UK start up secures first permit this century for cannabis cultivation

·3-min read
Marijuana Business & Finance Industry Concept
Northern Leaf is gearing up to cultivate marijuana in a greenhouse sprawling across 75,000 square feet. It plans to start supplying drugmakers in Britain, Germany, Denmark, Spain and Portugal by the end of 2021. Image: Getty

UK start-up Northern Leaf has been granted the second-only permit in Britain to cultivate medical grade cannabis for profit more than 20 years after the first licence was issued.

The Jersey-based firm, which was founded in 2019 received the permit in December 2020 by the government of Jersey under UK home office rules.

Northern Leaf is gearing up to cultivate marijuana in a greenhouse sprawling across 75,000 square feet. It plans to start supplying drugmakers in Britain, Germany, Denmark, Spain and Portugal by the end of 2021.

“Demand is increasing globally and the market is currently undersupplied,” Campbell Dunlop, chief executive of Northern Leaf, the licence relates to a site that has a maximum capacity of 400,000 sq ft, he told the Financial Times.

The first licence was awarded in 1998 to GW Pharmaceuticals (GWPH), a firm which specialises in cannabis-based epilepsy medicines that was founded in the UK.

Britain has become one of many global nations to legalise the use of cannabis-based medicine to treat illnesses from cancer to epilepsy and for pain relief in recent years.

The firm will be up against major competitors elsewhere in Europe, such as Aurora Cannabis (ACB), which has 100,000 sq ft of greenhouses in Denmark.

Other established producers include Tilray (TLRY) and Emmac, which have 160,000 sq ft and 300,000 sq ft respectively in Portugal, according to investment firm Chrystal Capital, which has helped Northern Leaf raise funds.

Dunlop said the permit was “quite a big breakthrough,” and told the newspaper that he expected the firm’s first shipment of cannabis to reach half a tonne — Emmac produced about 10 tonnes in 2020.

Brightfield Group — an international cannabis market research firm — said the EU cannabis market was valued at €330m ($403m, £297m) in 2020.

The Group, which does not disclose its owners, said it has spent £12.5m in purchasing and refitting real estate. It expects to invest another £6m in 2021.

Chrystal Capital, which is preparing a £5m funding round soon also helped Northern Leaf raise £3m in capital last year.

READ MORE: UK to see largest medical cannabis market growth in Europe 2020 to 2025

It comes as reports have shown that the UK could see the biggest cannabis medical market growth rate in Europe between 2020-2025.

According to Brightfield Group’s European Cannabis 2020 report, expectations to allow for domestic cultivation and general practitioners prescribing in the coming years will result in a 2020-2025 compound annual growth rate (CAGR) of 98%.

Chart: Brightfield Group
Chart: Brightfield Group

The group said that while it had initially projected that COVID-19 would cause the cannabis market in Europe to take a hit, due to decreasing patient registrations and supply chain disruptions, the market grew 28% during the year.

Germany currently has the largest medical cannabis market in Europe, with projected sales of $267m in 2020 and is expected to make up to a $2.1bn market by 2025.

But it pointed out, Europe’s medical cannabis market “is still rather small” when compared with the likes of the US where total combined legal sales of medical and adult-use cannabis in the US are projected to reach $35bn by 2025.

WATCH: Cannabis is the next great American growth story

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