The Role of British Sugar in the UK Cannabis Industry
Last week, the US Food and Drug Administration (FDA) approved Epidiolex for the treatment of seizures associated with two rare and severe forms of epilepsy. This is the first FDA-approved drug that contains a purified drug substance derived from marijuana. It is also the first FDA approval of a drug for the treatment of patients with Dravet syndrome.
However, unbeknown to many, the cannabis found in Epidiolex is legally grown in the UK, the largest producer and exporter of legal cannabis. What could the debate over the legalisation of the drug in the country for medical reasons mean for the company?
Go deeper with GlobalData
British Sugar cannabis grown in the UK
British Sugar, which produces about two-thirds of the United Kingdom’s quota of sugar, has been growing a non-psychoactive variety of marijuana plant in an 18-hectare greenhouse since 2016, after phasing out its tomato plant production at the site in Norfolk.
The company, which has a licence from the Home Office, supplies British Sugar cannabis to biotech company GW Pharmaceuticals, the company behind Epidolex.
In a statement, managing director of British Sugar Paul Kenward said that the decision to switch from tomatoes to marijuana was in part to help treat a ‘debilitating childhood disease’:
“Sixteen years ago we realised we could use some of the heat and waste carbon dioxide generated in our Wissington sugar factory to develop a horticultural business. During this time, we have invested in our world‐class facilities and developed our expertise to deliver consistent, high-quality crops season after season.
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By GlobalData“This new era for our horticultural business uses all we have learned to date to further build this value stream for British Sugar and to benefit the pharmaceutical industry. Furthermore, we are extremely proud that our new crop will make a worthwhile contribution to the control of such a debilitating childhood disease. Annually, we will produce enough of this ingredient to treat the equivalent of up to 40,000 children globally.”
The UK Government has been criticised for its stance on medical marijuana
British Sugar hit headlines in the ongoing debate over the legalisation of marijuana for medical and scientific use in the UK. The plight of two severely epileptic children, whose families believe medicinal cannabis oil has significantly improved their condition, has sparked calls to legalise the drug in such circumstances. While CBD is legal in the UK, it is not available on the NHS. However, THC is not legal, meaning that medicinal cannabis oil, which contains both CBD and THC, is illegal.
The UK Government has been criticised for awarding a licence to British Sugar while refusing to acknowledge the potential medical benefits of cannabis.
Paul Kenward, the managing director for British Sugar, is married to Victoria Atkins, the Parliamentary Under-Secretary of State for Vulnerability, Safeguarding and Countering Extremism in the Home Office. She has been accused of “blatant hypocrisy” by advocacy groups after opposing drug reform in the UK.
It also emerged that a subsidiary of Capital Group, for which Prime Minister Theresa May’s husband Philip May is relationship manager, holds a majority of the shares in GW Pharmaceutical.
What could the legalisation of medical marijuana mean for the UK economy?
Internationally the cannabis industry is worth around $20bn and the CBD industry in the UK is currently worth an estimated £200m. A recent UN report found that the UK exported 70% of the world’s legal cannabis in 2016, a total of 95 tonnes.
According to NGO Health Poverty Action, a legal cannabis market could make the UK Government between £1bn and £3.5bn a year in tax revenues, meaning legalising the drug could be a significant boost for the national economy.
Legalisation could also save an estimated £291m across the police, court and prison services in England and Wales.
In a statement, Health Poverty Action said:
“It is time to accept that prohibition is not only ineffective and expensive, but that regulation could – if it is done well – protect vulnerable groups and support public health. It would also generate both taxes (at least £1bn annually, but potentially more) and savings, which taken together would mean more resources for health, harm reduction and other public services.”
How much could British Sugar make from legalisation?
Unsurprisingly, GW Pharmaceuticals stands to benefit from the legalisation of medical marijuana in the UK as the only company to have a national licence to manufacture cannabis-based medicine.
According to The Guardian, GW is scaling up its UK production, with plans to invest £50m in capital funding over the next three years and to recruit 70 new staff, taking UK staff numbers to 400. As GW’s current sole supplier, British Sugar also looks to benefit.
British Sugar cannabis crops currently cover an area of 23 football pitches, but if it could cater to the UK market, it would likely expand. In the future it may convert even more of its four factories and a factory workforce of about 1,500 to this purpose.
Considering the uncertainty brought about by Brexit, with changes to sugar quotas “increasing the intensity of our competition”, according to the company, diversifying its operations to produce more British Sugar cannabis may be an attractive possibility.
