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A demonstrator smokes marijuana during the 'Cultivate Your Rights' march demanding its legalisation, in Santiago, Chile. Photo: ernetti/AFP via Getty Images
A demonstrator smokes marijuana during the ‘Cultivate Your Rights’ march demanding its legalisation, in Santiago, Chile. Photo: ernetti/AFP via Getty Images

British investors hoping to get in on the boom in legal weed in places like Colorado and Canada will have to wait a while longer before buying exposure in their home market.

The UK’s Financial Conduct Authority (FCA) on Friday said companies making any money from recreational cannabis use can’t list in London.

While cannabis has been legalised for recreational use in may places around the world, it remains illegal in the UK. The FCA said anyone investing in a company linked to recreational cannabis would be violating British laws related to the proceeds of crime. As a result, listings on the London Stock Exchange are off the table.

The FCA said it issued the guidance after “queries from cannabis-related companies interested in listing in the UK.”

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The recent decriminalisation of cannabis in parts of the world created a mini-investment boom in 2018, with the first dedicated ETF tracking the sector surging almost 75% that year. Pot stocks plummeted last year and have continued to struggle in 2020 but the sector is still seen as a promising growth market over the longer term.

While UK investors can’t get a slice of the recreational weed market through any London listings, they can buy exposure to the medical marijuana market. Medical marijuana was legalised in the UK in 2018 and the FCA said UK-based medical cannabis companies can list in London.

However, overseas medical marijuana companies need a closer look.

“We can’t assume a person who has been licensed in an overseas country would receive a licence here in the UK as licensing regimes differ globally,” the FCA said.

The regulator said it would have to review overseas companies looking to list in the UK on a case-by-case basis to make sure they don’t break proceeds of crime laws.

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