The United Kingdom’s (UK) legal marijuana industry shares similarities with Australia’s legal marijuana industry. Medicinal cannabis was legalised in 2018 to provide patients with rare illnesses access to medicinal cannabis products. While the UK, like Australia, has legalised marijuana for medicinal purposes, pathways to accessing therapeutic products can be challenging and tedious for doctors and patients. This article provides an overview of the UK’s legal marijuana industry, where it fits within the global market, and key threats and opportunities that companies in the sector should address.
The policy approach to marijuana in the UK remains conservative, with legalisation for medicinal use occurring recently in 2018.11 This approach follows the prohibition era of the early 20th century,17 where states across the USA and British colonies became aware of the recreational use of cannabis and opium. Despite the prohibition era spanning much of the globe, other jurisdictions such as Canada, many states across the USA, and parts of the Asia Pacific have since legalised marijuana17 for both medicinal and recreational use. By comparison, the UK’s industry is in its early stages, presenting a range of challenges and opportunities for growth.
Cannabis has been illegal for recreational use in the UK since 19282 and is classified as a Class B drug — the second most restrictive classification — under the Dangerous Drugs Act 1971.8 It’s important to note that until the Dangerous Drugs Act 1971 came into force, doctors in the UK could recommend cannabis to their patients.1
In 2001, then Prime Minister Tony Blair enacted legislation to downgrade cannabis to a Class C drug,18 effectively decriminalising it. This made penalties for personal possession, use and production minimal, while sentences for supply would also be significantly reduced. With this policy in effect, UK police saved 199,000 hours in 2005, according to the Home Office.6 The policy change was reversed in 2007,1 with Prime Minister Gordon Brown classifying cannabis again as a Class B drug. No further developments have occurred around the recreational possession and use of cannabis since this change.
Despite cannabis being legalised for medicinal use in the UK since 2018, the system remains flawed and often experiences shortages. This is because the country imports 100 per cent of its medicinal cannabis products. At present, a doctor must have the right to prescribe cannabis, and it can only be prescribed for a limited range of conditions.19 These conditions include severe forms of epilepsy, chemotherapy patients experiencing vomiting or nausea, and people with multiple sclerosis (MS) who experience muscle stiffness and spasms. Medicinal cannabis products are only imported to the UK once a prescription has been issued to a patient, causing delays and making it more costly.16 Further, since the legalisation of medical marijuana, doctors have received little guidance11 from the National Institute for Health and Care Excellence (NICE) and the National Health Service (NHS), so the impact of legislative changes has been limited in improving access for sick people.
The drivers for legalising marijuana for recreational use and possession in the UK include harm reduction, protecting underprivileged populations from over-policing, and economic incentives. Further, 48 per cent of the UK’s population supports the legalisation of marijuana.1 Similarly, a 2021 poll of UK Members of Parliament (MPs) found that 79 per cent of them agree that current policies should be updated.1 The Labour Party, for instance, generally advocates for effectively decriminalising the substance, while The Greens are in favour of establishing “cannabis social clubs”1 where its members can cultivate marijuana and supply it to other members.
Like other jurisdictions, it is expected that the UK will eventually move to change its cannabis policy, making access easier for medicinal purposes as well as decriminalising (or potentially legalising) recreational possession and use. Given the slow-moving nature of public policy, however, these changes may take many years.
The medicinal cannabis industry is growing rapidly in the UK. In 2019, revenue in the market was less than USD200,000,15 growing to USD87 million in 2021.15 By 2024, the market is expected to be worth USD1.2 billion.15 This indicates that while policy around the prescription and use of medicinal cannabis remains relatively prohibitive, it is a fast-growing market serving those patients who are allowed to use products for therapeutic purposes.
In 2021, there was an increase of 425 per cent in the number of unlicensed medical cannabis products14 dispensed for private prescription. This equates to an annual 23,466 products. It’s important to note that private prescriptions are not covered by the NHS, meaning the patient will not be reimbursed. For some, this can make medicinal cannabis products cost-prohibitive. Further, with specialist doctors only allowed to prescribe medicinal cannabis products, the time and effort required for a patient to access the products are significantly more intensive than accessing licensed pharmaceuticals. It’s estimated that around 1.4 million patients access cannabis products20 from the illicit market due to the current legal market’s limitations.
The UK and Denmark are the countries in the UK and Europe where high-THC products are most often prescribed.20 According to data from Project Twenty21 and Prohibition Partners, the breakdown of medicinal cannabis products20 sold in the UK are:
To date, 100 per cent of the medicinal cannabis products prescribed across the UK are imported. This makes the UK an outlier in the global market, given the country is the world’s largest exporter of medicinal cannabis.21 In 2019 alone,7 the UK produced 320 tonnes of legal cannabis accounting for 75 per cent of the global market (468.3 tonnes). These numbers indicate that perhaps economically, the country is benefiting from exporting its medicinal cannabis due to it meeting stringent global quality standards. However, it comes at the cost of a difficult domestic system where product shortages and the restrictive policy set by regulators mean no new NHS prescriptions have been written in the last two years.7
Like Australia, only two UK-licensed cannabis-based products are available7 via NHS prescription. These are Sativex, a whole-plant cannabis spray intended to treat MS and Epydolex (pure oral CBD) to treat patients with rare and severe epilepsy. Both of these products are produced by GW Pharmaceuticals and can only be a “prescription of last resort”10 where other treatment options have failed.
