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London's first cannabis IPO sees shares double on debut

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Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
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A marijuana plant is seen at Tikkun Olam medical cannabis farm, near the northern Israeli city of Safed, Israel. Photo: Dan Balilty/AP
A marijuana plant is seen at Tikkun Olam medical cannabis farm, near the northern Israeli city of Safed, Israel. Photo: Dan Balilty/AP

The first cannabis business to IPO on the London Stock Exchange has seen its shares double on debut, underlining the appetite among UK investors to gain exposure to the fast-growing sector.

Shares in Kanabo (KNB.L) hit just over 20p shortly after the open on Tuesday, as the stock officially began trading in London. The stock was still up 60% after around 20 minutes of trade, changing hands at 16.30p.

Kanabo makes vaporised marijuana pods and inhalers for medicinal use. The Israeli company also makes CBD products for the "wellness" market.

Kanabo is the first cannabis company to hold an initial public offering on the London Stock Exchange after the UK's financial watchdog last year cleared the way for legal weed businesses to join the market. However, Kanabo is the second cannabis stock to be traded in London, after Australia's MGC Pharmaceuticals dual listed its shares on the market last week.

READ MORE: London could be centre of Europe's cannabis economy, says vape CEO

"We are proud and happy to be listed on London Stock Exchange," chief executive Avihu Tamir said in a statement.

"We share the enthusiasm shown by the investment community in the UK for this important day. The reaction we have seen since we published our prospectus two weeks ago has been overwhelming."

Kanabo's raised £6m ($8.3m) in the IPO but the fundraising was 300% oversubscribed due to strong demand among investors, Tamir told Yahoo Finance UK in a recent interview.

Kanabo's shares surged on debut. Photo: Yahoo Finance UK
Kanabo's shares surged on debut. Photo: Yahoo Finance UK

Cannabis has become one of the hottest investment markets in the world after weed was legalised for recreational use in parts of North America. This trend, combined with growing mainstream acceptance of medical marijuana, has led to a rush to buy pot stocks in the US.

"With the support of the FCA and London Stock Exchange, the medical cannabis industry is set to take off in the UK and in Europe, similar to what's happened in North America in recent times," Tamir said in a statement. "This is just the beginning."

Globally, the legal cannabis market is estimated to be worth $17.5bn but forecast to grow to $65bn by 2027.

WATCH: Reddit traders target cannabis stocks