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The Cannabis Conversation

15/07/2020

At a glance

Over the last twelve months, the cannabinoid industry, both globally and in the UK has moved into phase 2. The initial excitement and rhetoric has now been replaced by real discussions and legitimate and focused operators are emerging.

Below we take a look at the challenges that face the industry and the developments over the last year.

  1. Regulation

The lack of detailed guidance as to the legal framework for the production, sale and marketing of CBD products in the United Kingdom continues to prevent the industry from developing and is restricting the flow of investment into the sector.

Many European countries have determined the legal status of a CBD product by adopting a definitive threshold for THC content, such as Germany at 0.2% or Austria at 0.3% THC.

In the United Kingdom however, a definitive threshold has not yet been adopted and instead, the Home Office guidance continues to provide that a CBD product must contain “no trace” of THC, for it to be freely sold without a Home Office licence. This guidance continues to cause profound confusion to the CBD industry as there is as yet no standard testing regime to be applied to evidence and benchmark a “no trace” product.

There also remains no regulation or detailed guidance which can be applied to other emerging phytocannabinoids such as CBN and CBG.

  1. Novel Foods

The UK Food Standard’s Authority (“FSA”) announced on 13 February 2020 that it is giving operators in the CBD industry a deadline of 31 March 2021 to submit valid novel food applications. After 31 March 2021, only products which have submitted a valid application to the FSA will be allowed to remain on the market.

Given the scarcity of expertise in the novel food regulatory and application space, the procedure for making a novel food application and obtaining novel food authorisation for CBD products has been met with a great deal of  confusion and uncertainty, some of which has since been clarified by the FSA. Further details can be found here.

  1. Access to Capital

Over the last year, the ability for CBD and medicinal cannabis companies to raise capital on the UK public markets has proved challenging. This is largely due to a limited number of institutional investors actively engaging in the space, as well as listing authorities being reluctant to promote the sector in the public markets.

Access to private capital has proven easier but still remains difficult due to novel food issues in the CBD space, slow patient access to medicinal cannabis products, investors attracted by wider European offerings, and a disconnect across EU jurisdictions as to the content requirements and marketing of cannabinoid products.

  1. Patient access to cannabis based medicinal products

Cannabis based medicinal products have been legal in the United Kingdom since November 2018, being prescribed by specialist clinicians; however patient access to these products remains limited. The cost and availability of products, as well as a lack of understanding by the wider medical community has meant that prescription numbers remain low.  Further, only two products have been approved for use in the NHS, Epidyolex and Sativex.

Lobbying groups, such as the Centre for Medicinal Cannabis, continue to push for legislative changes to provide easier and greater patient access.

With the COVID crisis also likely to continue for the foreseeable future, those operating in the industry will have to work even smarter and harder to attract the attention of consumers, investors  and regulators in order to achieve the types of gains which were expected from the sector this time last year.

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