Bishop & Sewell

Welcome to the first in a series of blogs on the cannabis market. What better day to launch this on than 4.20 (and to those of you participating in celebrations or rallies this year – Happy 4.20!)

Today’s Cannabis Market Watch is a light introductory read for those new to the industry, and will be followed by a series of blogs covering a range of developments in the Cannabis Market.

But what is 4.20?

On 20 April each year, millions of people around the globe use this day to celebrate cannabis. Major rallies can be found in places where cannabis has now been legalised, such as Toronto and California. The reason it is celebrated on 20 April each year comes from the representation of the date as: 4.20.

This number has long been associated with cannabis, with some attributing it to a group of high school students in California from the 1970s. The students would meet at the end of the school day to smoke marijuana at 20 past 4, a time at which their parents would be at work. However, the origins remain debated with others attributing it to a belief that 420 was the historical penal code for marijuana, and others to a theory that there are over 420 active chemical substances in marijuana.

With big movements across the globe towards deregulation and the legalisation of cannabis, 4.20 has remained closely associated with cannabis and has seen momentum gather behind both celebrations and calls for legalisation each year on this day.

Public festivities in the US and Canada have slowly grown to what we recognise today such as the Cannabis Cup, with large concerts, comedy shows, festivities, and even marijuana-friendly speed dating. Companies have found 4.20 to be an opportunity to market their products to cannabis enthusiasts.

This day alone is a walking advertisement for the potential of cannabis to disrupt markets such as the food, drink, hospitality and entertainment sectors to the benefit of the global economy. The legal marijuana market has even been projected to hit a value of $91 billion by the year 2027. Yet even this is just a snippet of the potential. Just two years ago it was estimated that the global cannabis consumer market is worth $344 billion, with $68.5 billion (c. 20%) of that being based in Europe.

What is the difference between Cannabis and Marijuana?

You might be wondering what the difference is between marijuana and cannabis as many use the two words interchangeably. However, just as all pizzas are pies but not all pies are pizzas, all marijuana is cannabis but not all cannabis is marijuana.

Cannabis is a term for the genus of plant within the cannabaceae family. Within this family there are 170 different species of plant divided into (i) cannabis ruderalis, (ii) cannabis sativa and (iii) cannabis indica.

Marijuana is the only cannabis plant which contains tetrahydrocannabinol (THC), the chemical (or otherwise known as cannabinoid) infamous for getting people ‘high’. Another chemical found in marijuana is cannabidiol (better known as CBD). Whilst this chemical is not intoxicating, it’s widely regarded to have many beneficial effects including pain relief, reducing anxiety and alleviating side effects of cancer treatment. Different ‘strains’ of marijuana have different ratios of THC to CBD, and thus are associated with different effects for which you can find online catalogues in the US.

In contrast, hemp is another cannabis plant which has no THC but does contain CBD. Whilst an incredibly versatile resource which can be used to strengthen metals and buildings, or to create more environmentally friendly clothes and paper, it would not intoxicate a person. So you can begin to see why a blanket ban on cannabis gets complicated already.

Cannabis in the UK

In the UK, this is precisely what happened in 1971 – a blanket ban on all cannabis plants, regardless of specie or genus, was introduced under the Misuse of Drugs Acts.

Hemp had been cultivated in the UK for many centuries, with King Henry VIII requiring all farmers to dedicate parts of their farms to growing hemp. However, since the blanket ban on cannabis was brought in, hemp cultivation saw a huge decline. Whilst technically hemp cultivation remained legal, it simply wasn’t profitable for farmers with all the red tape due to the classification of all cannabis as ‘controlled substances’. Some attribute hemp’s regulation to the association with its cousin the marijuana plant, whilst others believe the ban on hemp to be part of a conspiracy by the rich to suppress the cannabis industry.

Today the UK’s relationship with Cannabis is more complicated than the total ban of the 70s, having evolved in recognition of the different plant species as more scientific studies demonstrate benefits to be realised from cannabis genera. Last year CBD was deregulated to a food substance which can now be found in all types of products – from drinks and food, to candles and lotions. Meanwhile, hemp remains a controlled substance depriving farmers and the UK’s economy of profits from the CBD content contained therein. On the other hand, marijuana remains illegal for the most part, with a medicinal market carved out. Thus, whilst Cannabis remains largely a controlled substance under the Misuse of Drugs Act, the UK has simultaneously cultivated a legal cannabis market with a full eco-system, which has already seen cannabis companies list and is only growing.

The UK’s CBD market alone is currently valued at £500 million, and is projected to grow to the £1 billion mark by 2025, being the biggest CBD consumer market in Europe. Moreover, businesses utilising CBD in their products have seen strong adoption by the UK’s public in both purchases and investment. For example, earlier this year Voyager CBD raised 499% of their target amount through 300 investors on the crowdfunding platform Seedrs. In addition to the CBD market, the UK has long been recognised as the largest producer and exporter of legal cannabis globally since a United Nations report in 2018 which highlighted that the UK produced 50% of the world’s medicinal and scientific cannabis.

This series aims to cast a spotlight on the growth of the UK’s legal cannabis market, whilst commenting on various developments around the globe. Next up in this series, we will take a deeper look at some of the key developments from the past 12 months, including; the UK’s first cannabis listing on the London Stock Exchange, the deregulation of CBD, medical advances and NHS programmes, and the role of cannabis in the London Mayoral election.

Eleanor Furlong is a Solicitor in our Corporate & Commercial team. If you would like to discuss any of the points stated in this blog, please do get in contact on tel: +44 (0)20 7091 2721

The above is accurate as at 20 April 2021. The information above may be subject to change during these ever-changing times.

The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.

Category: Blog | Date: 20th Apr 2021

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