A 20,000sq. ft extraction facility operates on-island, producing distilled CBD oil, with cultivation planned to start early next year in 15 acres of leased greenhouses.
The company completed its first batch of sample cannabis oil for distribution to potential customers and testing in October and expects to have the first Guernsey-grown cannabis harvest from one of its partner growers by the end of this month.
‘We have a current investor base, both locally and elsewhere, and this is a final round investment opportunity to take us to the next stage of development,’ said Paul Smith, THOG Group CEO.
A number of private offers have already been made, and a company analysis report is available, prepared by an independent, third-party London research house.
Flotation is not on the cards, partly due to Financial Conduct Authority regulations. These include strict legal requirements for cannabis-related companies, especially for overseas firms.
One of the challenges for the industry is licensing. In July 2020, the European Commission put the brakes on all CBD novel food applications, and recommended that CBD and other extracts from hemp flowers be classified as narcotics under the United Nations Single Convention on Narcotics of 1961.
No final decision has been made. But because of Brexit, that may have little impact on the UK market.
CBD companies have until 31 March to secure a valid novel food application from the UK’s Food Standards Agency for each of their products so they can stay on the UK market.
‘UK novel food authorisation will be required to allow the sale of ingestible products, such as tinctures, oils and gel-caps, in the UK,’ said Mr Smith.
‘Application for novel food authorisation is complex and expensive. Companies wanting their products to be authorised for sale in the UK will have to submit detailed applications including laboratory test results to show their toxicology and stability.’
Import licences are required for jurisdictions where CBD is legal and have certain criteria.
‘The key is having formulated products that do not contain cannabinol (CBN) or cannabinol derivatives, such as tetrahydrocannabinol (THC). If exporting biomass, such as bud and flower, then it needs to be an EU certified variety and contain less than 0.3% THC.’
Despite some complications from a relatively new market, revenues totalled about £500,000 this year and are expected to exceed £5m. next year.
‘Guernsey has a golden opportunity to establish a new industry that will not only provide social and environmental benefits but also establish Guernsey as a leading jurisdiction for the production of top quality wellness and medicinal products and provide the economic diversity that the island sorely needs,’ he said.
‘That window will not be open for very long, however, as there are many other jurisdictions wanting to beat Guernsey to it. The States will need to move quickly and decisively to enable the industry to move forward.’