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 "play the watch".

Speaking at the recent cannabis and CBD exhibition in Birmingham, England, Roy said his research indicates that some companies are looking to sign up for the London Stock Exchange but are waiting for others launch first.

10 to 15 Imminent IPOs

He said: "There are cannabis companies looking to float on London markets, some just do not want to be first, because the costs will be high. However, once the market begins to move, we expect 10 to 15 companies to go public within two years and a recognized cannabis sector to be created on the market.

"While we are currently seeing North American companies attracted to Frankfurt, the financial liquidity available in London is not up to par, and this market will become the largest European market."

No big brands ... for the moment

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

"We are still in a very, very, very, very early stage for UK companies and it may be another three years before they become the target of the big brands."

One of the problems facing cannabis companies in the UK is the proceeds of crime act, which discourages investment. Banks are wary of any potential legal trap and are reluctant to invest.

Concern and confusion

Nick Tulloch, CEO of Zoetic, formerly Highlands Natural Resources, runs one of the few UK companies currently listed on the London market. In his view, these concerns and the "confusion" surrounding regulation make institutional investors conservative and wary of the industry.

"They do not want scandals, so for now, the money comes from small private investors, small institutions and wealthy families. I can talk to three different lawyers and get three different opinions. Harmonization and a clear regulatory structure would be welcome and create the confidence to deal with some of the problems with the banks. "

He adds that the influence of social networks is essential in the cannabis field. In fact, investors first learn 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 consultants, said most families with a high net worth profile now have funds in the sector. "Many institutional investors can not do anything because they are too big to get involved, but they keep an eye on it, and will eventually come in."

The inability of banks to take full interest in the cannabis industry, for regulatory and legal reasons, means that many cannabis companies are forced to use virtual suppliers at high prices, he explained. . A number of cannabis companies are currently trading in smaller London markets, 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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