COPENHAGEN (Reuters) - Danish cannabis firm StenoCare STENO.TE sparked a stock market stampede on Friday as investors rushed to buy into its shares on their debut, driven by enthusiasm for the therapeutic benefits of its products.
StenoCare’s stock nearly quadrupled in price to hit a high of 33.50 Danish crowns in early trade, valuing the company at more than 200 million crowns ($30 million). They had been priced at 8.80 crowns in their initial public offering.
Interest from investors in the stock had been overwhelming, Chief Executive Thomas Skovlund Schnegelsberg said. “From our communication with investors, we get a sense that many might have followed their heart rather than their wallet.”
Scientists say evidence is growing that cannabis can ease epilepsy and other conditions such as chronic pain and multiple sclerosis, prompting renewed interest in a substance best known for its psychoactive properties.
The European market for medicinal cannabis, forecast to grow from around 100 million euros ($114 million) this year to at least 450 million in 2022, is benefiting from looser legislation in countries like Germany, Britain, Italy and Denmark.
For now, recreational use of the substance, which has prompted interest from companies such as Coca-Cola (KO.N) and Molson Coors (TAP.N) for cannabis-infused drinks in North America, remain prohibited in most of Europe.
Denmark legalized the medicinal use of cannabis from Jan. 1 and is also one of the few European nations to legalize local production. Recreational use is still prohibited even though Copenhagen’s Christiania district is famous for cannabis-selling booths which are rarely targeted by the authorities.
Anita Ambjorn, 75, a pensioner who suffers from a muscle disease and has been using cannabis oil drops since March this year, attempted to buy shares in the IPO.
“I have never invested in the stock market before, but I was willing to support this case with a small saving of 5,000 crowns. Unfortunately I didn’t manage to get any shares this time around,” Ambjorn said by phone.
Ambjorn had just returned home from the pharmacy, where she spent 2,700 crowns to buy enough cannabis oil drops to last her a month and a half. The prescription cost her an additional 1,000 crowns.
“The price is horrendously high,” Ambjorn said. “But it’s worth it. I used to stuff myself with morphine, but this has given me a new and better life.”
StenoCare, which currently imports cannabis from Canada’s CannTrust, plans to use money raised in the IPO to launch its own production. “Our ambition is to have our own products on the shelves next year, but the exact timing depends on approval from the Danish Medicines Agency,” said Schnegelsberg.
Cannabis is also attracting the interest of consumer product companies after Canada last week became only the second country in the world after Uruguay to fully legalize cannabis. Canada’s move has helped boost shares in North American cannabis stocks like Tilray Inc (TLRY.O) and Cronos Group (CRON.O).
“That this is an explosive market has been proven in North America. But UK and European investors haven’t really had a chance to participate,” said Geremy Thomas, chief executive of London-based medicinal cannabis investment vehicle Sativa Investments.
Sativa hopes to become the first in Britain to legally grow and sell cannabis after last week presenting a plan to build a production facility.
“My hope is that as more companies begin producing and selling cannabis oil, the cheaper it will become to the benefit for people like me who are chronically ill,” said pensioner Ambjorn.
($1 = 6.5702 Danish crowns)
($1 = 0.8804 euros)
Reporting by Jacob Gronholt-Pedersen; Editing by Robin Pomeroy and David Holmes