The European cannabis market will be worth €123bn (£106bn) by 2028, according to the London-based analysis firm Prohibition Partners. That is more than twice the revenues that Apple reported in the region last year and larger than the annual economic output of Ukraine. Some of the more fanciful forecasts suggest that the world is witnessing the birth of an industry which could be worth from $500bn to $1tn. A flood of established stockbrokers have begun pumping out research on the industry and, as of the beginning of 2018, there were already a dozen cannabis companies with a stock market value of more than $1bn.
Altria, the company behind Marlboro cigarettes, paid $1.8bn for 45% of Canopy’s competitor and compatriot Cronos in December. The beer giant ABInBev, owner of America’s pervasive Budweiser brand, has put $50m into a joint venture with the cannabis company Tilray to research weed-infused beverages, a plan Coca-Cola has also toyed with. These are not half-baked Californian start-ups but international heavyweights.
Legal weed, particularly for medicinal purposes, ended last year as one of the world’s hottest investment prospects. Canada’s Canopy Growth, announced a partnership with TV chef and multimillionaire domestic goddess Martha Stewart to promote CBD, a medicinal component of cannabis (as opposed to the THC bit known for getting people high). It indicates that cannabis products are infiltrating respectable American households.
Hip-hop superstar Snoop Dogg, who promotes Canopy’s recreational weed subsidiary Tweed. Commercial tie-ups like these are just the latest in a rapidly expanding roster of landmark weed deals.
Cronos, Canopy and one of the sector’s other big beasts, Aurora, are all based in Canada, where recreational use achieved legal status in 2018, 17 years after medicinal use. They are well placed to capitalise on the relaxation of the law in the US, particularly via the 2018 farm bill, which did away with one of the major roadblocks – a long-standing federal prohibition on hemp cultivation. Alexandra Chong, chief executive of Jacana, a medicinal cannabis company that grows on a farm in Jamaica, recently raised $20m from venture capitalists. Jacana has already exported two shipments to Canada and has its eye on leveraging the cultural cachet of Jamaican origin to export to the rest of the world, including the UK. Chong said the industry’s growth potential was rooted in very simple economics. There is far more demand for cannabis and its derivative products, particularly for medical use, than there is supply. Restrictive legal frameworks in existing markets such as the US and Canada are one reason why supply is lagging behind demand.
London hosted last year’s Cannabis Invest conference, where the industry’s bigwigs tapped up investors for fresh funds. For investors there are already vehicles that allow them to put money into the industry, such as the UK-based Sativa Investments and Ananda Developments.
Before long, London is expected to welcome Britain’s first listed cannabis operating company. Spinnaker Opportunities was a cash shell on the lookout for companies to buy in the energy and industrial sectors. But halfway through last year it was attracted by the alluring whiff of the cannabis industry and its meteoric growth. It has announced plans to buy Kanabo, a research company focused on cannabis oil, medically approved vaporisers and cannabis cultivation, with a view to a stock market listing likely to value the company at up to £30m.
“Europe could and should exceed North America in terms of demand, on a like-for-like basis,” says Spinnaker’s chairman, Andy Morrison. “Should recreational use come to Europe it could ultimately be bigger. It’s an industry that could rival tobacco and alcohol in terms of its impact in the world.”
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