Last week, our lead consultant Henry Whorwood attended an event hosted by the EISA Association on the UK’s seed investment sector. Lord William Hague, former leader of the Conservative Party, took the opportunity to call for the legalisation of cannabis-related products in his keynote speech, saying the war against cannabis has been “comprehensively and irreversibly lost”. And oddly, recent reports revealed the UK is the world’s largest exporter of legal marijuana for medicinal purposes. What role has venture capital played in supporting British startups in this burgeoning sector?
Legalisation of cannabis-derived products has become an increasingly debated topic in the UK over the past month, with the Home Office recently ruling that an epileptic child was entitled to use prohibited cannabinoid oil to help treat his condition. Home Secretary Sajid Javid stated in the House of Commons that it was “time to review the scheduling of cannabis for medicinal use”.
Bearing these developments in mind, it seems timely that a young British startup has just completed a $10m investment round, which looks like it might open up a new market in the UK’s economy to domestic and international venture capitalists. The recipient was Oxford Cannabinoid Technologies, a biopharmaceutical company that aims to develop new drugs, derived primarily from cannabis-plants, in the fields of of pain relief, oncology and neurotic disorders.
To our knowledge, this could well be the first British cannabis company to raise equity since GW Pharmaceuticals. This pioneering British biotech company was approved by the Home Office and developed nabiximols, the “first natural cannabis plant derivative to gain market approval in any country”. They listed on the AIM back in 2001.
This raises the interesting question of why there has been a gap of 17 years between private companies raising money for cannabis-based medicines.
One of the deal’s investors was Imperial Brands, the multinational tobacco giant. This is also very interesting from a corporate venturing point of view – what has Imperial anticipated to make such a venture? From their website, it’s clear they have already invested heavily in electronic cigarettes. Is Imperial also diversifying into marijuana-related products?
It will be fascinating to see how the rest of the investment community reacts. Indeed, also attending The EISA Association event earlier this month was Grow Biotech PLC. This newly formed London investment unit will focus on new intellectual property relating to medicinal cannabis. In March a new cannabis investor floated on London’s Nex exchange, the first of its kind to do so in the UK. Despite Britain’s prohibition of most marijuana-related products, the country is not immune from the so-called “green rush”.
For now, the investment into Oxford Cannabinoid Technologies represents a landmark deal in the UK’s venture capital scene. It seems highly probable that more entrepreneurs will take on equity financing to create new products in this sector.