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.
While medicinal cannabis was legalised in the UK in 2018, investment in overseas-licensed medicinal cannabis businesses remains a legally complex area. We consider that there remains a risk that the proceeds from overseas medicinal cannabis business may constitute ‘criminal property’ for the purpose of the Proceeds of Crime Act 2002 (PoCA). This includes where the company possesses a licence issued by an overseas medicines or pharmaceuticals licensing authority.
This is because PoCA defines ‘criminal conduct’, the key definition under the Act, deliberately broadly. It captures not only an offence in any part of the UK but also any conduct outside of the UK which would be criminal in the UK if carried out here. Possessing and supplying cannabis for recreational use remains a criminal offence in the UK. If a pharmaceutical company supplied cannabis in the UK without appropriate Home Office licences, they would be committing a criminal offence. We can’t assume a person who has been licensed in an overseas country would receive a licence here in the UK as licensing regimes differ globally.
Recreational cannabis companies
The proceeds from recreational cannabis companies, even when they are located in those jurisdictions that have legalised it, are proceeds of crime under PoCA. We would therefore not admit the securities of such a company to the Official List.
The legal position of purely UK-based medicinal cannabis companies and cannabis oil companies is clear. UK-based medicinal cannabis companies can be admitted to the Official List, if the company has the appropriate Home Office licences for their activities where they are required.
Overseas-licensed medicinal cannabis companies and cannabis oil companies are in a different position. These companies may be admitted to the Official List, provided we are satisfied PoCA does not apply and they otherwise satisfy the criteria for listing. Before they are admitted, we will carry out a review of their case where they will need to satisfy us as to the PoCA risk.
For medicinal cannabis and cannabis oil companies with overseas activities, the company will need to satisfy us that their activities would be legal if carried out in the UK. We will also need to understand the legal basis of the company’s overseas activities, for example the nature of the local licensing and the licences the company holds.