Businesses and investors are beginning to acknowledge the impact of more liberal laws in some Western countries on the purchase and use of cannabis.

Recently Canada paved the way for the legalisation of the drug; Durham police chief Mike Barton has called for a similar move in the UK; and two high profile cases involving British children who apparently benefit from medicinal cannabis have shone a spotlight on the issue.

Canaccord Genuity’s Cannabis index has generated a 257% return relative to a composite S&P/TSX Venture benchmark in the last 12 months. Canaccord’s market cap-weighted index contains key cannabis companies that trade on various stock exchanges
in Canada.

The broker notes there is not great political traction for the idea in the UK yet but adds ‘there is evidence that a global trend to legalise cannabis is starting to gain momentum and this is attracting the attention of big alcohol, big tobacco and big pharma’.

Makers of alcoholic drinks have warned of an impact on demand from legalisation while some brewers and tobacco manufacturers are making initial investments in the space.

Constellation Brands, the company behind Corona lager, recently took a 9.9% stake in cannabis firm Canopy Growth; and Philip Morris invested $20m in a cannabis inhaler outfit.

There are limited ways for investors to gain exposure via the
UK stock market at present, should they want to, although it is worth keeping tabs on the issue and how it might impact other sectors.

Medicinal cannabis investment vehicle Sativa Investments (SATI:NEX) is listed on the NEX Exchange and has broadened its strategy to look beyond Canada in anticipation of regulatory change in Europe, including the UK. (TS)

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