Sativa Investments (NEX: SATI) CEO Geremy Thomas talks to DirectorsTalk about having completed its 1000th cannabinoid and terpenes test at its on-site testing facility, PhytoVista Laboratories. Geremy explains the types of tests, the significance of passing this milestone, ISO accreditation and planning for a larger market share.
Sativa Investments PLC, the UK’s first medicinal cannabis investment vehicle, announced that it has completed its 1000th cannabinoid and terpenes test at its on-site testing facility, PhytoVista Laboratories. The increased growth of the CBD industry in the UK has led to a rise in the demand for high-quality testing and batch certification, with PhytoVista being a leading service provider.
PhytoVista has state-of-the-art equipment to enable testing for pesticides, heavy metals, residual solvents, cannabinoids, terpenes and mycotoxins. The laboratory is able to certify that products and samples conform to regulatory standards. Turnaround time is usually five days or less. It is believed to be the only testing facility in the UK to focus on CBD and it also intends to test medicinal cannabis products once its relevant Home Office handling licences are granted.
PhytoVista also announces the recruitment of an analytical chemist and a microbiologist to expand capacity and also to operate a bespoke micro laboratory which is under construction and nearing completion. PhytoVista’s Chief Scientific Officer, Nick Clarkson, is developing additional testing methods and the Company is in the process of obtaining ISO 17025 accreditation. PhytoVista is already operating to ISO 17025 at present.
Nick was a keynote speaker at the Future Cannabis Strategies event in London in January 2019, where PhytoVista was also co-sponsor. PhytoVista also exhibited at the Hemp & CBD Expo this March in Birmingham. PhytoVista will also be at the Europe CBD Expo in London this June to showcase its testing facility.
Geremy Thomas, founder and Chief Executive Officer of Sativa Investments, said:
“The Company is fulfilling what it has set out to do through its holistic seed-to-consumer strategy and reaching its 1000th test is an early milestone. The laboratory can test the full spectrum of cannabinoid profiles and terpene content, from CBD wellness products to e-liquids, beer, chocolate and toothpaste.”
“PhytoVista is also a key part of Sativa’s internal strategic development as having an in-house, on-site testing facility is assisting the Company’s Home Office Research Licence application. The laboratory is also attracting significant interest from the pharmaceutical and academic research arenas which need an independent testing facility that mandates Good Laboratory Practice to verify and validate their own findings.”
The crushed velvet sofas and mahogany panels of Mayfair may seem a world away from skinning up a joint in the park but London high finance and cannabis are colliding in what’s been dubbed a 21st-century green rush.
Dozens of City types descended on the boutique Dukes hotel in St James’s on Tuesday for the Cannabis Invest UK conference, a kind of speed dating for the cannabis industry where companies showcase themselves to investors.
Former investment banking analyst Patrick Morton, who hosts the regular event, says the conference was in response to investor demand for up-and-coming cannabis firms as a wave of legal changes across Europe relax weed laws.
“We get a mix of people here. Private investors, institutional investors and cannabis industry people,” he says. “Most people have a personal connection to it, they’ve got a relative ill. The level of awareness is not that high in the UK yet.”
But all that could be about to change. The recent cases of Billy Caldwell and Alfie Dingley — denied marijuana medicine for their epilepsy — means medicinal cannabis could soon be legal in the UK, opening the floodgates for investment. Mayfair’s private family offices and well-heeled investors provide fertile ground for overseas cannabis companies looking to raise money. Dozens of cannabis company chief executives come over to London every month to tap London’s deep-pocketed investors.
“It’s the hot topic in Mayfair at the moment,” says Hanway Associates co-founder George McBride, a former barrister who now advises investors on putting money into the industry. “There’s more money than can be spent, the appetite is insatiable.”
Stephen Murphy, head of London-based cannabis consultancy Prohibition Partner’s, estimates more than £200 million has been raised so far for overseas medicinal cannabis ventures.
“There’s a large number of conferences where the chief executive of the leading cannabis companies have come over to raise capital,” he says. “Europe is seen as the next phase of the capital market boom after Canada.”
Canada is the leader in this nascent sector. More than 30 cannabis-linked companies are listed on the Toronto stock market and, in October, Canada will become the first G8 nation to make recreational cannabis legal.
Top Canadian bank CIBC predicts that retail sales, through so-called “budtenders” in high street shops, will approach $6.5 billion by 2020 and London investors are already taking advantage.
“The biggest flow of money out of London into cannabis has been into Canada,” says Canaccord Genuity analyst Matt Bottomley. “It’s the biggest landgrab in a new market currently available.”
Canadian grower MPX Bioceutical is one of those tapping the City for money. In the past two years it has raised $75 million from around 100 rich investors in three private fundraising rounds. Boss Scott Boyes says he’s found it easier to raise money in the UK than in the US and Canada.
“We’ve found British investors to have a more global perspective,” he says. “They are pretty sophisticated. These are not mom and pop investors.”
If investing in cannabis sounds like a bizarre futuristic fantasy or even the downfall of society itself there’s a throng of financiers who see the potential of the cannabis industry on a par with the alcohol and tobacco sector.
Predictions for a possible UK cannabis market are bullish, with Prohibition Partners suggesting it could be worth €18.5 billion in the next 10 years, while Euromonitor predicts the global market could be worth $150 billion.
“Many of the entrepreneurs and investors I’m talking to say this is the start of a whole new industry which we last saw with the creation of the internet industry. It’s groundbreaking,” says UK-based Tristan Gervais from Canaccord Genuity, the biggest dealmaker in the cannabis sector.
London is also slowly opening up for home-grown companies. In March, Sativa Investments became the first cannabis-focused vehicle to list in London after debuting on the Nex in March And Cambridge-headquartered GW Pharmaceutical has won special licences from the Home Office to manufacture medicinal cannabis.
Sativa has won backing from blue-chip City fund manager Gervais Williams from Miton, one of the City’s best know mid-cap managers. Retail punters are also investors, through Hargreaves Lansdown and Tilney. Sativa boss Geremy Thomas says looming legal changes in the UK after the Caldwell case would trigger more demand.
“The UK investment community is behind the curve in terms of what this market is all about but when medicinal cannabis is legalised here those concerns will fall away and investors will spot the opportunities,” he says.
Yet concerns remain. Regulators are sceptical of cannabis companies and bigger banks steer clear due to the grey legal status of investing in recreational cannabis (Sativa does medicinal), which could mean investors break the law.
Hanway Associates’ McBride says: “It does raise compliance questions but those are surmountable. There’s differences in legal opinion where the boundaries of risk are but it is more complicated in terms of compliance than other industries.”
Recreational, known as “rec” in the trade, adds an extra layer of complexity. One London-based investment vehicle, Fast Forward, decided to to sell its holdings in a Canadian cannabis producer after it realised it would be exposed to recreational space.
“With the recreational market set to happen in Canada, it will make it very difficult for a UK investor to invest in any company which has any exposure to recreational use at all,” says the company’s director Ed McDermott. “Even as an individual you would be getting the proceeds of crime. You’re effectively no better than a drug dealer.”
Back in Mayfair, investors are still bullish about the prospects for the medicinal industry. “We can help people from a compassionate standpoint and we can help change the law to get it more beneficial for communities,” says Morton. “And there’s also hopefully money to be made.”