Investing in the Cannabis Industry 2017

Investing in the Cannabis Industry 2017

Marijuana stock investing in 2016 has seen a meteoric rise.

Investing in cannabis is making some major money with one especially impressive company posting gains of well over 2,000%.  This despite how fraught with risk this industry is. Since marijuana is still classified as a Schedule I substance with “no currently accepted medical use and a high potential for abuse,” according to the federal government, there are still some hurdles to overcome.
The National Commission on Marijuana and Drug Abuse issued a series of reports concluding that marijuana was “less a serious threat to public health than a sensitive social issue and recommended changes to federal law that would permit citizens to possess a small amount of it at a time, while still maintaining that the drug should not be legalized.” Yet investing remains risky because the people in power refuse to be moved to action.

Is $50 billion motivation enough?

Investing 101Ackrell Capital projects that the cannabinoid-based pharmaceutical market could clear $50 billion annually. Investors took special not of the prediction due to the explosive growth the industry has seen so far. They make sure to include plenty of caveats in their report that basically boil down to legalization=money.
AbbVie (ABBV) is ahead of the game in medicinal marijuana field because its drug (Marinol) is already been approved by the Food and Drug Administration and in the market. Marinol is mainly used to relieve nausea and vomiting for chemotherapy patients. It has also been prescribed for AIDS patients to help stimulate appetite.
If you want to talk about AbbVie, let me just say that it has had 44 years of consecutive dividend increases. Over the past three years alone, the dividend has grown by 12.5%. the 4.13% dividend yield is considered attractive for income investors.
Just because they were first to the market doesn’t make them invincible though. Company revenues, gross profit and net income have been stagnant during the last four quarters. If Marinol can raise profits, AbbVie and others like it could be treated as an income play rather than a growth stocks for 2017.

There are currently 28 states willing to sell.

Support for use of medical marijuana is rapidly expanding along with investing opportunities. After the November U.S. elections, 28 states plus the District of Columbia now have legalized use of medical marijuana. A handful of states have also chosen to allow recreational use.
Legalization should diminish some of the institutional barriers for companies investing in the marijuana industry. Although we can see how slow the movement is by looking at recent court decisions about drug testing. The advancement of legalization on a state level presents a special opportunity for investors but at great risk.
Weed’s mis-classification as a schedule-I compound creates restrictions for patients in non-weed-friendly states. Not to mention how much of a damper it puts on investors’ plans. The chief regulator of Wall Street (Financial Industry Regulatory Authority or FINRA) blocked a S-1 filing from weed companies attempting to go public and trade stock. The ban will remain in place until the drug is re-scheduled.

There are only 3 approved options on the market.

While opportunities exist, current realities paint a stark picture. The U.S. Food and Drug Administration has approved a whopping total of three cannabinoid drugs. It took seemingly forever for another cannabinoid to join Marinol and Cesamet in the medicine cabinet.
In July of 2016, the FDA gave the go ahead for Insys Therapeutics’ (NASDAQ:INSY) Syndros to join the party. Like Marinol, the active ingredient of Syndros is the synthetic cannabinoid dronabinol. And don’t think that only drug companies are trying to get in on the action.
Investors sent shares of Scotts Miracle-Gro Co. up 48 percent last year when they saw the lawn-care company as a relatively safe way to capitalize on the cannabis trend. It sells fertilizers, lighting and other supplies for hydroponics that are used by most indoor cultivators.

One person can tip the scales.

A very important fact for investors considering investing in marijuana to remember is who the next attorney general is. And the person who got the nomination to fill that role was Alabama Republican Sen. Jeff Sessions. A man who is an adamant opponent of legalized marijuana.
In a Senate hearing last April, Sessions cited a 20% increase in the traffic deaths in some states where marijuana has been legalized to show the drug is a problem. His continued vigorous attempts to demonize cannabis users signals major disappointment for those hoping for banking reform.
Marijuana companies have continued to struggle with limited access to basic banking services since most banks fear federal prosecution for dealing with pot businesses. Being forced to operate on a cash-only basis is a security concern and an expansion inhibitor for any business. With Sessions taking the helm, there is little hope for meaningful pressure to improve access to banking services. Additionally, marijuana businesses must pay tax on their gross profits instead of net profits. This is because they’re disallowed normal corporate income tax deductions.

How should you approach the industry?

Investing in cannabis weed
It has been said that getting rich during a gold rush is to easiest when you sell shovels. With that in mind, the best figure for investors trying to turn a profit from the “marijuana rush” are the companies that have zero marijuana-related products. The smartest play might be in companies that have the potential to benefit by serving people and companies that do sell cannabis.
But before you invest in any company, get as much information about that company as you possibly can. Find out if they are a legitimate company with a good management team. Look into who’s running the company and at the company’s finances. Don’t be afraid to go over the balance sheet, the cash flow, the income statement, and the shareholder’s equity.
Look at all of the info you can before making a decision. Call the nearby Chambers of Commerce, find out if they know the people or company. Don’t forget to look at the other officers and management to make sure the engine is firing on all cylinders if you catch my drift. Do all the research you can but don’t forget to talk to your financial advisor as well before pulling the trigger.
The early bird doesn’t always get the worm.

