Still On the Fence About Investing in Cannabis? Check Out This Marijuana Stocks Company

There is no doubt that the legal cannabis industry is blooming before our eyes – helped along by California’s legalization of recreational weed in January. Sales in the U.S. are projected to grow 45% this year alone, according to the “Marijuana Business Factbook 2017.”

U.S. marijuana sales are projected to reach $17 billion by 2021, a quadrupling of sales from 2016, driving marijuana stocks valuations off the charts.

A progressive shift in public views of marijuana has only helped sales growth as well. In fact, four different polls of Americans’ opinions about marijuana legalization has reflected the growing rift between Congress and the preference of the American people. Each survey attracted the greatest number of respondents in favor of legalization of marijuana to date in the United States.

If you’re thinking of investing in marijuana stocks, note the findings of the following national surveys over the past year:

CBS News poll in April 2017 regarding marijuana: 

“Marijuana should be…”

• Legal: 61%
• Not legal: 33%

Quinnipiac University poll in August 2017: 

“Do you think that the use of marijuana should be made legal in the United States, or not?”

• Yes: 61%
• No: 33%

Gallup poll in October 2017:

“Do you think the use of marijuana should be made legal, or not?”

• Legal: 64%
• Illegal: 34%

Pew Research Center poll in January 2018:

“Do you think the use of marijuana should be made legal, or not?”

• Legal: 61%
• Illegal: 37%

Marijuana stocks investors are likewise aware that legalization in the U.S. is fraught with barriers; among the largest, marijuana’s longstanding federal classification as a Schedule I substance.

A Schedule I substances is wholly illegal, like heroin and cocaine.

Even with the majority of American adults in favor of rescheduling marijuana, the chances of this happening with a Republican majority in Congress are slim to none. The GOP has long taken a firm stance of opposition to marijuana, though now roughly half of Republicans are in favor of legalization.

Add to this barrier the current administration’s recent digging in of its heels to the idea of relaxing any regulations of marijuana, noted in Attorney General Jeff Sessions’ public statements and actions; an exorbitant tax rate for cannabis companies; and virtually no access to financial institutions for cannabis companies, then the challenges become more entrenched. Even changing the schedule of marijuana to a Schedule II substance – with recognized medical benefits, as well as recognized potential for abuse – would invite a new set of complications. Under this rescheduling, the marijuana stocks industry would be wholly subject to the FDA’s strict oversight – including marketing, packaging, growth and distribution.

Where is the silver lining for marijuana stocks in the U.S? 

It’s possible that a middleman exists to appeal to cannabis enthusiasts and opponents alike, potentially shaping U.S. marijuana policy in the years ahead. This middleman company comes in the form of a cannabinoid-based drug developer: GW Pharmaceuticals (NASDAQ:GWPH). 

As is often the case, one finds good news and bad news about the trajectory of GW Pharmaceuticals and its clinical trials.

Last week, a press release from the company announced preliminary, phase 2a results of their clinical study of GWP42006, leading with these disheartening words: “Study did not meet its primary endpoint.” The endpoint of GWP42006, a compound using cannabidivarin (CBVD) as its primary molecule, was to treat focal seizures. The study’s perplexing results indicated that GWP42006 did indeed reduce seizures, but, with roughly the same success as the placebo.

On the investment end of things, GW’s marijuana related stocks fell 5% after the press release and the company’s market cap shrunk by $200 million.

The biotech company laid out what is becoming a larger problem for biopharmaceutical companies industrywide, stating “the extent of this placebo response is substantially greater than that seen in published studies of other treatments in similar patient populations.” Figuring out the reasons behind this trend is easier said than done, but that doesn’t mean GW is giving up on GWP42006. The company continues to explore possible uses for the cannabinoid compound, branching out to autism spectrum disorders and further uses in the treatment of epilepsy.

The company’s main attraction is not GWP42006, but, rather, a cannabidiol (CBD) drug known as Epidiolex, which is where marijuana stocks investors ought to place their focus.

Epidiolex is pending FDA approval to be used in the treatment of childhood epileptic disorders, Dravet Syndrome and Lennox-Gastaut Syndrome (LGS), a decision that should take place by June 27. Prior to this date, Epidiolex will be subject to review by an FDA advisory committee who will then recommend or advise against the drug’s approval – input which the FDA may or may not follow.

The best case scenario, were Epidiolex to receive approval, would allow GW to launch the drug after its rescheduling by the DEA – taking no more than 90 days – putting the drug on the market in September.

If Epidiolex makes it to the market, it will likely be a big launch. A review of all new drugs anticipating a 2018 launch, led by EvaluatePharma, ranked Epidiolex as 10th on the list for projected 2022 sales. The market research firm projected these sales to be near $1 billion for Epidiolex.

Marijuana stocks investors will want to note, as opposed to GWP42006, Epidiolex did meet its primary endpoint, achieving statistical significance in its reduction of seizure frequency from baseline.

In patients with Dravet Syndrome, seizure frequency tripled in reduction from baseline in comparison to the placebo: 39% vs 13%.

Epidiolex faces the possibility of being the first medicine on the market to treat these two rare epileptic conditions. The ramifications of this could translate to more than 500 million annual sales for GW Pharmaceuticals which can only improve the situation for marijuana stocks. The potential uses for Epidiolex do not end with Dravet Syndrome and LGS, but, may extend to treatment of tuberous sclerosis and infantile spasms.

On a national level, and with FDA approval, this medicine would prove that medical benefits can be found in cannabinoids – a win for marijuana stock investors and a big step forward for the MMJ industry in the U.S.

(For more on the marijuana stocks in the U.S., read California is Changing the Game for Marijuana Stocks)