Okay, this example is a little ‘old economy’, but bear with me here, there is a broader point.
Imagine, if you will, setting up a greengrocer shop.
In a couple of weeks and with a few phone calls (you might even stray online) you’d be able to source your products and arrange delivery – probably on a just-in-time basis.
This is the magic of the supply chain.
It makes sure your jalapeno peppers, squash and pak choi are air freighted to the wholesaler before then being trucked on to your little high street enterprise (which presumably is sandwiched between a shuttered pizzeria and a deserted clothing emporium).
Now, imagine there was no supply chain; no interconnected, sophisticated network of growers, suppliers, processors, distributors, and retailers. It would be utter chaos.
Well, that’s where we are with the European medicinal cannabis industry, according to Ben Langley.
He’s the founder and chief executive of Grow Group, which is grappling with the not insubstantial task of creating a supply chain from scratch.
Getting quality cannabis medicines to patients
“The question for us, that defines what we do, is how do we get quality cannabis medicines to the patients that need them?” he says.
“There are tens, if not hundreds of millions of patients out there in the world that would benefit from legal cannabis medicines that either aren’t getting them because they don’t know how to access them, or are doing so via the black market,” he adds.
“So, we exist to essentially to solve that dynamic.”
Here in the UK, the market is in its formative stages of development. The legislation was passed in 2018, and there are now around 50 products on the market.
The constraining factor is the healthcare system and doctors in particular, who have been slow to prescribe cannabis – and with some reason given the lack of training around medicinal products.
Yet there are an estimated 1.4mln people with conditions such as chronic pain, cancer, sickness or severe epilepsy that might benefit from plant-based relief.
With such an ill-defined marketplace, there are two options: pay for expensive private prescriptions or, as Langley points out, access the black market.
The mission starts with doctors
So, Grow Group’s mission starts with the doctors – and a process of education to “empower them to prescribe”.
It’s then about getting the right medication in the right form to the right people at the right time (the supply chain, right).
Grow is split into three discrete operations – pharma, biotech and trading. Each solves part of the puzzle as seen by Langley and his team.
The pharma operation is the UK and Ireland’s leading cannabis importer that sources affordable pharma-standard medicines.
Biotech is essentially the research and development division, which is devoted to bringing down the costs of manufacturing and increasing the quality of products. It is overseen by the company’s chief scientific officer and Grow co-founder, Dr Ian Atkinson, a geneticist and botanist.
The trading arm is the world’s first international medical cannabis trading company.
Cultivation is not part of the mix. “We see it as a somewhat commoditised game,” Langley explains.
“We might get into cultivation if it makes sense. We work with cultivators and processors and producers in numerous locations.”
Its production facilities, which adhere to good manufacturing practice, deliver high standard end-products such as gel caps, tablets, extracts, oils, and flour.
“So, we’ve got a good final part of the supply chain in terms of mixing and packaging,” Langley explains.
Australia 18 months ahead of the UK
He says the Australian market, which is about 18 months ahead of the UK, provides a good proxy for the story on these shores.
Three years ago there were fewer than 500 active patients in Australia, today that figure is around 30,000, according to FreshLeaf analytics, which tracks the industry.
Germany, another target territory alongside Ireland, is Europe’s most highly developed and closely regulated market with an estimated 120,000 people using legal medical cannabis, according to the research group Prohibition Partners.
Langley sees the European market developing in a more regimented and organised way than North America, which is complicated in extremis by the addition of recreational weed to the mix.
Not helping this already dysfunctional market is federal illegality of the drug in the US (despite the almost wholesale legalisation at the state level).
Adding to the sense of confusion is the role of the Canadian equity markets in funding growers and retailers.
Of course, the wild west-style green gold rush has gone from boom to bust on the other side of the Atlantic.
Europe takes a different approach to the US
“European countries such as Germany and the UK have taken a much more pharmaceutical approach,” says Langley.
By this, he means the continent looks intent on regulating cannabis as a drug – with a framework around the manufacture and supply – albeit regulation is currently lacking uniformity country to country.
Grow, meanwhile, through close interaction with the authorities, has ensured that it is on the right side of the law so far as the legalities around the import and supply of the drug is concerned.
“I started engaging with the Home Office on the question of medical cannabis in early 2017,” explains Langley.
“That was 18 months before medical cannabis was even legalised in the UK and it was not until the Home Office had given me certain assurances (i.e., that I would not be breaking the law) that I founded Grow.”
The latest chapter in the story was written in September when the Financial Conduct Authority determined that UK-based medicinal cannabis companies could list their shares publicly – partially clearing up a grey area around this issue.
Pre-IPO funding round
Grow has signalled its intent by launching a GBP6mln pre-IPO funding round that should be complete early in the New Year. It has taken close to GBP7.5mln in series A and B funding to get the business to this stage.
Working with Langley is an experienced team. Heading Grow Pharma is Pierre Van Weperen, who has helped run businesses worth GBP50mln-GBP200mln in both the drug and services industries.
The chief operating officer, Andrew Scully, is an expert in transformation and development, who “cut his teeth” with some of the best-known companies in the life sciences industry.
“What I have is a team that can help scale the business quickly,” says Langley. And, presumably, they’ll help him piece together the cannabis supply chain too.