I’ve recently become an adviser to The Cannabis Fund, an index fund for the emerging UK and European cannabis and hemp market and, you may ask why? Cannabis and hemp are not just growing in Europe, they are thriving.
By Isabel Fox
For 8,000 years cannabis has been one of the most important crops to mankind. The power of the plant has been known for years for materials, food, medicine and recreation.
My interest is not in recreational use. In fact it is far from it. I am purely interested in the best technological and scientific breakthroughs taking place in the space, new standards and advances in innovation.
As the UK looks to increase R&D spending to 2.4% of gross domestic product (GDP) through its Industrial Strategy the cannabis and hemp space is one area the UK (and Europe), with its renowned research universities can be a centre of excellence.
The UK has already established a leading position with GW Pharma’s cannabis derived epilepsy drug receiving FDA approval in the US in June 2018 and in Europe for two kinds of rare childhood epilepsy in September 2019.
This year we saw the first Entrepreneur First (London)company — Plantik Biosciences — looking to produce high quality consistent cannabis products using genetics with an incredible CEA (French Alternative Energies and Atomic Energy Commission)PhD team.
In addition, Oxford Cannabinoid Technologies, a spin out from Oxford University, is one of the world’s best medical research teams developing cannabinoid therapies for diseases with high unmet medical need.
My understanding of the space is just beginning. I’m no expert today but I know deep-tech and here’s why my interest in the space has grown:
1. MARKET GROWTH
The industry has grown considerably over the past five years with Barneys, Neiman Marcus, Selfridges, PepsiCo, P&G, Boots, Holland & Barrett, Imperial Brands, Heineken, Snoop Dog, Martha Stewart and Whoopi Goldberg investing and looking to launch products in the space.
The global cannabis industry’s revenues reached $12.2 billion in 2018 — and the global legal cannabis market is expected to reach $146.4 billion by the end of 2025.
With a population more than twice the United States and Canada combined, Europe is set to become the world’s largest cannabis market.
The industry has grown more in the last year than the last six combined.
· Sativex Investments’ stock has doubled in a year since listing in the UK.
· German sales of cannabis and cannabis preparations tripled in 2018.
· France, the world’s 7th largest economy, now allows medical cannabis.
· The Church of England’s fund announced it will buy cannabis stocks.
2. WOMEN IN CANNABIS
The cannabis and hemp market was seen as an emerging space where women could find better leadership opportunities. In 2015 around 36 percent of cannabis executives were women — far better than in the tech sector.
However, in a recent study by Vangst published earlier this year women now make up only 17 percent of executives. Some 12 percent of the 166 companies surveyed had no female executive representation at all.
The decline of women in the industry is worrying and something I’m passionate to see reverse and ensure the UK supports women in the industry from these early days. As David Abernathy of Arcview Group, comments: “women-run ventures make about three times as much as male-led businesses, among companies that successfully raise capital.”
3. FEMALE VCs
One reason for the decline in women executives in the industry has been biases and lack of women VCs funding and supporting women.
Jeanne Sullivan of Arcview Group has been an extremely strong advocate for both women and the cannabis space in the US and Canada and, we need to get more women VCs into the industry in Europe.
The time to support the female voice in the industry is now and Europe has a great opportunity to learn from the US and Canada to ensure women play a critical role in the space.
4. TECHNOLOGY & SCIENCE
The industry has matured and evolved considerably and is now entering a more traditional venture phase (which I know) with advancements in breakthrough technology and scientific developments including:
We are seeing increasing technologies to improve yields, consistency and productivity of cannabis plants. This includes breakthrough technologies in vertical farming, cloud based IoT, advanced lighting, soil compounds, extraction techniques and much more. Many of these technologies will be adopted by the wider farming community as they increase efficiency.
I recently attended SynbioBeta in San Francisco for the largest synthetic biology conference in the world where cannabis was becoming an increasingly large topic of discussion.
From genetic manipulation of the cannabis plant to strengthen specific effects to brewing cannabis without using traditional cultivation methods. Companies are using synthetic biology to “brew” cannabis, just like breweries brew beer. This may seem a strange development however with synthetic biology scientists can brew these compounds in other organisms such as yeast, allowing for the creation of pharmaceutical-grade cannabinoids making it a faster, cheaper and more specialised production of these compounds.
Companies that are already doing this include Ginkgo Bioworks, Lavvan, Cronos Group and new start-ups like Hyasynth in Canada.
One of the core issues with wellness based cannabis is the quality of the final product. In 2016, the Ministry of Environment and Health in the Netherlands reported that over 90 percent of cannabis plants had pesticides on them. In additional consumer products often have little of the advertised key ingredients, toxins, heavy metals and much worse.
Up to now, testing of wellness based cannabis has been adhoc and with no centralised regulatory body to oversee it in Europe.
However, we are finally seeing new companies using blockchain like Canadian Cobidol to provide traceability through the entire supply chain to provide the reassurance for the consumer market.
As the cannabis space progresses, cannabis companies that embrace innovation will be the ones that succeed.
5. THERAPEUTIC POSSIBILITIES
The cannabis plant has nearly 500 active ingredients — more than 144 cannabinoids, more than 100 terpenes, all with a variety of potential different medical applications and therapeutic benefits according to Professor Dedi Meiri from Technion’s Faculty of Biology in Israel, one of the most respected researchers in the field.
Professor Dedi Meiri is investigating the vast therapeutic potential of naturally-occurring chemicals, with a primary focus on how these cannabinoids affect various types of cancer, epilepsy, multiple sclerosis and glucose metabolism (diabetes). He operates the Cannabis Database Project with eight clinical trials covering diverse aspects of cannabis treatment. Listen to his fantastic podcast on The Cannabis Conversation.
We are still in the early days of understanding the compounds — which combinations of cannabinoids could affect which types of cancers and what is the mechanism.
Big pharma has watched the cannabis industry from the sidelines, deterred by regulatory concerns however that is changing. In the U.S. Epidiolex (a plant-based CBD formulation) received FDA approval in June 25, 2018 for epilepsy. Epidiolex is a purified (> 98% oil-based) CBD extract from the cannabis plant. It is produced by Greenwich Biosciences (the U.S. based company of GW Pharmaceuticals, a UK pharma). In addition, the pharma industry is forming strong partnerships with cannabis companies such as Novartis and Tilray, who will develop and distribute medical cannabis together in legal jurisdictions around the world.
While the body of research increases globally on the uses of cannabis, the positive assessment of CBD by The World Health Organisation, traditional clinical trials and evidence is now key for widespread adoption.
The hemp plant is extremely versatile plant and is a biodegradable material that can be used for plastic replacements, building products, fabrics, paper and biofuels.
Natalie Parletta at Forbes wrote a great article which quoting Morris Beegle, co-founder and president of WAFBA (We Are For Better Alternatives), an advocate of industrial hemp: “Industrial agriculture is one of the greatest drivers, maybe even the biggest driver, of climate change. Hemp is a more sustainable, organic and regenerative agricultural crop, and most everything that you can make with cotton or soy or corn can be made with hemp — with way less impact on the Earth.”
Currently, there are less than a million acres of hemp growing across the planet however Grand View Research forecast it will reach US$10.6 billion by 2025 and let’s hope this becomes more widely accepted and used.
The future’s bright, the future’s green.