are keen to produce CBD ice cream. There are still regulatory hurdles to these kind of products but they are expected to fall soon.
Despite the fact that medical cannabis is now legal in over 30 U.S. states and the THC-rich recreational variety in 10 states plus Washington D.C., it is still illegal on a federal level. This is a blocker for the bigger companies to start producing and selling CBD-infused food and beverages that can be sold from general, non-specialist, retail outlets. However, changes that will make that step possible are expected to come soon. Bank of America Merrill Lynch analysts believe just the CBD food supplement market could be worth as much as £30 billion by 2032.
It is expected that several medical cannabis companies will move to list on the London Stock Exchange before the end of the year. The AIM exchange, which is a sub-exchange separate from the main LSE whose less onerous and expensive demands appeal to smaller companies, is expected to be particularly attractive to fledgling firms in the legal cannabis market targeting a European listing.