Aside from medicinal cannabis, CBD food products are the other growing sector of the UK’s legal cannabis industry, but companies in the market have also experienced challenges due to unclear regulatory guidance. The UK was the first country to regulate CBD as a novel food product in 2019,22 allowing for the sale of CBD food products in supermarkets and food stores. Companies wishing to sell CBD oils, gummies, capsules and other edibles require Novel Foods authorisation from the Food Standards Agency (FSA)3.
To clear confusion, the FSA published a list in April 202222 of the 3,500 CBD novel food products that are going through the approval process. The FSA said any products not on the list had to be withdrawn from sale immediately. However, after feedback from the industry, it extended the deadline to 30 June 2022. Over 900 products were submitted for approval22 following the FSA’s guidance, but only 70 products made it to the next round of analysis. This indicates that thousands of products may not be able to enter the market and the strict approval process companies must go through in the UK to sell their CBD food products.
It’s estimated that legalising marijuana would generate GBP3.5 billion in tax revenue.1 However, legalising cannabis isn’t the only factor that will contribute to growth in the industry. Policy developments to make current regulations and access pathways for medicinal cannabis patients more affordable and less burdensome would make the UK’s market more competitive and comparable to markets13 such as Canada and mature European markets such as Germany, Denmark and the Netherlands. Companies with a long-term view16 to cultivating medicinal cannabis in the UK for export within the current regulatory landscape could continue to bolster the country’s strong export performance.
The current system for prescribing medicinal cannabis in the UK presents both an opportunity and a threat. The threat, the protracted and complicated process for obtaining a prescription, is hampering the UK’s ability to compete and innovate. However, regulatory change that would make prescribing licensed and unlicensed medicinal cannabis easier and more affordable would present an opportunity for domestic players to cultivate and sell products to the UK market.
With European nations such as Luxembourg legalising cannabis in 2021 and societal attitudes to cannabis softening, it’s expected that the substance could be legalised for recreational possession and use over the next five to ten years.14 This timeline is, of course, only indicative. It depends on a number of variables, including whether it is simply decriminalised or legalised, the regulatory environment, and how medicinal cannabis access has changed in that time.
Brexit is the other major challenge for legal cannabis and CBD food product producers. Before Brexit, companies had a universal set of import and export guidelines to adhere to, so moving legal cannabis was more straightforward. Following Brexit, companies have had to understand new customs declarations and forms, deal with shipping delays exacerbated by COVID-19, and three different novel food authorisation schemes5 (England, Ireland and Scotland). Like other UK companies exporting and importing goods, staying updated on current customs regulations to mitigate supply chain disruptions is critical.
The global legal marijuana market was valued at USD13.2 billion in 2021,4 with an expected CAGR of 25.5 per cent from 2022 to 2030.4 In the UK currently, private medicinal cannabis prescriptions are driving the majority of growth in the region.
The global medicinal cannabis market is expected to be worth USD62.6 billion by 2024,12 equating to 4 per cent of the worldwide pharmaceutical market at the time. This growth will be driven by the continuation of more accommodative medicinal cannabis regulation. Based on current growth rates, the UK will make up 1.9 per cent of this market15 with expected revenue of USD1.2 billion by 2024. To date, regulatory change has predominantly occurred across Europe, North America, South America, and the Asia Pacific. The map below outlines current medicinal cannabis legality globally.
Source: Deloitte Access Economics based on Prohibition Partners’ research.
The UK’s legal marijuana industry is in its infancy compared to other developed nations such as Canada and the USA. It shares similarities with Australia in its regulatory landscape and access pathways, also prescribing the two same licensed medications (Sativex and Epydolex) for a limited range of conditions. While it’s expected that the recreational use of cannabis may be decriminalised, possibly legalised, as societal attitudes and the regulatory landscape evolve, this will likely take five to ten years.
Key opportunities for cannabis producers in the UK currently include cultivation for export purposes and the development of medicinal cannabis and novel CBD food products. It’s important to note that while CBD food products are now regulated in the UK, the approval process is lengthy for companies that didn’t submit their products to the FSA for review before June 2022.
Like other exports, the impacts of Brexit remain a key issue that companies should be aware of to ensure compliance with the customs regulations for importing countries. The legal cannabis industry in the UK is relatively conservative, but this is expected to change over time, providing more opportunities for UK companies to serve more people in the domestic market. Until then, companies must navigate the complexities and limitations of current regulations while capitalising on export opportunities.
