The complexities and risks of operating in the UK CBD market

Insights / / London

The UK's legislation and regulatory framework regarding the licensing of controlled drugs and the sale of CBD products is complex and often misunderstood. 

In 2018, the UK Government legalised the prescription of cannabis-based products for medicinal use, known as CBPMs. The UK legislation restricts the decision to prescribe CBPM to doctors on the General Medical Council's Specialist Register.

The medicinal cannabis industry is growing, both worldwide and in the UK, alongside a parallel industry in cannabidiol (CBD) ‘wellness’ products. CBD can be found in a wide range of products, available in stores and online, and is lauded for its health and therapeutic benefits. Consumers have an increasing appetite to be part of the wellness market which has seen a significant demand for CBD products.

In 2021, the CBD industry was estimated to have generated £690 million in sales, and it is expected to be worth almost £1 billion by 2025. The UK sector is already the world's second largest CBD market, behind the United States.

However, there are legal complexities in how certain products are regarded in the UK and the sale of products which, whilst legal overseas, would be unlawful if sold in the UK.

Under the Misuse of Drugs Act 1971, cannabis is a controlled drug of class B. Only certain parts of the cannabis plant, once separated from the rest of the plant, are not considered to be cannabis and a controlled drug.

CBD businesses selling 'hemp flower' or 'CBD flower' find they can be subject to a Police investigation, accused of cannabis supply and importation. 

We recently acted for the director of a CBD company, accused of supplying cannabis from CBD shops operated by the business as well as importing large quantities of cannabis from abroad for onwards sale to the public.

At trial of the supply offence where Josh Normanton, Counsel, 5 Paper Buildings was instructed, we successfully argued that the director could rely on the knowledge defence under s.28 of the Misuse of Drugs Act 1971, that he had no knowledge, belief or suspicion, or reason to suspect that the substance in his possession was a controlled drug. Having been acquitted of the supply offence, the prosecution then decided not to seek a trial on the importation offence and offered no evidence. The director was therefore acquitted on all counts. 

The legal and regulatory landscape in relation to cannabis and CBD products is complex and in a state of flux.

At Ince, our London-based regulatory and corporate lawyers and consultants can advise on a wide range of matters including investigations by Trading Standards and the Police, product compliance, corporate M&A for cannabis businesses, Proceeds of Crime Act ( POCA) compliance for investing into the sector and capital markets advice and representation. For more information and advice, please get in touch.

Colette Kelly

Colette Kelly Partner, Criminal and Regulatory Solicitor