APPG plan suggests UK has big future in hemp and cannabis, Biden overhauls cannabis policies
- The UK cannabis industry could create 594,000+ jobs, £5.5 billion in annual tax revenue, and environmental and agricultural benefits aimed at meeting carbon neutrality commitments by 2050.
- Freelancers and small business owners with the following skills could carve out a future in the cannabis industry (this list is not exhaustive): copywriter, medical researcher, quality assurance engineer, data scientist, IT support, public relations professional, journalist, IFA, farmer, accountant, solicitor, cosmetic retailer, product development and designer, database administrator, software developer, food scientist, sales and marketing manager, homoeopath, cultivation technician, consultant pain specialist, talent acquisition/HR manager, SEO manager, website developer, logistics manager
- Nawan Butt, manager of The Medical Cannabis and Wellness UCITS ETF (CBDX), explains what President Joe Biden’s overhaul of US cannabis policy means for investors and small business owners
The US cannabis industry has been booming in certain US states, such as Colorado, and investors are keen to see even more growth in the industry now that President Biden has spoken of more pro-cannabis policies.
On this side of the pond, the UK All Party Parliamentary Group (APPG) for Cannabidiol (CBD has published a plan for a Legal and Regulated UK Hemp and Cannabis Sector. The plan highlights the practical opportunities presented by what has become a global thriving hemp and cannabis (including CBD) industry. The APPG is co-chaired by Baroness Manzoor CBE and Crispin Blunt MP (both members of the ruling Conservative Party)
The group estimates the industry could create 594,000+ jobs, £5.5 billion in annual tax revenue, and environmental and agricultural benefits aimed at meeting carbon neutrality commitments by 2050.
The plan suggests that the UK does not have to address the issue of legalised recreational THC (tetrahydrocannabinol – the key psychoactive element of cannabis) to establish itself as a viable commercial hub, according to Senior Associate David Hardstaff and Partner John Binns of BCL Solicitors LLP.
“Tactically, this is a shrewd opener, cutting through the stasis sometimes resulting from differing views on the recreational use of cannabis,” wrote Hardstaff and Binns in an Open Access Government report.
“The case is made that the question of recreational use doesn’t have to be resolved once and for all before starting work on a more coherent plan for the UK’s wider cannabis industry. The risk, the Plan emphasises, is that if we fail to act now, the UK cannabis industry will be ill-equipped to compete with its peers as the global cannabis market flourishes,” said the report.
Cannabis reform expected to create US “bull market” for investors
By Nawan Butt, manager of The Medical Cannabis and Wellness UCITS ETF (CBDX)
The road to cannabis reform in the US has been very tough on investors and operators alike. An early look into Biden’s presidency had investors supremely optimistic about cannabis reform occurring under the new Democrat regime and valuations quickly reached all-time highs in February 2021.
That said, political meandering meant that valuations in the sector dwindled over the months as Democrats stuck to a more comprehensive approach in favour of a business-friendly incremental approach.
Many months have passed with numerous attempts at reform running through Congress; this includes the SAFE Banking Act, the STATES Act, the CLIMB Act, the CAO Act, the MORE Act and many more. However, progress remained slow with Senate leadership trying to find a fine balance between social equity provisions and business-friendly legislation.
However, over the past few months, we have written about and gotten more optimistic about an enhanced version of the SAFE Banking Act being tabled and passing the Senate in the upcoming lame-duck session. Discussions have been mostly behind closed doors but reports of progress have been encouraging.
In a surprise announcement, President Biden revealed the expungement of all small-scale federal marijuana offences and a review of cannabis as a scheduled substance in the United States in a bid to gain popularity into the November midterm elections.
The validation of cannabis reform from the top administrator in the country has led to a violent reaction for stock of cannabis and related businesses. This action opens to door for federal decriminalization as well as encourages near-term business-friendly reform which could potentially be the second bull market in US cannabis.
The price action should be a boon for medical cannabis and ancillary business verticals held within CBDX. With further clarification and setting of timelines, we anticipate this to be a secular pivot in the cannabis industry rather than a one-time revaluation.
There is potential to recognise a market opportunity of up to $80 bn in the US alone and such action would send shockwaves throughout the western world. We are closely watching for the next steps but are optimistic that those who have long endured the pain of the cannabis trade will soon see the bigger thesis come to life.
According to the BCL Solicitors LLP report, the APPG key recommendations include:
To achieve its objective of a thriving UK cannabis industry, as well as hemp, the Plan makes 23 specific recommendations, including:
- Move hemp licensing from the Home Office to DEFRA: To put the UK on a competitive footing with other hemp-producing countries, the licensing of industrial hemp cultivation should be moved to the Department for Environment, Food and Rural Affairs (DEFRA), whose staff have agricultural expertise and are better qualified than those in the Home Office to assess applications for hemp cultivation.
- Commission a review of the Novel Food Regulations and its applications to hemp-based food supplements: Today, the vast majority of CBD food supplements sold in the UK are imported. This is due to current restrictions on hemp cultivation and the onerous Novel Food process, both of which effectively preclude UK farmers from accessing this high-value-add consumer segment of the CBD sector.
- Establish commercially viable THC limits in consumer products: The current focus on permitting only CBD isolate sales in the UK (based on a perceived requirement for zero THC content) nullifies the potential economic benefits for a domestic UK industry, as isolates are an oversupplied commodity dominated by U.S. and Chinese manufacturers.
- Allow GPs to prescribe cannabis and remove the requirement for doctors to triage their prescription with two other peers: The current procedure is slowing down the process and creating unnecessary barriers.
- Reform the Proceeds of Crime Act 2002: At present, investors remain cautious about investing in the cannabis sector, owing to the risks associated with the Proceeds of Crime Act 2002. As a consequence, proceeds from medicinal cannabis business in states such as Colorado may constitute “criminal property” even if fully legal and authorised in the foreign state.
Cannabis-based products for medicinal use in the UK, find answers to frequently asked questions