UK cannabis companies and shares to watch
The UK legalised medical cannabis in 2018. Today, several marijuana companies are listed in the country. Explore the details on UK cannabis stocks – from how you can buy and sell shares, to regulation and stocks to watch.
Best British marijuana stocks to watch
Although there are plenty of hurdles for cannabis companies to overcome, several cannabis-related businesses have listed in the UK. Most of the ‘cannabis companies’ listed on the London Stock Exchange (LSE) and the Alternative Investment Market (AIM) are not pure plays, meaning they have other activities outside of marijuana.
Below, we explore our top picks for the top UK cannabis stocks that you can invest in with us, and we explain how you can gain broad exposure to the market rather than ploughing your cash behind one individual stock. But, please always bear in mind that all investment incurs risk, and that it’s essential to be aware of your risks before taking a position.
The following five companies are well-known UK companies which are associated with the cannabis market.
AB Foods
AB Foods is a £17.27 billion FTSE 100 market titan, which is perhaps best known as the parent of discount clothing retailer Primark. The company also owns many popular food brands, including Kingsmill, Patak’s, Billington’s and Blue Dragon cooking sauces.
But the company is also one of the largest licensed cannabis cultivators in the UK. Subsidiary British Sugar signed a deal with GW Pharmaceuticals in 2019 to supply medical grade M250 marijuana for drug development purposes.
M250 is a specific strain of cannabis which contains a much higher concentration of tetrahydrocannabinol than in standard cannabis — which is the active ingredient within the pant. However, M250 also does not produce a psychoactive effect, making it perfect for medical use due to the lack of unwanted side effects.
AB Foods has converted 45 acres of its greenhouse space — formerly used to grow tomatoes — to grow hemp plants, and is perfectly placed to expand to future demand or legislative change. The company may be a popular choice for risk-averse investors looking for exposure to the cannabis sector within a highly diversified company.
In recent interim results, the company saw revenue rise by 2% year-over-year at constant currency rates to £9.7 billion, though most of this cash came from non-cannabis activities.
Our analysts have given the stock a hold rating with an average price target of 2610p, up 13.23% from its current price
Market capitalisation: £17.27 billion
Futura Medical
The rest of the names on this list are much smaller — Futura Medical remains an early stage company which is focusing on the development of sexual health and pain relief using its DermaSys platform.
This allows active ingredients to be placed inside a gel, ready to be absorbed directly through the skin, making it a perfect platform to combine with tetrahydrocannabinol. This product, named CBD100, developed with CBDerma Technology, could be used to help manage localised pain — though is in the early trial stages.
More immediately, Futura recently announced that flagship erectile dysfunction drug Eroxon is now available on prescription in England and Wales, as well as over the counter. This success could be followed by further success with CBD100.
After successfully launching Eroxon in the US, both in stores and online, a key milestone in its partnership with Haleon, the company have secured a $5 million payment from the consumer products giant. This money will help Futura Medical grow the product worldwide.
Our analysts have given the stock a buy rating with an average price target of 140p, up 323% from its current price.
Market capitalisation: £100 million
Celadon Pharmaceuticals
Celadon announced last year that its Home Office licence has been successfully updated to allow the commercial sale of its high 9-tetrahydrocannabinol product, following the company’s recent registration as a Good Manufacturing Practices manufacturer by the UK MHRA.
This has allowed Celadon to commence commercially supplying its cannabis-based medical product to third parties, the first registration of a UK pharmaceutical facility for high THC cannabis active pharmaceutical ingredient since Theresa May’s legislation in 2018.
The company signed an inaugural £3 million contract for product to be delivered in Q4 2023, with the same offtake partner signing a letter of intent for an annual £7 million of product on an ongoing basis.
Celadon has also received approval from the NHS Research Ethics Committee to roll out a novel non-cancer chronic pain trial for up to 5,000 patients. For context, there is currently no NHS-approved cannabis-based pain relief treatment available for prescription.
The company’s strategic partnership with Danish company Valeos Pharma will help Celadon to expand its reach across Europe and is expected to bring in an extra $8 million each year.
Despite this, investor sentiment remains cautious as CFO Jonathan Turner is stepping down from his position on 27 December and the search for his replacement is underway.
Shares were down 20.55% following this announcement.
Market capitalisation: £24 million
Kanabo
Founded in 2016, Kanabo became the second medical cannabis company to list on the LSE’s main market in February 2021.
Kanabo develops medical treatment products such as its 'VapePod' vaporiser, the first medically certified cannabis vaporiser in the world, and a range of non-smoking consumption solutions. The company maintains a strong focus on research and development, and it is in scale-up mode, with plans to become Europe’s largest public cannabis company.
