In a sign that the cannabis industry is attracting investor interest far beyond just alternative lifestyle, health and wellness entrepreneurs, even the UK's Channel 4 broadcasting company has got in on the investment act – or rather its venture capital arm has. Recently, C4 Ventures invested in cannabis company Cannaray, eyeing the wider European market for medicinal cannabis and CBD products. Cannaray is a European medical cannabis and retail CBD company that also received financial backing from Three Bridges Private Capital and Alpha Blue Ocean.
The head of C4 Ventures, Vinay Solanki, said the investment reflected the rapid use of medical cannabis and CBD across the UK and EU. As a first in UK media, the investment would give Cannaray's flagship wellness CBD brand access to a "high-reach upmarket TV audience" in the UK. Solanki said: "We've been impressed with the leadership team at Cannaray and their progress in building a portfolio spanning European Medical Cannabis and the Cannaray CBD wellness brand. "In 2021, Cannaray became the UK's first major brand to advertise CBD on TV and Cannaray CBD is now stocked on Amazon and in more than 1,500 retail outlets across the UK including Tesco, Superdrug, Asda, Waitrose and Harrods."
Cannabis health benefits
V4's investment and media campaign reflects the huge emerging market growth of medicinal cannabis and CBD attributed to consumer awareness of the health benefits now available from cannabis. As well as health, wellness and medical applications, cannabidiol oil is also being used to treat depression and anxiety, diabetes and even cancer symptom relief.
Experts predict that the UK's medical cannabis market alone could be worth more than £450 million by 2026, which amounts to 24% of the total European market. Moreover, if the UK were to legalise cannabis – with recreational sales starting in 2024 – this would bring the market's size to more than £1 billion in the UK alone.
Across the EU, meanwhile, the cannabis market is expected to grow from €403 million in 2021 to reach €3.2 billion by 2025. Spain recently became the latest EU state to decriminalise cannabis for medical use, with other EU countries taking similar measures including France, Romania, Italy and Germany.
Legalisation roll out across EU and North America
Germany's federal government has its sights on a blanket legalisation of the domestic cannabis market by early 2024 – and many industry experts predict the country could well become the world's largest cannabis market within the next two years. Given that Germany has open borders with nine neighbouring countries, this would almost certainly pave the way for legalisation in other EU countries. Elsewhere, the Canadian cannabis market continues to outpace much of the rest of the world. The sector more than doubled in value between 2019 and 2020, increasing to $2.6 billion from $1.2 billion. Canada is now the largest exporter of legal cannabis in the world, ahead of the Netherlands. As a result, CBD businesses are queuing up for trademarks and last year an estimated 7,000 applications and registrations were registered in the country.
To the south, the US has generally had to play catch up with Canadian legislation, where cannabis was legalised in 2018. Nevertheless, the cannabis industry has grown dramatically in the US. In the past year alone states as far apart New Jersey, Montana, South Dakota, New York and New Mexico have legalised cannabis for recreational use. Across the US, 37 states have now decriminalised cannabis for specific medical use, while 19 have gone further, for recreational use. Legislation by state governments was recently echoed by the federal government on April 1 this year when the House of Representatives voted to federally decriminalise marijuana.
Start ups, IPOs and M&As
The liberalisation of the cannabis industry and the relaxation of legislation across Europe and North America has resulted in phenomenal growth in cannabis sales. Globally, sales increased from $21 billion in 2020 to $29 billion in 2021 and are expected to reach $35 billion this year, according to Jason Wilson, cannabis research and banking expert at ETF Managers Group. The result of this huge spike in growth has spawned a list of start ups, IPOs and M&As as businesses have taken advantage of the relaxation in national laws.
This growth is predicted to soar during the next decade, turning cannabis into a global industry worth $176 billion by 2030, according to ResearchAndMarkets.com. This has also had a big impact on the legal sector where many law firms are now starting to build cannabis practice areas as the number of countries and US states introduce more relaxed laws. Legal and financial advisors are being contacted by cannabis businesses that need advice on intellectual property, employment law, taxes, regulatory compliance, lending and financial transactions, M&As, among other practice areas.
Most lawyers agree that with legislation changing within countries and across borders, companies are now eyeing multiple business opportunities, many often involving international investment and M&As. As a result, such evolving laws and regulations require lawyers to act quickly for their clients. As an example of the complexities to hand, in one US state alone, California, cannabis companies have had to navigate 18 agencies for licensing cultivation or manufacturing, including state and local entities. As a highly regulated industry across the world, the deregulation of the cannabis industry is now offering businesses and their advisors huge opportunities that were simply not available until recently. In this publication, legal advisors across multiple territories explain the recent changes to legislation on medicinal cannabis and CBD in their jurisdictions.
Download the full publication, ungated for free here: https://bit.ly/3ogLPYV
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.