Earlier today the Financial Conduct Authority (the "FCA") published its approach to assessing the listing of cannabis-related companies, pending a formal consultation.
As can be seen in jurisdictions like Canada and California, investing in cannabis can be lucrative. However, whilst medicinal cannabis was legalised in the UK in 2018, investment in cannabis businesses is a complicated area. UK investors potentially risk committing money laundering offences under the Proceeds of Crime Act 2002 ("POCA"), if they trade in cannabis-businesses.
The FCA’s position on listings of cannabis-related companies is as follows:
- Recreational cannabis companies: will not be admitted to the Official List (even if the company is located in a jurisdiction where it is entirely legal) - on the basis that recreational cannabis is illegal in the UK;
- UK-based medical cannabis companies or cannabis oil companies: can be admitted to the Official List, if they operate under the appropriate Home Office licenses for their activities; and
- Overseas–licensed medicinal cannabis companies: may be admitted to the Official List provided that the FCA is satisfied that (i) POCA does not apply and (ii) that they meet the other criteria for listing (essentially that the company will need to satisfy the FCA that their activities would be legal if carried out in the UK).
Although, this statement is subject to a formal consultation and doesn't address all of the issues surrounding investing in cannabis, it does contain the helpful clarification that a company operating legally abroad under a licence cannot automatically assume that this would make them eligible to list in the UK.
In response to queries from cannabis-related companies interested in listing in the UK, the FCA is today setting out its approach to assessing these applications. This is pending a guidance consultation which will follow in due course