The VapePod uses cannabis oil cartridges to deliver high precision dosage to patients. This controlled method allows patients to medicate with medical marijuana to help with chronic pain, sleeping disorders or anxiety attacks
Throughout this year, the company has made significant progress in developing its digital health services and has introduced an AI chat-to-prescription service to help streamline prescriptions. On top of this, its upgraded e-Script system has enabled prescriptions to be filled out in any pharmacy.
H1 results saw revenues increase by 55% year-on-year to 649k and operating EBITDA loss reduced by 10% to £0.98 million. Going forward, the company are looking to grow its digital services and expand its offerings in the German market once the vape has been certified.
Market capitalisation: £6.96 million
Cel AI
Previously referred to as Cellular Goods, Cel AI is a wellness company which specialise in cannabidiol products. Its three main products include a de-aging skin care mask, a roll-on athletic gel to help with muscle recovery and a newly launched collection of sleeping tablets.
Unlike most CBD manufacturers who extract CBD from hemp plants, Cellular Goods use a synthetic form of CBD which is produced in a lab. Not only is this approach more sustainable but it means the company is less susceptible to disruptions in farming.
The company’s most recent interim results reported a revenue drop of 42% to £18k as unfavorable market conditions have resulted in reduced demand. But on a more positive note, net losses reduced by 67% to £604k.
Cannabis in the UK: what you need to know
The UK’s attitude toward marijuana has changed dramatically over the last decade. Even though the UK has become the world’s largest legal medical cannabis producer, the drug is still illegal for recreational use.
According to a 2023 report by the Crime Survey for England and Wales (CSEW), around 2.5 million people had taken the drug over a one-year period – that is around 8% of the UK’s population – valuing the country’s black market at well over £5 billion.
Meanwhile, the UK’s CBD market was estimated to be worth £690 million in 2021, and is expected to surpass £1 billion annually within the next few years.
There has been a surge of public support for the legalisation of medical marijuana, and there are signs that the UK government is softening its approach towards cannabis production and distribution. In December 2021, a bill was introduced in the House of Commons which – if passed – would make it legal for general practitioners (GPs) to prescribe medical cannabis for a range of uses in England and Wales.
But the war on drugs is likely to continue to be a complex political battleground.
Marijuana regulation in the UK
The UK’s regulatory stance toward cannabis is complex and, in some cases, contradictory. Medicinal cannabis was legalised in November 2018, following several high-profile cases about children with severe forms of epilepsy being unable to access potentially life-changing cannabis-based treatment.
Yet, access to legal medicinal marijuana remains extremely limited. It cannot be prescribed by your average general practitioner (GP), only by those listed on the Specialist Register of the General Medical Council. However, this may soon change, if the Medical Cannabis Access Bill becomes law.
Public perception is improving and although the number of doctors able to prescribe medicinal cannabis is growing, they are not being encouraged to give it to patients.
The response from the medical community has been underwhelming. Institutions like the Royal College of Physicians and the British Paediatric Neurology Association have said cannabis should only be prescribed as a last resort, while the UK National Institute for Health and Care Excellence – which effectively chooses what drugs can be funded on the National Health Service (NHS) – have also imposed strict guidelines for prescriptions.
There is only a handful of conditions that doctors will consider treating with cannabis, including multiple sclerosis, epilepsy and to help alleviate the effects of chemotherapy treatment. And when someone is suffering from one of these conditions, doctors are effectively directed to try every other possible treatment before prescribing cannabis.
Recreational cannabis is still illegal in the UK under all circumstances.
UK cannabis exports
While the government’s tone implies it does not have great belief in the medicinal applications of marijuana, a few select firms are allowed to legally grow and produce cannabis. In fact, a report released by the UN's International Narcotics Control Board in 2018 found that the UK is the world’s largest producer and exporter of legal medicinal cannabis in the world.
The UK government doesn’t disclose the list of companies that can legally produce marijuana on British soil, but we do know that only three pharmaceutical cannabis products are licensed in the country. Sativex and Epidyolex are produced by GW Pharmaceuticals (acquired by Jazz Phamaceticals in May 2021) and Nabilone is produced by Eli Lilly & Co (All Sessions). Outside of the medical applications, the UK has also relaxed its rules on CBD and hemp oil. Again, these must contain less than 0.2% THC. These oils can be bought legally in the UK, but they have been banned from making any medical claims without obtaining a medical licence, which is expensive to obtain.
This means the majority of those offering CBD or hemp oil can’t claim the products offer any medicinal benefits. This has created a further grey area in the market and has forced many producers to rely on informal marketing techniques, such as word of mouth, to flog their oils.
