30 August 2016
What”s Smoking In The Legal Pot?
(RTTNews.com) – Investing in marijuana stocks is at a nascent stage, as traders dread to take the plunge, given the risks involved in terms of limited visibility into many of the companies. However, with more and more states legalizing or considering legalizing marijuana for recreational purpose and about half of the 50 states already legalizing marijuana for medical use, one cannot turn a blind eye towards the prospects. More states are planning to take the marijuana legalization directly to voters through ballots, given the pressure mounted by citizen initiatives.
The legal marijuana market in the United States is estimated to grow to $7.1 billion in 2016, which represents 26% growth over 2015, according to a report by New Frontier and ArcView Market Research.
Most Marijuana stocks trade over-the-counter or OTC. Given that stocks listed on the OTC do not need to adhere to strict listing standards unlike securities listed on the NASDAQ or other major United States exchanges, investment in these OTC-listed companies is a risky proposition. Only a handful of Marijuana stocks are listed on the NASDAQ, limiting the options before an investor who is looking to ride the wave without wanting to take big risks.
– Due Diligence of business – Scrutinize hyped claims/false or exaggerated press releases – Track record of promoters and proportion of their holdings – Look out for the presence of institutional investors – Any past SEC trading suspensions
Marijuana has a very old history, dating back around 12,000 years. This herb is known by various names like Cannabis, Pot, Weed, Grass, 420, Dope, Herb, Shunk and Ashes, to name a few. Native to central and southern Asia, marijuana is widely used for recreation, and is often linked to risk of addiction when used over a long period of time. However, there are also supporters of the herb who claim that marijuana has medical benefits.
The use of marijuana in medical settings has been a source of much debate. The primary ingredient in marijuana is THC, or tetrahydrocannabinol, a psychoactive compound that induces the ‘high’ and hallucinogenic effect in the user. One other compound worthy of mention in marijuana is Cannabidiol, or CBD. But unlike THC, CBD does not cause a high.
Both THC and CBD are said to have potential medical benefits like pain relief, easing of PTSD-related symptoms, reduce nausea, stimulate appetite and calm asthma attacks to name a few. Over the last few decades, there has been a growing interest in medical marijuana.
The FDA has approved three Cannabis-based drugs. Two drugs – AbbVie’s Marinol and Insys Therapeutics’ Syndros – contain a synthetic version of a substance that is present in the marijuana plant, while one other drug Valeant Pharmaceuticals’ Cesamet contains a synthetic substance that acts similarly to compounds from marijuana but is not present in marijuana.
Marinol is approved to treat nausea and vomiting associated with cancer chemotherapy and to treat appetite loss associated with weight loss in people with AIDS; Cesamet is approved for the treatment of nausea and vomiting in patients undergoing cancer treatment, and Syndros is approved for AIDS-related anorexia, and nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional antiemetic treatments.
In Canada, under the new Access to Cannabis for Medical Purposes Regulations, implemented by Health Canada as recently as last week, “Canadians who need access to cannabis for medical purposes are allowed to produce a limited amount of cannabis for their own medical purposes, or designate someone to produce it for them”.
Now let’s take a look at some of the medical marijuana companies, whose shares trade on the NASDAQ.