City fund managers have displayed a healthy appetite for dope, by stampeding for shares in Britain's only legal cannabis company, GW Pharmaceuticals.
The Salisbury company, which is developing a cannabis-based treatment for multiple sclerosis, announced yesterday that its flotation has been over-subscribed by more than six times. Demand has been so strong that GW has made extra shares available, increasing the proceeds of the placing from £16m to £25m.
Chairman Geoffrey Guy, whose stake will be worth more than £40m, said: "This is at the top end of our best expectations."
GW grows 15 tonnes of cannabis a year, on a secret plantation in southern England. Its annual harvest could attract a street value of £65m, although not all of GW's cannabis is suitable for producing a "high" among users.
The business, which is backed by the former GEC chairman Lord Weinstock, has attracted a valuation of £175m. It is carrying out clinical trials for a multiple sclerosis treatment, and has earlier-stage cannabis products for cancer and rheumatoid arthritis.
The government has pledged to permit the use of cannabis-based pharmaceuticals, as long as they are approved by the medicines control agency.
Analysts believe the market could be enormous. Julie Simmonds, an analyst at Beeson Gregory, said: "We can assume that it probably works."
Proceeds from the flotation will fund larger scale plantations, clinical trials and expansion into Europe and North America.