Emerging investments: Could 2022 be the year of the ‘flower’ in the UK?
Despite being home to the largest medicinal cannabis company in the world, until now, investment in the sector has been relatively muted in the UK. Could that be about to change, asks Rahul Bhushan, co-founder of Rize ETF.
The efficacy and uses of medical cannabis are undergoing their largest trial to date, thanks to a UK-based Project Twenty21. Over the next two years, this project will attempt to collect data from 20,000 medicinal cannabis patients with the objective of providing evidence to the NHS funding authorities that the benefits of medicinal cannabis outweigh the potential risks.
Through Project Twenty21, eligible patients will be able to access affordable medicinal cannabis treatment, expanding safe access to more British patients.
We see this development as an early and positive indicator of improved acceptance and liberalisation going forward, with greater focus and investment in the UK medicinal cannabis sector to be expected.
Lack of valid cannabis access
At present, there are roughly 6,000 medicinal cannabis patients in the UK. All but three of these patients are forced to rely on the private sector to receive the treatment they need, according to Project Twenty21.
Under the project, seven conditions are currently being studied. These are chronic pain, post-traumatic stress disorder (PTSD), anxiety, multiple sclerosis (MS), Tourette’s syndrome, epilepsy, and substance-use disorder.
The medicinal professionals behind the project are also setting up a Cannabis Industry Council so that they can speak with one unified voice to the government.
Post-Brexit and post-pandemic, a properly regulated and operating medicinal cannabis industry has the potential to generate a lot of jobs and tax revenue for the country.
The current state of UK cannabis
The UK currently trails Germany, Canada, and the US regarding prescriptions. Generally speaking, the pattern we have seen in these countries is for medical establishments to be reluctant for two years, before softening after three years, and then seeing the benefits of wider acceptance in years four then five.
The main cannabis-derived medicine available in the UK today is owned and marketed by UK-based GW Pharmaceuticals (GW), the world’s largest cannabis pharma company. The company was founded about 20 years ago and has grown to become the world leader in cannabis research and therapeutic IP.
GW’s main drug, known as Epidiolex in the US and Epidyolex in the EU, made history in June 2018 when it was approved by the US FDA to treat symptoms associated with two rare forms of childhood epilepsy, Lennox-Gastaut syndrome and Dravet syndrome.
The FDA nod set the stage for further innovation in the pharmaceutical cannabis space, leading to many more companies appearing on the market, researching other therapeutic areas and use cases for cannabinoids (Epidiolex is derived only from a single cannabinoid, i.e., plant-based cannabidiol or CBD). Epidyolex has been available for distribution and sale in the UK since January 2020.
Following GW’s successful rollout and rise to fame, Nasdaq-listed Jazz Pharmaceuticals made a €6bn bid for the, a moment that was hailed by industry enthusiast as major vindication of the therapeutic potential of medicinal cannabis. This represents the largest acquisition in the space to date and is expected to go ahead in the next few months subject to regulatory approval.
The more recent cannabis legalisation wave kicked off in Canada back in 2013 and 2014 and subsequently spilled over into the US before steadily morphing into the global story it is today. But to-date only the medicinal use case has transcended borders while attitudes remain mixed on adult-use. A decade ago, there were only around 10 countries where cannabis was legal for medicinal use. Today, there are over 70.
We believe the de-stigmatisation happening in the US and Canada will eventually be fully exported to Europe. So ultimately, we believe an acceptance of adult-use legalisation will arrive on the shores of Europe.
Currently, Europe does not have any meaningful “homegrown” cannabis companies to speak of (aside from GW, but today they have most of their operations in the US). Absent any broad mix of homegrown players, the benefits of liberalisation and legalisation have been less obvious in Europe. While in North America, with hundreds of companies operating in the space, the experience has been vastly different.
This has fed through to investor attitudes too. In North America, investors have witnessed the arrival of wave after wave of cannabis companies, observing them cater to rising demand, growing, and starting to generate revenues. While North America has had a head start, we do expect Europe to follow suit with time.
Initiatives such as Project Twenty21 are exactly what are needed to help accelerate acceptance and understanding of the medicinal cannabis complex. We are excited to see its progress and anticipate further and faster evolution of the UK cannabis market over the next few years.
 New Frontier Data, “Project Twenty21, Trying to Prove the Case for Medical Cannabis in the U.K.”, April 2021. Available at: https://newfrontierdata.com/cannabis-insights/project-twenty21-trying-to-prove-the-case-for-medical-cannabis-in-the-u-k/
 National Organization for Rare Disorders, “Rare Disease Database”, 2021. Available at: https://rarediseases.org/rare-diseases/lennox-gastaut-syndrome/
 Wall Street Journal, “Jazz Pharmaceuticals to Buy Cannabis-Based Drugmaker GW Pharma for $6.7 Billion”, February 2021. Available at: https://www.wsj.com/articles/jazz-pharmaceuticals-to-buy-cannabis-based-drugmaker-gw-pharma-for-6-7-billion-11612370417
 New Frontier Data, Medical Cannabis Research – Data obtained from New Frontier Data’s research division through dialogue with Mr. John Kagia, Chief Knowledge Officer, April 2021