Pot of gold: UK set for £100m cannabis float
Firm backed by ex-RBS chief plots record £100m float ... and it aims to grow marijuana for NHS in UK
ABRITISH company which has assembled a heavyweight board and is planning to grow marijuana in England i s pl ot t i ng a £ 100 million f l oat t hat would make it the largest cannabis business on the London Stock Exchange.
Cannaray will become the only London-listed UK grower of cannabis next summer if it secures its licence to cultivate the plant on the south coast of England and floats on the stock market as planned.
The company, which has City big hitters on the board including a former Royal Bank of Scotland executive, has just raised £7.8 million and is now in the process of rounding up another £3.5 million of investment.
It then hopes to raise up to £30 million in a stock market float next year which could value it at more than £ 100 million, making it the largest London-listed cannabis company and the only one with a licence to grow cannabis in the UK.
Chief executive Scott Maguire is planning a main listing on the LSE, rather than floating on the challenger NEX Exchange, which a number of smaller players have done recently.
‘I believe that’s a recipe for failure,’ he said of listing on NEX. ‘You might as well stay private because there’s no volume or liquidity on that exchange. It would be a main board listing that would allow the company to raise the magnitude of capital necessary to become a global cannabis player.’
The cannabis grown by Cannaray will be prescribed by doctors to t reat patients suffering f rom chronic pain, vomiting and nausea caused by chemotherapy, epilepsy and multiple sclerosis.
It is also in talks to launch its cannabis oils on supermarket shelves by February.
Cannabis-based medicines were made available by prescription through the NHS last year, prompting a number of entrepreneurs to chase London listings to cash in on the fevered enthusiasm.
Cannaray would use the money from the float to start processing the cannabis it will be growing so that it is up to medical standards and ready for patients to smoke, vape or take in the form of oils, capsules or creams.
The firm’s current i nvestors include Newey, Britain’s biggest potted plant grower. The pair have struck a deal so that Newey will grow cannabis for Cannaray, starting with a one-acre greenhouse.
It has applied to the Home Office and is in talks with the authorities, including the police, about securing the site with the help of ex-Special Forces operatives to make it like
‘Fort Knox’, according to Maguire.
It would be only the second greenhouse in Britain where a company grows cannabis legally to sell to patients.
British Sugar grows cannabis in Downham Market in Norfolk for GW Pharmaceuticals, which used to be listed on AIM in London but is now on Nasdaq in New York. That greenhouse, however, is much larger at around 18 hectares. In 2017, local residents complained of a smell from the site.
The exact location of the greenhouse that will grow Cannaray’s product is being kept confidential for now because of the high level of security being built around the site to protect it from being broken into. But it is known it will be close to the south coast of England.
Most start-ups looking to cash in on the hype surrounding cannabis stocks and the legalisation of medicinal cannabis are led by littleknown entrepreneurs with boards made up of corporate financiers.
BUT Maguire, an American biotech veteran who has lived in the UK for more than 20 years, has assembled a heavyweight board and an impressive scientific advisory board. Cannaray’s directors include Chris Sullivan, former deputy chief executive of RBS, and Sir Nigel Knowles, former chief executive of legal giant DLA Piper, who chairs listed law firm DWF. Both are Maguire’s former golfing partners at Wentworth.
It is the first role for Sullivan since he retired from Santander last year, where he ran the corporate banking division. Previously he was RBS’s deputy chief executive and also ran the bailed-out lender’s corporate banking division.
Sullivan was accused of being ‘wilfully obtuse’ when he gave evidence to the Treasury Select Committee about the notorious Global Restructuring Group (GRG), a division of RBS which critics claim drove to the wall small firms they were supposed to be helping.
A spokesman for Cannaray said Sullivan ‘understands the potential of cannabis medicines as a future replacement for many opioid-based therapies and has a desire to make a positive impact on society.
‘He is also a keen golfer and has read how many golfers are now using CBD [cannabidiol, a cannabis extract] for anxiety and aches and pains.’
Sullivan joined the board as a nonexecutive director this month, but invested in the company in June. Most of the investors so far are businessmen that Maguire has rounded up.