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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

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.

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:

  1. 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
  2. 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
  3. 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

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.

Most smaller pure play stocks in the UK are listing on the Aquis Stock Exchange (formerly NEX Exchange), which is known as AIM’s younger brother and designed for small businesses looking to raise smaller amounts of money from the public.

Below, we explore our top picks for the top UK cannabis stocks that you can onvest 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.

Read about the top cannabis stocks in the world

Kanabo

Kanabo develops medical treatment products such vaporisers and a range of non-smoking consumption solutions. With a significant focus on research and development, the company is working towards growing its innovative solutions even more.

Founded in 2016, Kanabo became the second medical cannabis company to list on the LSE’s main market. After its February 2021 listing, the company secured its first UK distribution agreement and, at the time of writing, has a market capitalisation of £65.7 million. Kanabo has operations in Israel and the UK.

Cellular Goods

Cellular Goods, backed by retired footie great, David Beckham, listed on the LSE in late February 2021. Since its inception in 2018, the company has focussed on cannabidiol (CBD) wellness products with benefits that include inflammation reduction, skin protection and pain relief.

Cellular Goods innovatively uses biosynthesis to source active ingredients for its products, which is a quicker and greener alternative to traditional processes. At the time of writing, the company enjoys a market cap of £32.8 million.

Jazz Pharmaceuticals

Jazz Pharmaceuticals is an Ireland-domiciled biopharmaceutical firm focused primarily on treatments for sleeping disorders and indications in neuroscience and hematology-oncology. It earns a spot on our list owing to its $7.2 billion acquisition of GW Pharmaceuticals in May 2021.

GW Pharmaceuticals has long been a leader in the UK medical marijuana space. The firm was founded in 1998 and listed on AIM in 2001, before it left London to join the NASDAQ in 2013.

Over the past decade, GW Pharmaceuticals developed two of the world’s leading cannabis-based treatments and grew into a company larger than the main North American cannabis stocks such as Aurora and Tilray.

Sativex, a GW Pharmaceuticals product, is a spray containing both CBD and THC that is used primarily to treat certain types of multiple sclerosis (MS). It has been authorised in over 25 countries, including the UK. Its second product, Epidiolex, is used to treat

Associated British Foods

Associated British Foods (AB Foods) is a diverse company consisting of a variety of agricultural and ingredients businesses, such as sugar and corn, as well as its clothing retail arm, Primark. But it’s less known that the company is also one of the UK’s largest producers of legal cannabis.

It has converted a large amount of capacity in Norfolk to produce CBD-based cannabis rather than tomatoes, which is supplied to GW Pharmaceuticals to make its medical treatments, specifically Epidiolex.

With a market cap of over £15.2 billion at the time writing, AB Foods is the largest company to be picked as one of our cannabis stocks to watch.

Futura Medical

Futura Medical is a research and development business, based in Guilford, that specialises in producing transdermal technologies (essentially gels and creams) that can be used to deliver medicinal treatments through the skin.

It calls its transdermal technology DermaSys, and its lead product helps with erectile dysfunction. In 2019, Futura Medical established a joint venture with CBDerma Technology to explore how its transdermal system could be used to make cannabis-based products for patients.

Together, the companies developed the ‘CBD 100’ gel – a patent application was filed for the formulation in August 2020. The companies, in partnership, are now exploring commercial avenues for the product. Futura trades on AIM and, as of 8 September 2021, has a market cap of £114.8 million.

Oxford Cannabinoid Technologies

Oxford Cannabinoid Technologies Holdings is the holding company of Oxford Cannabinoid Technologies Ltd (OCT). The UK company aims at developing a selection of cannabinoid-based prescription medicines focused on the pain market. It was admitted to the LSE main market in May 2021. Since its establishment in 2017, OCT has undertaken four rounds of investment and expanded its research into the therapeutic effects of cannabinoid derivatives.

The company recently announced two strategic relationships. The first being with life sciences firm Voisin Consulting SARL. Voisin will provide support and advice on OCT’s regulatory strategy and drug development roadmap for programmes in the UK, US and Europe. The second is a service agreement with Aptuit (Verona) SRL, a subsidiary of drug discovery firm Evotec. The agreement gives OCT the ability to accelerate research by accessing Evotec’s world-class technology platforms.

DeepVerge

DeepVerge is a vertically integrated business, meaning that it manages its value and supply chain through ownership of, and collaborations with, its suppliers and distributors. It collaborates with artificial intelligence (AI), clinical research, water technologies, medical device and life science businesses companies to provide technology for comprehensive skin-care, health-care, pharmaceutical and cosmetic product testing.

DeepVerge’s CBD products include pain relief creams and wound dressings with anti-inflammatory and pain relief properties. The company listed on AIM in April 2017 and, as of 8 September 2021, boasts a market cap of a hefty £65.6 million.

Chill Brands Group

Formerly Zoetic International, Chill Brands Group changed its name in late July 2021. Having started life as an oil and gas company (Highlands Natural Resources) Chill Brands has transformed itself into a vertically-integrated CBD business.

After a gas discovery in Kansas, US, the company found that the gas had high purity levels of nitrogen and a high concentration of hydrogen. Together, the latter are used to make a potent fertiliser used in a pilot project to improve yields at a cannabis growing facility.

The company sells products in the UK, Europe and the US. These include CBD oils, gels, cosmetic products, vapes and chew pouches. Product availability is subject to local regulations.

Sunrise Resources

Sunrise Resources is another natural resources company that has found itself chasing the momentum behind legalised cannabis. The company is developing a mining project in Nevada, US. It’s hoping to produce pozzolan, used in cement and concrete, and horticultural-grade perlite.

It’s planning on supplying the product to cannabis growers in the US, which mines less perlite than it needs, meaning it has to import the rest, mostly from Greece. So, Sunrise is hoping to benefit from that deficit. The company said that demand for horticultural perlite 'has been invigorated by the growth in cannabis cultivation' in the US and Canada.

Other UK cannabis stocks to watch

There are other UK-listed cannabis stocks to watch, and some of them offer greater direct exposure to the legal marijuana market. These include:

  • Freyherr International Group plc is the UK parent company of a group engaged in the production of medicinal cannabis products. Operations are centred in Slovenia, and the Group principally operates within the EU
  • Sativa Group is a seed-to-sale business focused on CBD products for the medicinal and wellness markets. In August 2021, Sativa announced a distribution agreement with German partners, Lexamed, to build its Goodbody CBD brand within Germany
  • Ananda Developments is an investment firm that backs cannabis companies, including iCan Israel-Cannabis and Liberty Herbal Technologies. It also provides a platform for investors to gain exposure to the cannabis sector

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 2020 report by the Crime Survey for England and Wales (CSEW), around 3.2 million people had taken the drug over a one-year period – that is around 5% of the UK’s population – valuing the country’s black market at well over £5 billion.

A guide to the cannabis industry: all you need to know

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.

The cannabis being prescribed is grown around CBD – the medicinal component – and must contain as little THC – the psychoactive element – as possible (below 0.2%). 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. 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.

David Barfoot, director at Rize ETF recently stated that 'Due diligence on medical cannabis companies is capital and labour intensive'.

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.

The opportunity on offer is huge. Prohibition Partners estimates the UK’s medicinal cannabis market could be worth over £7.8 billion by 2028. Plus, estimates show that a recreational market could represent a bigger opportunity, with a forecasted value of £8.5 billion.

That means the total value of a fully-legalised cannabis market in the UK could be over £16 billion within less than ten years.

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.

Don’t miss your opportunity to trade cannabis markets

To take advantage of 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 4:1 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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