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Cannabis in the UK: Problems and Solutions

By John Binns

Published: Feb 01, 2023   
Cannabis buds on the Union Jack.
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A spectrum of perspectives

How does the UK feel about cannabis in 2023? There are a few answers to this question, depending on the perspective of those questioned. At the positive end of the spectrum, many of the public will by now have tried CBD products and will have a vague idea that cannabis was legalised here a few years ago, at least for medicinal use. Some in the UK may even say they have had success with investing in the cannabis industry, though for now such success is more likely to come from businesses overseas than to be home grown.

At the more negative end are (sadly) us lawyers, who will tend to shake our heads and say that things are a lot more difficult than that, perhaps grumbling about the Home Office, novel foods regulations, or proceeds of crime laws. Unfortunately, some of that gloom is shared by medical practitioners and patients, who are finding it hard to get medicinal cannabis products that are supposedly now available to them. So, what is the reality, and how is it changing?

Controlled drug licensing

The starting point is that the Misuse of Drugs Act 1971 (the MDA) prohibits various actions in connection with controlled drugs (CDs), which include products containing cannabis or its principal psychoactive ingredient, THC. Although CBD is not itself a CD, CBD products (at least the natural, “full spectrum” variety, as opposed to artificially produced CBD isolate) are often also classed as CDs by virtue of their THC content.

The Misuse of Drugs Regulations 2001 (the MDRs) enable the Home Office to license activities that would otherwise breach the MDA. Although, in the case of cannabis, this is only allowed for research or other “special purposes”. They also create a class of “exempted products” that arguably include CBD products with less than one milligram (mg) of THC.

Unhelpfully, unlike other jurisdictions, the UK has no general percentage threshold below which THC content does not present a problem, although licensing is easier where the content is below 0.2% (hemp). So, imports of even low-THC CBD products have prompted asset seizures and even criminal investigations.

Proceeds of crime

Even more unhelpfully, the Proceeds of Crime Act 2002 (POCA), which prohibits dealings with and arrangements concerning the proceeds of “criminal conduct”, defines that term to include conduct overseas that would breach UK law if it occurred here. An exception for overseas conduct that is lawful where it occurs has been disapplied (by the Proceeds of Crime Act (Exceptions to Overseas Conduct Defence) Order 2006) for offences punishable with over 12 months of imprisonment, as is the case for most offences under the MDA.

In practice, this means investors (and their banks and advisers, who have additional obligations under POCA) have to consider making Suspicious Activity Reports (SARs) to the National Crime Agency (NCA) and seeking consent (also called a Defence Against Money Laundering, or DAML). Typically, the NCA has neither consented nor refused in these cases, so that consent is deemed to have been obtained after a “notice period” of seven full working days following a DAML SAR. But the nature of this process helps explain why UK banks have traditionally been skittish about dealing with cannabis proceeds.

Medicines and novel foods

The law on CDs interacts with the regime for regulating medicines (and products marketed as such) under the Human Medicines Regulations 2012 (the HMRs), operated by the Medicines and Healthcare products Regulatory Agency (MHRA), including those that do not (yet) have marketing authorisation (‘unlicensed specials’).

In practice those marketing CBD products have been careful to distinguish between general health benefits and specific medical claims, though the line is not always clear. Instead, their focus has been on the impact of regulations concerning novel foods, thanks to unhelpful decisions initially within the EU and then, post-Brexit, by the UK’s own Food Standards Agency (FSA).

Some cautious steps forward

Hopes were raised in 2018 when, in response to high profile press campaigns, the MDRs were amended to acknowledge a new category of cannabis-based products for medicinal use (CBPMs), which can now be prescribed, albeit only in limited circumstances (broadly speaking, where nothing else has worked) by authorised practitioners. Invariably this has been without the benefit of public funding from the National Health Service (NHS), thanks to the sceptical stance of the National Institute for Health and Care Excellence (NICE), citing a paucity of evidence from randomised controlled trials (RCTs).

Guidance from the Financial Conduct Authority (FCA) for cannabis businesses proposing to list on the London Stock Exchange (LSE) has also been broadly positive, suggesting a way forward for overseas businesses that can show (with the help of legal analysis) that their products would be licensable in the UK (comparing our MDRs and HMRs with the equivalents in the other jurisdiction/s).

Where are we now?

In this heavily regulated market, some UK businesses have performed remarkably well:

  • obtaining research and hemp cultivation licences from the Home Office.
  • selling (though not manufacturing or bulk-importing, unless their THC content is literally zero) CBD products (insofar as the FSA still allows it).
  • investing (with appropriate POCA advice and/or DAML consents) in overseas cannabis businesses.
  • (rarely) supplying CBPMs (including a slowly growing set of unlicensed specials) to private-paying patients.
  • (less rarely, but with varying degrees of success) listing on the LSE.

Despite all that, it remains fair to say that the UK’s legal establishment is unhelpful to cannabis businesses, in ways that are easy to identify and would often also be easy to fix. Top of the industry’s wish list would be a bespoke licensing authority in place of the Home Office and the FSA (perhaps within the MHRA), and a percentage THC threshold in the MDRs (to end the reliance on exempted products, which remains a legal grey area). There are also calls for amendments to (and/or more pragmatic guidance on):

  • novel food regulations (in relation to CBD).
  • POCA (specifically its problematic 2006 Order).
  • the restrictions on prescribing CBPMs (allowing more GPs to prescribe them more often and for more conditions).
  • the limits on public funding for CBPMs via the NHS (perhaps by relaxing NICE’s reliance on RCTs).  

Horizon scanning

Few in the UK would predict much more radical change than that, at least in the short term. A general resistance to the very idea of legalisation for recreational purposes lay behind the restrictive nature of the 2018 changes, although London’s mayor is piloting a form of decriminalisation, and the UK’s close neighbours (notably Jersey) are nudging it in a very slightly more liberal direction.

For more ambitious reformists, the longer-term prize is a bespoke regulatory regime for cannabis and CBD products, reflecting their unique nature and potential, and adopting an approach to risks and harms that is firmly science-based. Following this model, the MDRs, the HMRs, and novel food regulations would be jointly served by a regime whose mission would be to enable as well as protect consumers and help to cultivate and develop a legal cannabis industry both domestically and for the ever-growing global market.

The reality

Ultimately, it is the reality of consumer demand in the UK – from the mass market, in the case of CBD products, and from patients suffering from manifold chronic conditions, in the case of CBPMs – who will ultimately drag its legal establishment forward. We have already moved quite decisively away from the idea that cannabis has no medicinal value, and few in the real world would now defend the purist requirement for “absolute zero” THC in CBD products, or the quasi-imperialist approach of POCA to overseas investments, or the idea that RCTs are the only way to prove a product’s health or medical benefits.

Instead, the reality is now that people are interested, both in the medicinal and broader health benefits of cannabis and CBD, and in the commercial aspects of investing in what so many other countries are finding is a very lucrative set of products. With luck, it should not take too much longer for the UK’s laws to catch up with that reality.

John Binns

Partner at BCL Solicitors LLP

John Binns is a specialist in proceeds of crime laws, cannabis regulation, sanctions, and tax investigations. He has extensive experience in financial crime, which also involves bribery and corruption, extradition, Interpol, fraud, market abuse, and the conduct of related civil proceedings. He is a prolific writer and speaker on a variety of topics, including cannabis law in the UK.


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