The impact of cannabis legalisation on the startup ecosystem
Globally, entrepreneurs consider the UK among the top startup environments to make their mark as a company. Here, startups thrive regardless of their industries, but some more than others.
The implications of this existing advantage in the potential success of the cannabis industry are an important question on everyone’s mind.
The UK continues to face internal struggles with its cannabis laws. Medical cannabis became legal in 2018. However, recreational cannabis is strictly forbidden as a Class B Drug. There appear to be no signs of change in the coming years.
However, many citizens believe change is inevitable. So, it’s a great idea to start analysing the possibilities of the industry and what it means for startups.
A look into the UK’s startup ecosystem
The UK has a strong reputation for giving startups the ground to flourish. Among European countries, it’s said to rank number 2, which is a testament to its potential regardless of economic hurdles in the region.
Plus, this is one economy where industries overlap their innovations, which helps quicken their progression. There’s a reason why the UK got ahead of its competition and was able to defend its position.
The total number of startups in the country is more than 4 million, and it sees a consistent gradual increase each year. Most startups face issues within the first few years, and some face closure. However, the circumstances are still able to produce stable, thriving companies.
Although UK startups have always been able to increase their revenues, the number of small firms did drop 6.6% between 2020 and 2021. Opening a new niche, such as legal cannabis, could give new and existing startups a new angle to play from.
What can cannabis legalisation do for the UK?
There is no doubt that the UK may benefit from a cannabis boom, like other countries that have legalised cannabis around the globe. Although public opinion seems to favour legal cannabis, medical and recreational, the government’s ruling remains the main hurdle.
Many upcoming politicians have promised change but failed to provide it. This issue has become frustrating for entrepreneurs envisioning a thriving cannabis industry in the kingdom.
The biggest potential to see cannabis bring in cash is currently through the country’s medical cannabis program. Its poor regulation and planning reflect the wasted potential experts can see.
Although a limited number of patients may use medical marijuana (due to strict eligibility requirements), there’s still a significant portion of the money that can be generated.
Currently, all medical marijuana distributed to patients is imported. That takes away opportunity from local businesses and shows the UK’s dependence on external producers. Until September 2022, the UK had already brought in 23,890 kilograms of cannabis, which was triple the amount from 2022.
The medical cannabis market already stands at £143 million, which will inevitably increase as the number of eligible patients increases (currently around 30,000 rises).
The decision to legalise cannabis is predicted to bring £2.5 billion into the UK’s economy, and startups and small businesses will play a big role in the process.
How will it affect UK startups?
The potential to bring in hundreds of millions of pounds per annum through taxes, cannabis insurance, sales, and tourism will only increase as the years pass and will be the catalyst that attracts new startups from around the globe.
However, this isn’t possible without the help of the government. Small businesses such as cultivators, manufacturers, dispensaries, etc., all require a supportive framework to run their operations.
Plus, taxation, banking, and other financial activities remain a challenge for many cannabis powerhouses, such as the US. With the current economic frustrations, the UK isn’t immune to such hiccups. A faulty structure for smooth cash flow within the cannabis industry will deter potential startups.
The fact of the matter is that there’s no guarantee of success unless consumers can access the products and services cannabis startups can provide.
Currently, existing medical marijuana businesses in the UK are one of the biggest exporters in the world. But they’re out of reach for UK residents.
Unfortunately, these mandatory doctor visits, strict requirements, and high charges encourage patients to turn to the black market. Under-the-table businesses are selling and earning more than many legal ones due to increased demands from ordinary users.
By legalising cannabis and setting up a stable industry, the UK can benefit from a bustling market that’s grown with the help of its startups.
The UK boasts great potential for future cannabis-oriented startups. Its existing business trends and the influx of guaranteed cash from cannabis-related activities are an ideal match. It would be wise for the government to use this opportunity to lift its struggling economy.