The past year has presented many challenges for companies planning to go public. Investor concerns regarding the war in Ukraine and the rising cost of living have stalled progress.
However, for Northern Leaf, a medical cannabis company aiming to raise £3 million in pre-IPO funding, this difficult period has allowed management to put together the operational and commercial pieces needed to achieve its goals.
The final step is to obtain the Medicines & Healthcare products Regulation Agency (MHRA) EU Good Manufacturing Practice (GMP) certification, which is expected to be approved in the second quarter of this year.
High-value medical markets
“This sign-off is extremely time-consuming and difficult to attain, but will give Northern Leaf access to high-value medical markets across Europe where their products will be dispensed,” a source close to the company told Proactive.
The business has a significant advantage over the domestic competition as its 75,000-square-foot state-of-the-art cultivation facility is located on Jersey.
The island’s legal, judicial, and financial systems operate separately from the UK and are extremely business-friendly.
Additionally, the climate is the sunniest in the British Isles which makes it a very favourable jurisdiction for cultivating high-quality medical cannabis.
However, the most significant advantage is that the company’s licence permits it to export to overseas markets, whereas domestic growers can only sell in the UK.
Remarkable list of potential customers
As a result, Northern Leaf has compiled a “remarkable” list of potential customers for its pharmaceutical-grade product, thanks to the time spent operating as a private company.
The company's facility will enable it to produce up to nine tonnes per annum, with planning permission in place to expand that to 25 tonnes of pharmaceutical-grade, high-THC dried flower.
Northern Leaf is led by Don Perrott, who previously spent 22 years with KPMG in London and New York before heading the UK & Ireland arm of Aurora Cannabis, the Canadian cannabis giant.
Perrott is one of the most experienced professionals in the industry here in Europe, and he is supported by what one source described as a “first-class management team”.
Master grower
Northern Leaf also hired Asaf Shaked at the end of 2021 as its Master Grower. “Asaf is widely recognised as one of the best in the industry and he, together with the rest of the team, will ensure that Northern Leaf can produce high quality, consistent strains for the European medical cannabis markets,” the Northern Leaf source told Proactive.
Pharmaceutical-grade treatments derived from high-THC plants are used for a wide range of indications, including cancer, chronic pain, PTSD, anxiety, intractable epilepsy, multiple sclerosis and many other illnesses. Doctors are allowed to prescribe them in over 20 European countries.
Northern Leaf's first target markets are likely to be the UK, Germany and Israel. All of these countries have experienced rapid growth in the number of patients being prescribed cannabis-based medicines and this is expected to continue.
Huge growth expected
Prohibition Partners expects the number of medical cannabis patients across Europe to increase from 350,000 in 2022 to 2.6 million in 2025.
With strong demand and the potential to expand into new markets such as Australia and Poland, Northern Leaf is well-positioned to become one of Europe's top medical cannabis businesses.
A £3 million pre-IPO funding round will provide the investment and working capital required to bring the company to market later this year.
"The last year has been tough," said he source close to the IPO. "But in many ways, it has allowed us to put in place the building blocks to create a successful company, underpinned by the highest levels of regulatory compliance and a focus on quality and consistency."
This pre-IPO round is a preference equity offering providing downside protection via liquidity rights and guarantees a 20% upside to the IPO price to be set by the IPO investors.
Anyone that wants further information on this offering, which is due to close by mid-March 2023, please contact the company via investors@northern-leaf.com.