Cannabis is illegal at the federal level. The Obama administration assured cannabis industries in states that had legalized medical and recreational marijuana they would not be subject to federal prosecution. However, Attorney General Jeff Sessions rescinded those memos on January 4, 2018.
Is this a reason to sell, or is it a buying opportunity? Todd Harrison, Founding Partner and Chief Investment Officer at CB1 Capital Management, recently went on Bloomberg News to discuss this. He outlined how cannabis stocks will bounce back by disrupting healthcare.
Cannabis and Healthcare Benefits
For the last 70 years, no one could test cannabis to determine potentially positive results. However, thanks to changing public attitudes and state laws, the healthcare profile of cannabis is starting to grow.
Courses in cannabis were offered for the first time as a curriculum at Oxford as well as in a few colleges in the United States. Here are some resulting discoveries about cannabis and healthcare:
95% of cannabinoids are non-psychoactive.
Almost all cannabinoids have therapeutic benefits.
Cannabis could prevent the decaying brain activity in Alzheimer’s and dementia patients.
High doses of cannabinoids like CBD and THC could help treat cancerous tumors.
Marijuana treatments have been shown to reduce epileptic seizures in children by 40 to 50%.
As Harrison stated in his interview, “this is about getting well.”
There are currently more than 80 clinical or pre-clinical trials underway testing the cannabis plant in relation to healthcare. The results from the studies are showing that targeting the right receptors with the right cannabinoids can save lives and ease suffering.
Harrison quoted a study that predicted cannabis would take $5 billion away from big pharma as soon as it becomes legal. This is what he means when he claims cannabis could disrupt the healthcare industry.
Healthcare Cannabis as the Investment of the Decade
The drug lobby been against medical marijuana since the beginning, but that’s starting to change.
Harrison pointed out that Constellation Brands, an American winery company, bought stock in Canopy Growth Corporation, a Canadian medical marijuana company in 2017. They faced no backlash from the Department of Justice.
GW Pharmaceuticals is one of CBI Capital management’s holdings. Its stock rose by 30% over the last three months. Other organizations that invest in cannabis and healthcare include:
The Scotts Miracle-Gro Company
Corbus Pharmaceuticals Holdings, Inc.
INSYS Therapeutics, Inc.
Aggressive market adaption has provided global medical marijuana opportunities. Israel is leading the way with over 50 years of scientific research. Canada and Australia are currently in a fight for “global domination of the medicinal cannabis market.”
Knowing this, it’s not surprising that Harrison labeled healthcare cannabis the investment of the decade.
Cannabis Margination From Dispensaries to Prescription
Harrison’s company is predicting that over the next ten years, marijuana will migrate from dispensaries to prescription medication covered by health insurance.
“The U.S. has to get on board, and we think that the only way they can do that is through the FDA,” Harrison said. “That’s their only claim to the money. Follow the money.”
The price tag Harrison’s placing on this potential investment opportunity is $300 billion. His future market projections include:
Cannabis cultivation will fade.
We’ll start to see output in biopharmaceuticals, cosmetics and industrial hemp and farming.
GW Pharmaceuticals is expected to publish research showing the merit of cannabis treatment this summer. If that happens, then, by law, the FDA is required to reclassify cannabis. Harrison thinks this could happen as early as the end of 2018.
Jeff Sessions Aided the Cannabis Industry
“The states are not giving this money back,” Harrison said in response to Sessions’ roll back on Obama memos. Harrison is referring to the following:
Tax revenues generated by medical and recreational marijuana reached $745 million in 2017.
New Frontier Data predict that revenue will increase to $2.3 billion in 2020.
Medical marijuana could potentially save taxpayers $220 million in Medicare if it was legalized across the United States.
Harrison also discussed how the public and political response to Sessions’ ruling ultimately helped the cannabis industry. This includes:
Both Republicans and Democrats were against Sessions’ decision.
S. attorneys in legalized cannabis states said they will only prosecute pot distributors if they are involved with gangs or violence.
According to response surveys, 63% of the public believes the federal government should legalize cannabis.
94% of the country supports medical marijuana.
During the Bloomberg interview, Harrison emphasized how politicians seeking re-election hesitate to go against public opinion.
“The only thing politicians like more than money is getting re-elected,” Harrison claimed.
When over 90% of voters see cannabis as a healthcare benefit, the story changes. It stops being about “getting high” and starts to become about weed’s medical usefulness.
Embracing Marijuana’s New Story
Harrison and his company believe cannabis is a disruptive healthcare story. He expects to see a value-led market for the cannabis healthcare sector.
According to Harrison, medical marijuana is a “frontier science.” Following that science, he believes, will lead to a series of medical breakthroughs.