UK company Spinnaker Opportunities hopes to become the first cannabis company to list on the London Stock Exchange – within a matter of months.
And, Chairman Andy Morrison believes if it is successful, by this time next year it could be joined by a further 10 cannabis-related businesses.
This follows the release of the first official listing guidelines by the UK Financial Conduct Authority (FCA), which had previously blocked entry to the market for all cannabis companies.
Mr Morrison told BusinessCann: “We hope to have it finished by the end of the year, it would be neat to do that, and maybe even sooner. However we don’t know what questions the FCA may have or what their process is.
“There are a few other companies in the wings, but we have a chance to be amongst the first. I’d like to be the first, but its a question of doing our part as quickly as we can and the FCA saying yes.”
From Energy To Cannabis
In May 2017 Spinnaker made its debut on the London Stock Exchange listing as a SPAC (Special Purpose Acquisition Company) with the intent to lever a reverse takeover with an energy or industrial-focused business.
This cash shell/SPAC structure sees the holding company back an emerging business providing it with the finical clout, contacts and expertise to grow rapidly.
After 18 months Spinnaker had failed to move beyond due diligence with a number of targets and, observing events in North America, it shifted focus to cannabis.
Bringing in new advisers it quickly hit upon an appropriate target Israeli company Kanabo run by CEO Avihu Tamir.
Mr Morrison continued: “With an early stage business a lot of it boils down to the management team. Avihu Tamir, the founder has been involved in the medical cannabis space for many years and has built a very strong board. and research infrastructure.
“Of course Israel has been able to do medical cannabis research for much longer than the rest of the world and there is a huge knowledge base in the country.
“Then thirdly, there is the product itself, their focus on vaporisation solutions is strong and has stood the test time. While we’ve had delays getting onto the market we haven’t had any issues with regulations, such as novel foods.
“The vaporisation delivery method is more dose-able and controllable. The scientific approach of the business appeals and will stand the test of time.
Regulators Went Cold On Cannabis
As well as the £.1.4m it garnered for listing Spinnaker has secured a further £300,000, and is close to securing a further £1m-plus.
Mr Morrison believes it can become a £20m company. Kanabo’s CBD range is currently on sale in the UK, although Covid-19 has limited its marketing efforts.
This time last year Spinnaker was hopeful of securing LSE market access in short order after passing an ‘eligibility review’ undertaken by the FCA.
“We felt as though we had been given the green light, but in January this year the FCA seemed to get cold feet; they started a review and we were back to the start.”
However on September 18 the FCA issued its first guidelines for cannabis companies. Put out for consultation they essentially say that medicinal cannabis and CBD companies are welcome, but those with connections to recreational cannabis companies – even if that be legal in their native jurisdiction are barred.
Spinnaker is focused solely on Kanabo for now, but Mr Morrison is exploring potential opportunities with the hemp plant, not just in the CBD space.
Mr Morrison believes the FCA guidelines will open the markets to a fresh wave of capital and see the entry of some of the smaller institutions
He continued: “I think it has the potential to become a really significant sector. There will be some limitations if a company has any connections to recreational cannabis, so that will prevent a lot of the Canadian and North American businesses from making and move to London’s market.
“That will hold it back a little bit and maybe create some space for European leaders to enter. Assuming we get the first companies on the market by the end of this year, including ourselves, then by the end of next year I would have thought we could easily see another 10 companies, possibly more.
“This is such a big space from the medical devices to CBD lifestyle brands there is a lot of room for people to get involved in the sector, even if they don’t touch the plant themselves.”
A spokesperson for the FCA said the new guidelines had been the result of growing pressure from the industry, but was unable to give a date for concluding the consultation.
@The London Stock Exchange has a total market value of over £4 trillion – more than twice the GDP of the UK economy.
@It currently lists over 2,500 companies from over 60 countries and on its seven markets which include the FTSE 100 and AIM All-Share index.
@One CBD company is currently listed on the LSE; Zoetic International. It had initially been listed as Highlands Natural Resources, with a focus on US oil and gas before migrating into cannabis.
@UK cannabis companies such as Ananda Development are listed on the junior Aquis Exchange where regulators are amenable to cannabis businesses.