Should London make itself the natural home for cannabis-related stock-market floats? The case that it should is simple: for the money. The case that it shouldn’t is much hazier, especially if we’re moving towards formal legalisation of the weed, and away from the present typically British situation, where it’s officially illegal but in practice no one much cares.
Aside from firms growing plants that make people high, there’s a whole other breed of companies seeking capital that are exploring medical marijuana.
The products they make are usually an oil which people might take as a shot with their morning coffee, or as a tablet before bedtime.
These “wellness” products are said to be good for everything from anxiety, to sleep disorders to perhaps really serious illnesses such as Parkinson’s.
The science for this is thin at the moment but it’s early days.
The problem comes with the grey area that exists around the Proceeds of Crime Act.
If you’re making an anti-acne cream based on marijuana that has no recreational properties, the risk is theoretical, but serious enough to prevent anyone from investing. At the moment the banking advisers, Nomads and fund managers needed for a successful float would shy away from a marijuana-related IPO.
Compliance departments are jumpy enough at the best of times; this sort of stuff is a no-no as far as they are concerned.
Which brings us to EXMceuticals, a Canadian firm which has already floated in Vancouver and Frankfurt with a value of about £30 million, but would like its main listing to be here.
EXM makes products using CBD, Cannabidiol, from which THC, Tetrahydrocannabinol, the woozy stuff, has been removed.
What does it do with the leftover THC? It has a massive party. (Not really).
Chairman Jonathan Summers, a former banker who admits that a year ago he hadn’t even heard of CBD, thinks London is missing a trick here. Cannabis oil is legal in Europe already and America might soon relax its laws so it can be used as a food supplement.
Bank of America thinks the market could be worth £30 billion by 2032.
“A lot of people are very excited by this but to grow the market we need CBD to be available,” says Summers.
“We’d like to move our primary listing here to access the capital in London. But we need the law to be clarified.”
Part of the concern from regulators must be that London’s reputation ends up tarnished.
If it opens its doors to cannabis floats from firms making false promises of miracle cures for all manner of ailments, all that will happen is that investors get burnt.
It could be Dutch tulip mania all over again.
“That’s obviously a fear that certain people have,” Summers tells me. “But there’s also a massive degree of curiosity here. London has traditionally been a place where innovation wins.”
EXM isn’t quite ready for a London float, but thinks it could be by the first quarter of next year.
The case of Billy Caldwell shows authorities can move quickly when they want to. The 13-year-old epileptic boy had life-threatening seizures after he was refused cannabis oil on the orders of the Home Office drug enforcement team.
Home Secretary Sajid Javid got involved and sense prevailed.
Perhaps the stock market regulators could show similar enlightenment.