High point for Oxford Cannabinoid

Oxford Cannabinoid Technologies Holdings plc (OCT), a biotech company developing medicines that mimic the painkilling effects of cannabis, published a prospectus on 17 May 2021 in relation to its intended admission to the standard segment of the Main Market of the London Stock Exchange. The company has raised £16.5m gross proceeds via a placing, and market capitalisation is predicted to be £48m on admission, expected on 21 May 2021.

The company started out of an Oxford University research programme into medical marijuana and has since gained the backing of investors such as tobacco group, Imperial Brands and Casa Verde, an investment fund co-founded by rapper Snoop Dogg. OCT’s admission is one of the first few initial public offerings (IPOs) to have emerged in this industry since the UK legalised medicinal cannabis in 2018.

The Financial Conduct Authority (FCA) published a statement on the approach for the listings of cannabis-related businesses in September 2020. It cautioned that overseas companies may run into complex legal issues, including the proceeds from overseas medicinal cannabis business potentially constituting ‘criminal property’ for the purpose of the Proceeds of Crime Act 2002, and the supply of recreational cannabis in the UK a criminal offence, even from jurisdictions where it is legal. For UK-based companies however, the position is much clearer, as they may be admitted to the Official List if they have the appropriate Home Office licences for their activities where required. Such is the case for Oxford Cannabinoid, which stated in its prospectus that as a UK-based company and with the appropriate Home Office licences, ‘OCT’s business activities in the UK …do not amount to ‘criminal conduct’, or the proceeds of any such business activities amounting to the proceeds of crime.’

So far in Q1 2021, there has been one overseas IPO from Australian MGC Pharmaceuticals Limited and one from UK based Cellular Goods plc, both admitted to the Main Market and both operating in the medicinal cannabis industry. This initial trend started to solidify with Love Hemp Group plc’s an intention to float on the Main Market on 8 April 2021. These trends will be further explored in our upcoming Equity Capital Markets Trend Report.