A batch of medicinal cannabis firms look set to exploit London’s deep-pocketed investors with stock market listings this year and the flurry of activity is expected to continue.
The legalisation of medicinal cannabis in the UK last November has seen London emerge as a new hub for companies to list.
Canaccord Genuity analyst, Alex Brooks, told Proactive Investors: “We are working very hard to get a number of companies listed in London …we anticipate that there will be several that we have listed by the end of this year.”
Medicinal cannabis IPOs expected
European Cannabis Holdings is among the medical cannabis firms understood to be eyeing a stock market listing this year.
The company has so far raised £6mln from investors and is expected to use a London float to support the development of three medicinal cannabis clinics in the UK.
Kanabo Research is reportedly another medicinal company with plans to list in the UK.
The Israeli company, which has developed a vaporiser medical device called VapePod that allows people to inhale cannabis oils, is expected to float on London’s main market by summer.
Medicinal cannabis firm Jacana, founded by Jamaican businesswoman Alexandra Chong, is also said to be mulling an initial public offering on London’s junior market AIM.
Chong, who previously ran the Lulu dating app and is married to Sir Richard Branson's nephew Jack Brockway, has a 100-acre farm in Jamaica and plans to sell medicinal cannabis in North America, Europe and the UK.
London-listed firms expanding into cannabis
Outside the medicinal cannabis space, there are companies already listed in London that are dipping their toes in the sector.
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The new venture, Zoetic Organics, will grow hemp and sell products such as organic hemp oil.
Imperial X, listed on the NEX exchange, plans to launch a cannabis business after its mining investment firm failed.
The firm will join Sativa Investments PLC (AQSE:SAT), which is also on the NEX exchange.
Sativa became the UK’s first cannabis investment vehicle to float when it listed last March and its shares have doubled in value since.
It is currently the only pure-play medicinal cannabis company listed in London but that is about to change, Brooks said.
“It is my judgment that by the end of this year there will be half a dozen listed cannabis companies in London of meaningful scale and that we would be involved in a good chunk of them,” he said.
“That’s just the beginning because if you look at all of these companies they are all relatively conservative cannabis plays … they are very medicinally focused, and there is a lot more scope for the industry beyond just that and there is huge scope for volume growth in the short and medium term.”
Brooks thinks Europe is in the early stages of a growth industry as there is a “very meaningful” end market with a “meaningful set of companies”.
Cannabis the new bitcoin?
Companies that list in London will be hoping to emulate the success seen in Canada, where valuations have surged.
There has been a rapid rise of cannabis companies in Canada since the country legalised recreational cannabis last October.
Some critics have drawn comparisons to the boom of bitcoin, which has experienced extreme price volatility.
"There's a belief that it’s all a bubble and it’s all going to end, which is not at all consistent with what the market is doing with these stocks," Brooks said.