FCA mulls cannabis company listings

The Financial Conduct Authority (FCA) is considering its approach to overseas-based cannabis companies interested in listing in the UK

The regulator says it is setting out its approach to assessing these applications, and will be launching a guidance consultation in due course.

While medicinal cannabis was legalised in the UK in 2018, the regulator says investment in overseas-licensed medicinal cannabis businesses remains a legally complex area.

The FCA has concerns 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.

The FCA says it cannot assume a person who has been licensed in an overseas country would receive a licence here in the UK as licensing regimes differ globally.

The proceeds from recreational cannabis companies, even when they are located in those jurisdictions that have legalised it, are proceeds of crime under PoCA. The FCA confirmed it would therefore not admit the securities of such a company to the official list.

However, 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 the FCA is satisfied PoCA does not apply and they otherwise satisfy the criteria for listing.

Before any company is admitted, the FCA says it will carry out a review of their case where they will need to satisfy the regulator as to the PoCA risk.

For medicinal cannabis and cannabis oil companies with overseas activities, the company will need to satisfy the FCA that their activities would be legal if carried out in the UK.

The regulator 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.

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