Maltese cross… the bridge to the first legalisation of recreational use of cannabis in the EU
6th January 2022 |
At last, cannabis really has been legalised for recreational use in the European Union (EU) for the first time.
The country that has crossed the metaphorical bridge to this decision is not Germany – and that is despite the new coalition government there talking in November about making the move.
In fact, the first country in the EU where you can legally grow, possess and smoke cannabis is… Malta!
On 14 December 2021, the Maltese parliament passed the key legislation.
The new law allows possession of up to seven grams of the drug for those aged 18 and above. It also permits people to grow up to four cannabis plants at home.
While this is one small step in a tiny country whose population is fewer in number than that of Leeds, it could well represent a huge leap forward for the cannabinoid (CBD) market.
CBD products contain small traces of tetrahydrocannabinol (THC) – the psychoactive compound found in the cannabis sativa plant.
The ability of CBD to alleviate physical and mental ailments such as back pain and anxiety has helped tackle stereotypes regarding the efficacy of cannabis-laced products.
It has led to cannabis being legalised for medicinal purposes in around 50 countries with as many as 50 countries including Australia, Greece and Italy currently allowing such use of cannabis.
And now, within the EU, the government of Malta has gone one better and is legalising cannabis for recreational use.
We believe the European CBD market will be a huge beneficiary from this – for two reasons.
First, it will help remove any lingering uncertainty and common misconceptions about CBD products.
In addition, we think it could be the start of a proverbial domino effect, in which other EU countries take a more positive, proactive approach towards cannabis products.
Who knows? It could even push the UK closer to cannabis legalisation.
This appears now be to a possibility, following the news that London mayor Sadiq Khan will not seek prosecution of Londoners aged between 18 and 24 who possess small amounts of cannabis. It’s not full-blown legalisation as such, but it is very applicable to our view that medicinal and recreational cannabis use will soon be prevalent across Europe and the UK.
The Frontier Tech Investor stock that is already in Malta…
What’s also exciting is that our Frontier Tech Investor holding, Kanabo Group (LSE: KNB), is already doing things in Malta.
You may recall that Kanabo announced the proposed acquisition of Materia, a European-focused medicinal cannabis and CBD company, back in July 2021.
According to Kanabo, the acquisition procedure is moving into its final phases, with the majority of due diligence work having been completed.
On 16 December 2021, Materia’s wholly owned subsidiary, Materia Malta, announced it has commenced sales of its “Carbasi Verde” medicinal cannabis product, which has a THC content of 21.7%. It is available at pharmacies across Malta, and is distributed to Germany and the UK.
This is crucial, because if the acquisition completes, which is looking ever more likely, Kanabo will seize control of Materia’s EU GMP-certified manufacturing facility.
This will offer Kanabo a near perfect strategic position, allowing it to capture a significant chunk of the European CBD market that would’ve otherwise been unattainable.
From here, it could potentially establish itself as a European CBD powerhouse: that is an opportunity which reinforces our positive long-term outlook towards the company.
We reiterate that we see this stock as a BUY. You can find the original recommendation here.
Buy list update
Ilika (LSE: IKA)
Ilika is a producer of solid-state battery technology. It has two battery specifications in its range: the Stereax battery, optimised for the Internet of Things (IoT) and medical care; and the Goliath battery, designed for the electric vehicle (EV) market.
The company is still in the pre-commercialisation stage, but it is quickly advancing towards actual production.
On 7 December 2021, the company announced the opening of its Stereax battery manufacturing facility in Hampshire, UK.
Up to this point, Stereax was only capable of manufacturing its Stereax batteries in low volumes, having to make do with pre-pilot lines at leasing facilities.
But now, the opening of its new facility will allow it to manufacture its Stereax batteries (specifically the M300 micro battery model) at scale, enabling commercialisation in 2Q22.
The opening of this new facility is a step in the right direction for Ilika, providing it with a clear path to commercialisation and potential business growth.
Ilika is also in the process of expanding output of its Goliath battery range at the UK Battery Industrialisation Centre (UKBIC), increasing capacity from 1kWh per week to 10kWh per week.
And let’s not forget the part Ilika could play in driving a more sustainable automotive industry. In the aftermath of the COP26 climate summit talks, Ilika’s clean battery technology may emerge as a viable option for governments and industries seeking to adhere to strict emissions regulations.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good: this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
HANetf ETC Group Digital Assets and Blockchain Equity UCITS ETF (LSE: KOIP) – the KOIP exchange-traded fund (ETF) is an investment fund which tracks the Solactive ETC Group Digital Assets and Blockchain Index, comprised of 30 blockchain-centric stocks. It even includes crypto exchange giant Coinbase (NASDAQ: COIN). The fund is a convenient route into the crypto market that gives exposure to crypto assets that would otherwise be difficult to access. The fund is ever changing, but it includes numerous companies that are pure plays on the growth of the crypto world. You can find the original recommendation here.
EQTEC (LSE: EQT) – EQTEC is a unique, green energy company that it setting the standard for sustainable energy production. Its innovative gasification technology can convert up to 50 feedstocks into sustainable energy sources. It plays a pivotal role in reducing methane emissions from rotting waste at landfill sites. This matters because methane can be up to 86 times more potent than carbon dioxide at trapping heat in the atmosphere. As a result, we believe that the company has a key role to play in helping policymakers achieve stringent emissions targets in the face of COP26. You can find the original recommendation here.
Mirriad Advertising (LSE: MIRI) – Mirriad Advertising is changing the advertising game. This company has come up with a unique solution that inserts advertising into content after the content has been produced. It boosts opportunities for product placement in films and TV series, which Mirriad Advertising monetises by taking a cut of advertising campaigns. The company is expanding into the massive US advertising market. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
