Cannaray range September 2022 small

Source: Cannaray

Cannaray is planning to list its consumer CBD brands on the London Stock Exchange through a reverse takeover of Cellular Goods.

The prospective buyer has signed a letter of intent for a £18.6m deal that will fulfil its ambition to take its Cannaray CBD and Love CBD brands public, after years of mooting an IPO.

“The intended listing on the LSE of our CBD business is very positive news for our shareholders, as we seek to focus on the major growth opportunities within the European cannabis market,” said Andrew Garden, who has been appointed Cannaray chairman as part of the deal.

The company had declared its intention to target an IPO worth more than £100m in February 2020, having raised £7.8m in growth capital the year before. Its latest funding round in April 2022 raised £10m.

For Cellular Goods the deal follows a tricky experience with CBD, the company having had to withdraw its ingestible range in April after it failed to comply with the FSA’s novel food regime for the category.

Since then the company has focused on its CBD cosmetics range, which is not subject to the FSA novel food regime.

Cellular Goods non-executive chairman Darcy Taylor said: “The enlarged company will benefit from a significant increase in group revenues, market presence, combined portfolio strength of complementary product lines addressing premium and mass consumer segments, and economies of scale in marketing, logistics and production.

“The transaction represents a significant opportunity for industry consolidation and enhanced long-term growth potential supported by complementary business fundamentals.”

While the deal is a significant move for Cannaray’s CBD businesses, the company has declared its intention to focus on medicinal cannabis, both in the UK and Germany.

“With the German government having announced steps to legalise adult-use cannabis in the near term, we are also well poised to galvanise our capital and human resources to be at the forefront of this multibillion euro market as it emerges,” Garden said.

In connection with the deal, Cannaray founder Clive Sharpe will step down as the company’s chairman, but will retain a significant shareholding. Anna Chokina has likewise resigned as Cellular Goods CEO with immediate effect.