Exclusive: Purity Hemp CEO on the UK’s fast-growing medical cannabis market
After losing his sister to cancer and his best man to an opioid addiction, Canada-born, London-based Michael Walker felt he should explore alternative healthcare options so not to rely on Big Pharma.
The former head of marketing at Heathrow Express left the advertising industry in 2016 to set up his own company, the Purity Wellness Group, which trades as the Purity Hemp Company.
The business utilises cannabinoid components like CBD and is one of first CBD companies to eye a listing on the London Stock Exchange. Walker feels now is the right time as shifting social attitudes are driving changes in market regulation and legislation.
“One of the key things that we tried to recognise was how we educate people, how we educate the medical advisory boards here, how we educate GP’s, the nutritionists and personal trainers. How do we get them to understand that cannabis in this form can be a really positive thing,” Walker told City PM in an exclusive sitdown.
In the beginning, Walker recounted, “we couldn’t really work out why medical research hadn’t taken this up and run with it. Then you get into the background of the sector and the whole industry and see the demonisation of cannabis and the laws that are preventing medical companies and medical researchers from doing such research.”
“Eventually, society is going to want to know that this is available,” he added.
Market regulation
The UK’s Medicine and Healthcare products Regulatory Agency (MHRA) has stipulated that CBD products cannot be marketed as a medicine, but as food supplements instead.
From getting it tested to getting it packaged, Walker said that UK laws have made CBD a tough market to break into due to restrictive regulation.
However, due to the lack of regulation in the emerging market, companies can sell CBD products of low quality which leaves consumers out of pocket.
“Our company was solely based on helping people get the truth, the facts and the information about how it can help us,” Walker explained. “We wanted to be a business that was compliant, that was registered in the UK, that was paying VAT and we wanted to have an import-export license.”
“None of this was available here in the UK. It was just very difficult to find products that were of any quality,” he sighed.
It is one of the main reasons why Walker looked forward to new regulation coming in for novel foods and the changes that are going to be made in the marketplace to protect the consumer.
I am really expecting 30 per cent of the market to completely disappear
“There are so many different ways that companies that are still on the high street are using alcohols, methanol and other chemicals,” he continued. “They absolutely destroy any of the good quality molecules that were left on the hemp and plant seeds, these things are literally destroyed by the extraction process but it’s cheap and its fast.”
“What the consumer doesn’t know is what they’re actually putting into their body. This is where the other fool has been laid, which is a lot of the procurement people have had wool pulled over their eyes. Because again, this is such a new frontier for them, they didn’t know what to ask.”
Shifts in social attitudes towards CBD
The £300m market may still be in its infancy but it is expected to reach a value of around £1b by 2025.
“There’s been a massive increase [in interest]. When we started this journey, there was just over half a million recorded CBD users in the UK in 2019. There’s over 6.5m to 7m users right now,” Walker said.
“Now that the medical attorneys and credible associations like Harvard and Cambridge have done huge data sets, there is an acceptance that there are positive results. So, I think the continuous promotion of positive results coming from people trying the products have opened the market,” he added.
“My belief is that this will be a toothpaste. This will be an aspirin in your cupboard.”
What do these changing attitudes mean for investors?
“They’ve been waiting for this novel food regulation to come through which we’ve got all of our products listed in,” Walker said.
He expects there will be “a tsunami of companies” coming across globally into the UK to see how they can buy their way into the market.
“So ethical brands with a premium product become a very big acquisition for companies that don’t have the experience in growing, cultivating, harvesting or selling. Our position has been phenomenally affected with this.”
Initially welcoming a small team of investors, there is now an influx of hedge funds and investor groups alike scouting out the business, Walker revealed, with offers over the past six months tripling.
“Globally, the acceptance is wide. The changes in the World Health Organization and the decriminalisation of it is widely accepted. Now, it’s up to each country to determine and define the best ways to market,” he noted.
Impact of regulation on such a new market
“This is like prohibition of alcohol coming out of America. There has to be some regulation in there,” said Walker, pointing out that, when Canada legalised cannabis, it was marketed through dispensaries and taxed, and those selling it had to undergo criminal background checks.
“I celebrated when I got a VAT number. I celebrated the fact that I can pay tax because of the fact that we couldn’t get banking or a registration number because we had the word ‘hemp’ in our name,” he said.
“Because ‘hemp’ is cannabis and cannabis and hemp are still in the same classifications as cryptocurrencies, adult entertainment, ammunition and online gambling. That’s where we sit within the high street infrastructure of banking.”
Despite the cloudy reputation, Walker believed that the CBD market is what is needed to drive the UK out of economic downturn.
We have to pay for Brexit somehow and we have to pay for this pandemic somehow.
“I absolutely believe that we will use the opportunities to license and facilitate recreational marijuana and medical marijuana within the next 24 to 36 months,” he explained.
LSE listing
Walker is convinced that “what we’re seeing right now is just the start. [The UK has] got the second company in cannabis listed in the stock exchange. We’re seeing huge amounts of money pile into the UK and so I think, yes, it’s definitely within our strategic plan but we’ve got to make sure the laws stay.”
“This is the David and Goliath story. This is the big pharmaceuticals who have done everything that they can to prevent the banking institutions from helping businesses like ours. We could go to the bank and get a small-time loan or a bounce bank loan but we’re in a sector that doesn’t allow.”
Future of the market
“My biggest concern moving forward, and one of the things that I’ve been able to help with as I’ve just been appointed a trustee of the Mental Health Associates, is the biggest sleeping killer we have with this pandemic,” Walker sighed.
“The impact of the pandemic on wellness and mental health has just been huge. People have been going and purchasing products online that’s cheap, not getting the results but they’re hoping and literally waiting for that package to come and it’s not delivering it for them, and that’s really sad,” he said.
Walker’s hope for the company and the market is that it can help with the mental health crisis that is looming as a result of the pandemic, provided the market is regulated to ensure products are of good enough quality to be effective to consumers who want it.