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Cannabis Growth Comes to LSE with First Pure-Play IPO (Bloomberg: 3rd December 2019)

Cannabis Growth Comes to LSE with First Pure-Play IPO

Published: 2019-12-03
By Kat Van Hoof (Bloomberg)

Though medicinal cannabis was legalised a year ago in the U.K., capital markets activity has been largely limited to fringe trading venues. One company preparing to make the jump to the London Stock Exchange could bust the sector wide open.

Cannabidiol and medicinal cannabis company Sativa said it will look to list on LSE’s junior market AIM early next year, the first initial public offering of the sort for Europe’s largest exchange. While already listed on the lesser-known NEX Exchange, the company “had numerous institutional shareholder requests” to move to AIM, said Chief Executive Officer Henry Lees-Buckley.

NEX isn’t subject to the same regulatory standards as LSE and the stocks listed there are often too illiquid for most institutions to invest in. The sector is primed for growth as public perception and legislation is turning in its favour. Banks in Europe have been gearing up for a boom in listings, hiring bankers and beginning research coverage, though the deals have been slow to materialise. Marijuana stocks are more established in Canada and the U.S., where the world’s largest weed company Canopy has been listed since 2014. “The European market is more nascent and most local companies are smaller as a result,” said Tristan Gervais, head of European cannabis investment banking at Canaccord Genuity. A Cenkos note estimates that the global pot market could be worth $300 billion in revenue per annum by 2030, with medicinal products alone accounting for $75 billion. Some local investors have turned to weed companies in North America and are familiar with the sector. They are open to investing in Europe, but are “keen to see more companies listed on main exchanges such as the LSE,” said Henry Fitzgerald- O’Connor, managing director at Canaccord Genuity. Much of the North American market focuses on recreational weed, which remains illegal in Europe.

In Britain, companies can only legitimately make highly regulated pharmaceutical and medicinal products or sell popular products such as CBD oil as a food supplement, regulated by the Food Standards Agency under the European Union’s Novel Food directive. However, pot stocks in the U.S. and Canada have not been without teething issues and investors should be wary of the comedown. Following exponential growth, Canadian stocks in the sector lost half their value between March and November amid disappointing results and regulatory issues. Even so, more companies will want to follow in Sativa’s footsteps, with “several IPOs” expected next year, Canaccord’s Gervais said. “European investors will be looking for sound business models, expecting visibility on revenue and profits,” said Fitzgerald-O’Connor.

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Sir Alasdair Breckenridge - passed away 12th December 2019

We are saddened to report that Sir Alasdair Breckenridge has passed away on 12th December 2019.

A native of Angus, Scotland, he studied medicine at the University of St Andrews, before working as a lecturer then senior lecturer at the Hammersmith Hospital and at the Royal Postgraduate Medical School from 1964 to 1974, after which he was professor of clinical pharmacology at the University of Liverpool until 2002.

Sir Alisdair served as chair of the Medicines and Healthcare products Regulatory Agency from 2003; as a member of the Committee on Safety of Medicines from 1982 to 2003 (being chairman from 1999 to 2003); and as a member of the Medical Research Council from 1992 to 1996.

In 2005 he was appointed chair of the Emerging Science and Bioethics Advisory Committee. He was appointed Commander of the Order of the British Empire (CBE) in the 1995 Birthday Honours for services to medicine and to health care and knighted in the 2004 New Year Honours for services to medicine. He was also elected a Fellow of the Royal College of Physicians (FRCP), a Fellow of the Royal College of Physicians of Edinburgh (FRCPE), a Fellow of the Royal Society of Edinburgh (FRSE), and a Fellow of the Academy of Medical Sciences (FMedSci).

Sir Alasdair was appointed to Sativa’s Scientific Advisory Board in July 2018 and we have been honoured to work with him. Sir Alasdair has been invaluable member of the Sativa team and will be fondly missed.

We send our condolences to his family at this sad time.

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INTERVIEW: Sativa Group ‘Adding serious horsepower to high street efforts (Directors Talk)

Sativa Group (NEX: SATI) CEO Henry Lees-Buckley joins DirectorsTalk to discuss its latest update to the market. Henry explains how two new appointments will help to strengthen its position, updates us on the Cannabis cultivation project and why they aim to be on the London Stock Exchange.

Sativa Group PLC joined the NEX Exchange on 29th March 2018 as the first UK listed medicinal cannabis investment vehicle. Since then, the Company has changed its business strategy to capitalise on changes in the UK and European laws and regulations surrounding the cannabis industry. 

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INTERVIEW: Sativa Group take an important step forward with controlled drug licence (Directors Talk)

Sativa Group (NEX: SATI) CEO Henry Lees-Buckley joins DirectorsTalk to discuss the award of a Controlled Drug Licence from the UK Home Office. Henry explains why this is an important step forward for the company, what the licence enables the Sativa to do, what it means for the company and why this is such an important achievement.

Sativa Group PLC joined the NEX Exchange on 29th March 2018 as the first UK listed medicinal cannabis investment vehicle. Since then, the Company has changed its business strategy to capitalise on changes in the UK and European laws and regulations surrounding the cannabis industry.