Medical cannabis companies have been given the all clear by the Financial Conduct Authority (FCA) to float on the London Stock Exchange. However, companies that sell cannabis or marijuana for recreational purposes will remain banned.

The FCA said that companies that produce and distribute recreational cannabis can’t list on the London Stock Exchange because of the Proceeds of Crime Act. Any income derived frim the sale of cannabis and cannabis oils outside of the United Kingdom have the potential to constitute ‘criminal property’ under the Proceeds of Crime Act. This is because the Proceeds of Crime Act encompasses conduct abroad that would be considered a crime in the UK.

This is even true for companies that sell cannabis recreationally in countries where recreational cannabis is legal such as Canada.  Canada legalised cannabis in 2018 and an array of public companies such as Aurora, Tilray and Canopy Growth are now listed on major stock exchanges.

The FCA stated that UK medical cannabis companies would be allowed to float on the London Stock Exchange. Overseas corporations may also have the opportunity to list in London, but they will have to satisfy the FCA that listing on the London Stock Exchange is appropriate which may prove difficult because of the more nuanced legal position. If you wish to learn more about the regulations around CBD specifically within the UK then please check our comprehensive guide to the legality of CBD in the UK.

The current restrictive regulatory landscape for medical cannabis in the UK may complicate matters for overseas companies looking to list in the UK. While medical cannabis was legalised in 2018, access for patients is difficult and the number of prescriptions being prescribed in the UK at the moment is not significant. Complications surrounding the cost of importing cannabis into the UK mean that the price is high making the cost of a medical cannabis prescription significant to the patient. The limited choice of pharmaceutical wholesalers in the UK that have import licenses that allow them to bring cannabis into the country means that the price of cannabis is too high for many patients and too costly for the NHS to justify issuing prescriptions.

Cannabis is not covered by private insurance and is not available on the NHS. This means that the patient has to pay for the medication out of their own pocket in most instances. Medical cannabis is only available on the NHS for rare forms of epilepsy, multiple sclerosis and in certain cancer cases. 

This month in a landmark case, the NHS confirmed that Billy Caldwell’s medication would continue to be funded by the NHS. Billy Caldwell suffers from severe epilepsy and this was the first instance of the NHS funding an unlicensed cannabis medicine.

The FCA stated that the current legislation that is in place in the UK concerning medical cannabis means that foreign companies could not bank on having the right to list on the London Stock Exchange. The FCA stated they will have to gather a fundamental understanding of the foreign activities of any cannabis company looking to go public in the UK.    

This is a key development for all UK medical cannabis that have the appetite and means to list. This will also be of benefit to patients across the country as it means that UK medical cannabis companies will have access to the capital markets. For medical cannabis to truly advance in the UK, randomised clinical trials need to take place to prove the efficacy and safety of medical cannabis. Only upon successfully gathering data that proves cannabis can treat specific symptoms or conditions will the NHS even consider enabling patients access to medical cannabis on the NHS.

The capital that medical cannabis companies will have access to on the public market may help to drive the UK medical cannabis sector forward which should ultimately allow more people who are in pain to gain access to cannabis-based medicines that can improve their life as the price decreases. It should also allow UK medical cannabis companies to raise the funds to enable them to carry out clinical trials and clinical studies to prove the efficacy of particular cannabis medicines in treating specific conditions or symptoms.