Is the UK healthcare sector ready for medical cannabis?
08 April 2019
Cannabis deals are poised to grow again in 2019 after a huge rise in activity last year. In 2018, Mergermarket recorded $13.7bn globally, up 875% from 2017, with the majority of buyers and sellers coming from Canada and the US.
Despite financing, valuation and regulatory obstacles, deal-makers expect a continued deal flow in 2019 as more corporate buyers, family offices, institutions and PE firms enter the market.
Canada, a step ahead of other countries, legalised cannabis on 17 October 2018 for recreational purposes after years of allowing it for medicinal use, will also continue to target expansion internationally.
What happens next in the UK?
At the end of last year the Home Office agreed that, for the first time in UK history, medicinal cannabis products could be legally prescribed to some patients. And further regulations are expected to be released by the end of 2019 to legalise medical cannabis.
The NHS will provide regulatory oversight and determine what products will be permitted. Although few details have been made public, commentators and supporters speculate these restrictions will not be prohibitive. For example, in March, a new private clinic in Greater Manchester became the UK’s first specialist medicinal cannabis centre.
GW Pharma is currently the only licensed cultivator in the UK, so a significant undersupply is expected when legalisation comes in. Canadian companies are therefore well positioned as the UK government has so far been reluctant to allow a domestic production industry.
Opportunity v risk
Projections vary but the higher ones have estimated that a British medical marijuana market could be worth up to £8 billion a year. Investors, having already cashed in on developments in America, will be looking to enter the market.
The debate received widespread media coverage last year (and again more recently) and will no doubt be reignited when the issue resurfaces. It remains a divisive topic. This is partly because critics of the legalisation of medicinal cannabis say there is still insufficient clinical evidence to support its prescription for patients despite some widely cited examples of people suffering from chronic pain or severe epilepsy who have reported benefits hitting the headlines.
It is unclear how the situation will unfold. Although there is widespread sympathy for those suffering with conditions where cannabis may provide relief, there is likely to be further debate about whether this legal step moves forward the possibility of legalisation of cannabis for recreational use.
Although it appears to be winning political support, convincing some medical professionals to begin prescribing may be challenging without more definitive data. Watch this space.
Find out more
You can read about how our Canadian colleagues have been navigating industry issues with their clients following the adoption of cannabis.