UK cannabis deal sets new record and raises hopes that legalisation could be a real possibility!

British cannabis producer Bridge Farm has been bought by US-based private equity fund Artemis Growth Partners in the largest European cannabis deal ever seen.

The Artemis consortium includes former management of Bridge Farm and according to Clearwater International, advisors on the deal, the total transaction value of  £66m (€74m/$81m) ranks the transaction as the largest European M&A (mergers and acquisitions) transaction in 2020 for cannabis and cannabis-related companies and represents the largest M&A transaction of 2020 in Europe for the horticulture and farming industry.

The deal comes as pro-cannabis advocates and business analysts suggest that the Covid-19 crisis could accelerate the legalisation of cannabis in the UK. 

The fund’s partners, many of whom are former Goldman Sachs and JPMorgan executives, has a large portfolio of companies that sell and advocate the use of cannabis for a number of different purposes including for medicinal use.

Announcing the deal, Artemis said it expected the huge financial pressures on governments around the world after the coronavirus pandemic could see cannabis legalised to make it taxable.

“We’re going to find Budgets around countries to have giant gaps, and the economics are overwhelmingly in favour of governments jumping ahead and legalising cannabis and finding near-term revenue there, ”stated Will Muecke, co-founder of Artemis Growth Partners. 

These claims, which to pro-cannabis advocates may seem to good to be true, certainly seem to make sense when considering that a 2018 study estimated that the UK government could rake in an extra £3.5bn in tax from the legal sale of cannabis! When faced with the very real possibility of a steep post-virus worldwide recession it is definitely a very attractive option for governments around the world, not only the UK!

While still illegal in Britain, Bridge Farm has a Home Office licence to grow high-THC cannabis for medical tests. Only 12 such licences have been awarded so far by the UK Government. 

The company operates a 2m sq ft glasshouse facility in Spalding where it already currently produces hemp for use in CBD oil, The company also produces ornamental plants and herbs for supermarkets, which it will continue to do.

In the event that cannabis and its products  (including THC based products) are fully legalised both medicinally and recreationally as we have seen in Canada and some US states, Bridge Farm managing director Louise Motala said that the group would be well-positioned to capitalise on the change. 

“We’re already a heavily audited business because of the food crops we supply to retailers, and we have all those controls in place,” she said. “When the Home Office visited us, they wanted ongoing dialogue, because we’re an example of what good looks like.” 

Talking further about the acquisition and the potential it holds, David Ball, operating partner and senior advisor at Artemis Growth Partners said the following:

“Bridge Farm is the low-cost cultivation platform in the UK for cannabis with over 2 million square feet of the most technologically advanced, automated glasshouse production in all of Europe. We see Bridge Farm as the cornerstone of a vertically integrated global producer of cannabis and other medicinal botanicals with future offerings ranging from cannabis flower and concentrates, as well as other essential oil and phytomedicinal extracts, into a wide range of plant-based branded and wholesale health and wellness products”.

“We have over 60 acres of fully automated, sustainable cultivation and production space and we are looking forward to realising the full potential of our scale and facilities for the benefit of our customers.”

Huge acquisitions such as the Bridge Farm-Artemis deal, reveal the shifting dynamics in the medical cannabis market in the UK and Europe. The fallout from COVID 19 along with the cannabis reforms that are happening in Canada and the US are helping to change opinions and push public debate further forward than we have ever seen before!

So much so, that many would say that the big question has changed from “should we legalise cannabis?” to  “when should we legalise?” and “how do we do it responsibly?”.