How Might Brexit Impact The UK's Cannabis Industry?

By Bill Griffin, Special Contributor to New Frontier Data

Brexit remains a great unknown. Now delayed until Jan. 31, 2020, one among the few certainties is that  it has a huge potential impact on UK industries operating in Europe, and vice versa.

As officials muddle over the latest details, an updated review of the implications for the UK's cannabis industry seems worthwhile:

CBDs

While the UK's CBD market is huge, the fact that UK hemp farmers are prohibited from processing flowers and leaves from their crops requires them to rely on imports to sustain that market. A recent study from the UK's Centre For Medicinal Cannabis priced the 2018 market as worth £300 million (347.7 million EUR), with double-digit compounded growth boosting it to £1 billion (1.16 billion EUR) by 2025.

Since most of the UK's CBD supply is imported from Europe, Brexit offers disruption, if meanwhile some opportunities for producers from the Americas and Asia.

Conversely, Brexit will present new difficulties for the hundreds of current UK CBD brands to sell their goods in mainland Europe.

Verdict: Without changes to the UK's restrictions on hemp processing, its CBD market is more likely to suffer from constraints on supply, and barriers in exporting.

Hemp

European Union (EU) member nations must choose their hemp crops from the officially approved European Commission catalogue of hemp strains. Such strains provide plants with robust industrial hemp properties, but do not offer a particularly broad range of cannabinoids or terpene profiles. They are also restricted to plants that produce 0.2% or less THC. Mandating low THC levels likewise equates to low levels of CBD and other cannabinoids.

Switzerland (not an EU member) has no such limitations, and Swiss farmers are not obliged to grow strains from European Commission's catalogue. Thus, cultivators are free to experiment with strains featuring higher cannabinoid content and wider terpene profiles which can be offered in some EU members' markets.

Verdict: While Brexit may theoretically afford UK farmers with free rein on hemp strains, the current restrictions on processing flowers and leaves render it a moot point.

Medical Cannabis

Medical cannabis is legal in the UK, but as it is not currently prescribed through the National Health Service, the country does not import or distribute any significant quantities. There is presently no EU legislation which prevents the UK from increasing its internal distribution of cannabis. Meanwhile, there is plentiful supply of medical cannabis available from Canada, and the UK has begun to grant cultivation licences for testing purposes.

GW Pharmaceuticals cultivates cannabis in the UK, making the country the world's largest legal cannabis exporter by dint of the company's global distribution, including in Europe.

Verdict: While political withdrawal from Europe is unlikely to impact the UK's medical cannabis market, it could potentially hinder GW Pharmaceuticals' export numbers.

Adult-Use Cannabis

The UK prohibits discretionary adult-use cannabis (beyond low-THC CBDs), though the EU does not prevent it.  As a practical matter, adult-use cannabis in the UK is, de facto, decriminalized. Brexit is unlikely to trigger any change in either the UK's official or social policy about it.

That noted, a potential upcoming election could open a path for deregulation as public opinion has shifted in favour of cannabis both for medical and adult use. Policy reform might represent a method to court younger voters, as seen in Canada when  Prime Minister Justin Trudeau's pledge to legalise the plant resonated with the demographic.

While an election in the UK will eventually happen regardless of Brexit, the leveraging of legalised cannabis as a campaign issue may prompt reform policy.

Verdict: Should an early election be held this fall, the possibility exists for cannabis reform to rise as a campaign issue. That said, at the time of writing, neither of the two main political parties (i.e., the Conservatives or Labour), has officially endorsed full legalization, though politicians on both sides have publicly called for it.

The post How Might Brexit Impact the UK's Cannabis Industry? appeared first on New Frontier Data.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Image Sourced from Pixabay. Credit: Pete Linforth