BCL Solicitors: UK: A blueprint for the UK Cannabis Industry

Senior Associate David Hardstaff and Partner John Binns of BCL Solicitors LLP, share their views on a blueprint for the UK Cannabis Industry

The UK All Party Parliamentary Group (APPG) for Cannabidiol (CBD) Products has published ‘A Plan for a Legal and Regulated UK Hemp and Cannabis Sector’. The APPG’s ambitious manifesto is packed with bold ideas and projections for the UK cannabis industry, but is there currently the appetite to implement its recommendations, or are they destined to symbolise a missed opportunity?

Whisky Galore!

The Plan is compiled by the APPG, co-chaired by Baroness Manzoor CBE and Crispin Blunt MP (both members of the ruling Conservative Party), with contributions from a range of sources, including clinical and trade groups. A wide array of research features, covering topics ranging from bee diversity to pharmaceuticals.

Aside from the obvious consumer demand for liberalised cannabis policies, the Plan’s headlines focus on the practical opportunities presented by a thriving hemp and cannabis (including CBD) industry. These include an estimated 594,000+ jobs, £5.5 billion in annual tax revenue, and environmental and agricultural benefits aimed at meeting carbon neutrality commitments by 2050.

The analysis opens by observing that the UK does not have to address the issue of legalised recreational THC (tetrahydrocannabinol – the key psychoactive element of cannabis) to establish itself as a viable commercial hub. Tactically, this is a shrewd opener, cutting through the stasis sometimes resulting from differing views on the recreational use of cannabis. The case is made that the question of recreational use doesn’t have to be resolved once and for all before starting work on a more coherent plan for the UK’s wider cannabis industry. The risk, the Plan emphasises, is that if we fail to act now, the UK cannabis industry will be ill- equipped to compete with its peers as the global cannabis market flourishes.

The Plan relies on two primary comparators: the mature cannabis market of Colorado, U.S., and the Scotch whisky industry. Colorado is held as an example of what a country aspiring to world class regulation and global bio-science leadership requires, whereas the whisky industry is used to demonstrate the UK’s reputation for developing high end, premium products. The hemp and cannabis industry’s turnover is estimated to reach £69 billion by 2026. By comparison, Scotch whisky’s worldwide turnover has levelled at £66 billion.

The parallel being drawn is clear, and while the UK may never be to cannabis what Scotland is to whisky, the opportunities highlighted are too significant to ignore. Aside from the obvious economic benefits through taxation of products (from consumer to medicinal) and reduction in crime, the Plan points to industrial hemp’s environment credentials — through its qualities as a ‘green’ building material and its ability to absorb huge amounts of CO2 — the point being that the benefits of a buoyant cannabis industry go far beyond taxes and consumer experience.

Cannabis Outdoor Sunset Horizon Direct
© Sharkpic

Key recommendations

To achieve its objective of a thriving UK cannabis industry, as well as hemp, the Plan makes 23 specific recommendations, including:

  1. Move hemp licensing from the Home Office to DEFRA: To put the UK on a competitive footing with other hemp-producing countries, the licensing of industrial hemp cultivation should be moved to the Department for Environment, Food and Rural Affairs (DEFRA), whose staff have agricultural expertise and are better qualified than those in the Home Office to assess applications for hemp cultivation.
  2. Commission a review of the Novel Food Regulations and its applications to hemp-based food supplements: Today, the vast majority of CBD food supplements sold in the UK are imported. This is due to current restrictions on hemp cultivation and the onerous Novel Food process, both of which effectively preclude UK farmers from accessing this high-value-add consumer segment of the CBD sector.
  3. Establish commercially viable THC limits in consumer products: The current focus on permitting only CBD isolate sales in the UK (based on a perceived requirement for zero THC content) nullifies the potential economic benefits for a domestic UK industry, as isolates are an oversupplied commodity dominated by U.S. and Chinese manufacturers.
  4. Allow GPs to prescribe cannabis and remove the requirement for doctors to triage their prescription with two other peers: The current procedure is slowing down the process and creating unnecessary barriers.
  5. Reform the Proceeds of Crime Act 2002: At present, investors remain cautious about investing in the cannabis sector, owing to the risks associated with the Proceeds of Crime Act 2002. As a consequence, proceeds from medicinal cannabis business in states such as Colorado may constitute “criminal property” even if fully legal and authorised in the foreign state.

Use it or lose it

There is no time to waste, the Plan warns. A cabinet minister responsible and departmental leads should be in place by October 2022, with detailed implementation plans in place by June 2023. There is a sense of urgency in the Plan and the urgency is undoubtedly real. The UK risks falling behind the rest of Europe in creating a coherent strategy for its own cannabis industry. Germany, Europe’s largest economy, is closer than ever to following the lead of Canada and California.

There is a sense of inevitability as recreational cannabis becomes accepted across Europe. The question is not whether the same will happen in the UK, but when. Through inaction, the Plan cautions, the UK could find itself belatedly following a more progressive European agenda, rather than setting it.

Ambitious to a fault?

The Plan crams an impressive amount into its 123 pages, posing several bigger questions, each of which easily justify a standalone strategy of their own. Among other things, it discusses how to free the industrial hemp industry of restrictions imposed by the UK Home Office and the Misuse of Drugs Act 1971, which until now have all but prevented the emergence of any ‘home grown’ CBD industry, and recommends simplifying the industrial hemp licensing process (a topic which crops up again in the context of medicinal cannabis); moving the responsibility for licensing to DEFRA, and enabling farmers to process the controlled leaves and flowers.

The Plan is made up of an undeniably ambitious set of proposals, and if there is to be any criticism of it, it is that it covers too much ground to keep focus. However, its wide reach doesn’t result in an oversimplification of the issues. Rather, it is effective in highlighting the need for a singular strategy to drive the UK’s cannabis industry, whilst allowing space for its individual strands to develop.

The cannabis industry hasn’t been immune to recent global trends and downturns. The initial excitement that took the UK by storm following the 2018 legalisation of cannabis-based medicinal products has certainly mellowed. What the Plan offers is a glimpse of a longer-term, more sustainable cannabis industry, one that is outward looking and thinks beyond its own immediate success.

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Author Bios

Canada
Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Nicaragua
Elvin Rodríguez Fabilena

USA

General
Julie Godard
Carl L Rowley -Thompson Coburn LLP

Arizona
Jerry Chesler – Chesler Consulting

California
Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Colorado
Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Florida
Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

Illinois
William Bogot – Fox Rothschild

Massachusetts
Valerio Romano, Attorney – VGR Law Firm, PC

Nevada
Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Oregon
Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Pennsylvania
Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild