Will Brexit Be a Boon for the U.K.’s Legal Cannabis Industry?

By Oliver Bennett, Special Contributor for New Frontier Data

In common with most of the international community, the United Kingdom is in urgent need for economic recovery following this pandemic year. But the U.K. has another factor to contend with: its imminent Brexit date. After a year’s transition period, the country leaves the European Union (EU) trading bloc properly on 31 December.

Those events in tandem – the pandemic and Brexit – present obvious challenges to the U.K. But some suggest that the latter might put the country in pole position when it comes to the cannabis industry, as it will confer an immediate advantage over the EU. The U.K.’s Foods Standards Agency (FSA) recently announced that it will consider novel food applications for CBD products from January 2021 onward, consistent with its September announcement that the FSA did not consider CBD to be a narcotic – months before the recent landmark EU ruling relating to France. Along with the U.K.’s Home Office accepting that cannabis in the form of CBD should not be a controlled drug, businesses seeking to enter the European CBD market may wish to look at the U.K. for an initial foray into the wider European market.

Brexit is also being cited as a potential boon for Britain’s medical cannabis industry – particularly if the glacial regulatory framework of the EU remains in place. Medical cannabis companies have recently been given new guidance by the U.K. government’s Financial Conduct Authority (FCA), permitting the listing of both U.K. and international medical cannabis companies on the London Stock Exchange. The U.K. is already home to what is said to be the world’s single largest legal cannabis cultivation site, the 18-hectare site from GW Pharma at British Sugar’s facility in Wissington, Norfolk. Some have also  spoken about a “golden opportunity” for CBD in the U.K., including the industry body the Association for the Cannabinoid Industry, which believes that the U.K. could achieve both one of the most “liberal regimes in Europe” and a “lucrative market” after secession from the EU. The Cannabis Trades Association (CTA) is now attempting to create an option comparable to those in Germany and Denmark, i.e.,  a centralised government department devoted to cannabis.

Clearly, the U.K. government will want to mitigate any potential difficulties associated with a “no deal” Brexit – that is, leaving with no defined arrangement with the EU – by incentivising economic activity and creating jobs factoring in CBD and the wider cannabis sector. The legal cannabis industry is already becoming a large part of the U.K.’s post-pandemic plans to “Build Back Better”, i.e., promoting transitional retraining and new skills to revive a reduced workforce.

Links outside the EU (most notably to the U.S. and Canada) are likely to be pursued, and the position of Great Britain as a leading country for life sciences, green energy, agri-tech, and biotech research and development certain to be increasingly cited. Innovation in such areas, including medical cannabis, will be looked upon to help transform the U.K.’s post-COVID-19 economy into a place of opportunity and global investment, allowing CBD and medical cannabis alike to forge a real opportunities for economic growth in the U.K.

Yet the U.K. still faces significant constraints: It is widely understood that medical cannabis remains hard to come by, with 1.4 million patients unable to access the drug, having the effect of causing people to travel abroad (most notably the Netherlands) to find supplies. Yet, the Home Office remains reluctant to enable a legal market in cannabis. Even in the recent past, the U.K.’s history with the cannabis industry (particularly medical cannabis) has been slow. Though CBD has proven quite buoyant, recreational cannabis legalisation remains a long way off. But again, when Brexit frees the U.K. from the EU’s regulatory framework, it has also been suggested that an acceleration of recreational use is likely to follow, expanding the cannabis market significantly. To emphasise the uptick of interest in medical and potentially recreational cannabis markets, the numbers of high-THC licences granted by the Home Office almost doubled in 2020, including to the Sativa Group.

Questions also remain about exports, including how FSA-approved products will be treated in the EU after trade links are detached, and whether the European Commission (EC), the EU’s executive body, will recognise CBD products that have been approved and fast-tracked for use in the U.K. Others have flagged that through Brexit Britain will have a different regulatory agency than the European one, which will not marry with pan-national ways of approving medicines. Despite such obstacles, it remains more likely than not that one of the net consequences of Brexit will be that the U.K. proves to become a far more receptive country to cannabis than it has been in the past.