London to replace Frankfurt as hub of European cannabis capital

While Frankfurt is currently the preferred market for companies, capital flowing to London will, according to experts, the European financial center of cannabis.

Jonathan Roy, director of the Cannabis Investor Forum, said investment opportunities in the UK are currently limited to a few companies, while others are "playing for time".

Speaking at the recent cannabis and CBD exhibition in Birmingham, England, Mr Roy said his research indicates that some companies are looking to list on the London Stock Exchange, but are waiting for others to do so. throw first.

10 to 15 Imminent IPOs

He said: “There are cannabis companies looking to float in the London markets, some just don't want to be the first because the costs will be high. However, once the market starts to move, we expect 10 to 15 companies to go public within two years and a recognized cannabis sector to be created in the market.

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“While we are currently seeing North American companies drawn to Frankfurt, the financial liquidity available in London is not up to par, and this market will become Europe's number one market. "

No major brands ... for the moment

While North American companies are attracting interest from major global brands (Hexo and Molson Coors, Canopy and Constellation) these types of operations will not be in practice in London for some time, Roy said.

“We're still at a very, very, very, very early stage for UK companies and it may take another three years before they become the target of big brands. "

One of the issues facing cannabis companies in the UK is the Proceeds of Crime Act, which discourages investment. Banks are wary of any potential legal pitfalls and are reluctant to invest.

Concern and confusion

Nick Tulloch, CEO of Zoetic, formerly Highlands Natural Resources, heads one of the few UK companies currently listed on the London market. According to him, these concerns and the “confusion” surrounding the regulation make institutional investors conservative and suspicious of the sector.

“They don't want scandals, so for now the money is coming from small individual investors, small institutions and high net worth families. I can talk to three different lawyers and get three different opinions. Harmonization and a clear regulatory structure would be welcome and would create the confidence needed to deal with some of the problems with the banks. "

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He adds that the influence of social media is essential in the field of cannabis. Indeed, investors first inquire about the presentation and presence on social media, before focusing on the quality of the product.

Institutional investors play the watch

Geoff Miller, one of Cannafi's cannabis financial advisers, said most families with high net worth profiles now have funds in this industry. “A lot of institutional investors can't do anything because they're too big to get involved, but they keep an eye on it, and will eventually enter. "

The inability of banks to fully engage with the cannabis industry, for regulatory and legal reasons, means that many cannabis companies are forced to use high-priced virtual suppliers, he explained. . A number of cannabis companies are currently trading in smaller markets in London, such as the NEX Exchange, including The Sativa Group and Ananda Developments.

The London Stock Exchange is expected to get its first listing from the Israeli company Kanabo Research and the Australian company MGC Pharmaceuticals, both wishing to go public in the coming months.

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