UK’s indecisiveness on marijuana
It’s clear that the UK government remains undecided when it comes to legalising cannabis. It is quite happy to profit from the vast amounts of legal medicinal cannabis being produced legally by a small handful of companies.
While medicinal cannabis is exported to other countries, it’s still very difficult for UK patients to gain access to the handful of legal treatments available. This highlights contradictions in the government’s policy, which could cause further problems for an industry still in its infancy.
A potential consequence could be inadvertently creating a monopoly among the handful of licensed producers.
The stringent rules, high costs and complex regulation means there are high barriers to entry. This could lead to new start-ups setting up shop elsewhere, in more favourable jurisdictions, like Canada. For example, there has been a debate over how UK-based investors can gain exposure to legal cannabis firms at home or abroad, and not fall foul of anti-money laundering laws when receiving dividends or income.
This is also causing companies to delay going public because they fear operating in a grey area of regulation. Likewise, some investors are wary of backing operations that might be illegal.
How to invest in UK cannabis stocks
With us, you can invest in all the UK cannabis stocks we mention below via our share dealing platform. When share dealing, you’ll buy and own company stock. This entitles you to voting rights and dividend payments if the company grants them. You’ll pay from just £3 commission on UK shares,2 but you can only profit from price movements if you sell your shares for more than you paid for them.
Steps to investing in cannabis
If you’re ready to start investing in cannabis stocks, follow the below steps:
- Create a share dealing account: it’ll take less than five minutes to open. When your account is up and running, log in to our share dealing platform
- Search for your preferred stocks: when you’ve found the shares you want to buy, you can purchase these in two different ways – at quote or on-exchange
- Monitor your investment: once you’ve bought shares, log in to monitor your investments, collect dividends (if paid) and reinvest. And when the time comes to sell, do so at a click of a button
Learn more about how to trade and invest in cannabis
Whereas we offer leverage on our trading products – ie spread bets and CFDs – leverage isn’t available for investments. This means that you’ll have to commit the full value of your position upfront. But, this also caps your maximum risk at the initial cost of your position. Keep in mind, though, that investments can rise or fall in value, so you might receive back less than you initially invested.
Learn more about share dealing
What is the future for cannabis in the UK?
The UK’s approach to medicinal cannabis is more complex than in other nations. While the UK produces and sells medicinal cannabis to other countries, it’s not easily accessible in the UK . The country has taken a tentative step toward legalisation – for now, it has only legalised medicinal cannabis in name.
Legalisation has been featured prominently in electoral campaigns by the likes of the Liberal Democrats and the Green Party. Even the institutions that have so far proved a roadblock to widespread access have changed their views – eg the Royal College of Psychiatrists has said it’s willing to reconsider its view.
Still, there have been concerns that progress in the UK could stagnate, especially with all the political energy that was consumed by Brexit. However, if ignited, the flame could catch quickly. Germany was in a similar position to the UK a few years ago but has now grown into the largest medicinal cannabis market in Europe. Since legalising medicinal cannabis in 2017, Germany has allowed big North American companies, like Aphria and Aurora, to set up shop in the country and cultivate cannabis.
While the UK has established a large production base, it has concentrated it among a handful of businesses, meaning other countries could become manufacturing hubs for the European market rather than the UK. Germany offers both a domestic market and the potential to export, while the UK only offers the latter in addition to the far and few between prescriptions.
The same is true for investors and financiers which, keen to tap into the momentum building before it’s too late, will flee to where the regulatory environment is more favourable.
IG Cannabis Index: trading a basket of stocks
An alternative to investing in UK cannabis stocks is to take a basket approach, and trade using our leveraged products – spread bets and CFDs. For example, you can use either of these to trade the IG Cannabis Index which tracks the top 20 largest publicly listed cannabis companies in North America. This allows you to spread risk and trade the industry as a whole.
Leverage comes with a high risk of losing money as profits and losses are amplified (not limited to your margin). Make sure you understand how it works and take steps to manage your risk before opening a position.
Don’t miss your opportunity to trade cannabis markets
To get exposure to volatility in this rapidly growing market:
- Go long or short on available cannabis shares, ETFs or our cannabis index
- Get 10:1 leverage on our Cannabis Index, and from 5:1 on available cannabis stocks
- Protect against risk with stops and other tools
Footnotes:
1 The IG Cannabis Index is only available on spread betting and CFD trading accounts.
2 Trade in your share dealing account three or more times in the previous month to qualify for our best commission rates. Please note published rates are valid up to £25,000 notional value. See our full list of share dealing charges and fees.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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