Companies are making serious efforts to develop effective medicines using on cannabis. These companies deserve all due diligence before investing in any of them. Understand that investing in potential is risky and any of the drugs discussed in this article could fail or disappoint. Some medicinal marijuana stocks will undoubtedly succeed in 2017, so research and be vigilant when navigating this exploding industry. But don’t forget all the good that cannabis can do.
Cannabinoids have been found to have potential in treating over 40 medical issues including cancer, chronic pain, epilepsy, and glaucoma. Companies developing marijuana-related compounds rarely focus on cannabis alone. Be aware that some “mainstream” stocks may actually profit from loosened restrictions on marijuana even if they don’t grow or sell it themselves. Thanks for reading.
 
 

cann history

A History of Medical Cannabis Part 2: Modern Cannabis

In Part 1 we talked about ancient cannabis and how it has been used throughout the ages.

Today we are going to talk about modern cannabis and how it moved from prominence as a medicine to a recreational drug. Yet medical cannabis is not relegated to the ancient past. Modern medicine uses the term marijuana instead of the ancient name: cannabis but it means the same thing.
The original name can be traced back to the Greek physician Pedanius Dioscorides. He was a roman army doctor from around 40-90AD who traveled widely on campaigns throughout the Roman empire. He wrote the medical text that virtually all others were based on for over a thousand years and had a special entry for both male and female cannabis plants. It wasn’t until the 1930’s when the plant became known a marijuana in an effort to re-brand it. But I’m getting ahead of myself.

By 1621, medical marijuana had made its way into the English Mental Health Book.

Cannabis was entered into one of the most popular medicinal textbooks from the era to treat depression. Because of the work of an Irish doctor working for a shipping company during the colonization of the new world, medical cannabis moved to the Americas.
Cannabis treatments were a staple of a professional doctors curriculum up through the industrial revolution.  Before Alaska and Hawaii were states, America had laws on the books that supported medical marijuana in all 48 states. Cannabis was not seen as a recreational drug, it was medicine with little risk of side effects.

But in 1936 all that changed.

Pressure was being placed on the U.S. by the international community to sign the International Treaty on Controlled Substances. While not directly listing cannabis as a controlled substance, the treaty forced all countries that signed to adopt similar drug policies. Propagandists later used the treaty to get cannabis banned across the developed world.
A very popular anti-marijuana campaign burned through the nation. Funded by the government and directed by the talented propagandist Larry Anslinger, “Reefer Madness” was a sensational tale about marijuana. It featured the plant ruining people’s lives through sex, insanity, and horrific acts of violence. Although Reefer Madness was a work of pure fiction,  it was accepted by a whole generation as fact with the tenacity of religious convictions. The influential power of the Reefer Madness propaganda laid the groundwork for Larry Anslinger to get cannabis banned.
Larry Anslinger was a potent propagandist that was able to convince the developed world to outright ban cannabis use, cultivation and distribution. He used a mixed media of propaganda to accomplish this. Anslinger was a master of using media and used the newspapers, radio and television to spread a web of half-truths and outright lies.
After spreading a racially motivated panic with the Reefer Madness propaganda, Anslinger convince the U.S. to pass the Marijuana Tax Act of 1937. Anslinger provided his political masters a new way to target their political opponents voting base. The politically motivated police force acted quickly on the new laws to target the poor.

The Marijuana Tax Stamp Act brought America Modern Cannabis.

On the day the Marijuana Tax Stamp Act was enacted (Oct. 2, 1937) the FBI and Denver Colorado police raided the Lexington Hotel. They arrested a man named Samuel R. Caldwell for selling modern cannabis. He was a 58 year-old unemployed laborer. Three days later, on Oct. 5, 1937 Caldwell became the first person convicted under U.S. federal law of distributing cannabis.
In 1942, cannabis was removed from the U.S. Pharmacopeia. When that happened, cannabis lost the last vestiges of medical legitimacy. Because of the International Treaty on Controlled Substances, most of the other countries in the developed world were forced to enact similar rules.

Over the next decades, criminalization of cannabis continued.

As more and more regulations were heaped on medical practitioners, they became unable to prescribe cannabis. Legal penalties increased massively with the Boggs Act of 1951. It established minimum prison sentences for simple possession of cannabis. Thanks in great part to Anslinger’s work, cannabis was classified as a schedule 1 controlled substance in 1970.
Schedule 1 substances are substances no medical benefit and high risk of abuse. The controlled Substances Act of 1970 Classified Marijuana as a having “No Accepted Medical Use”. After the passing of the Substances Act, medical practitioners were barred from prescribing modern cannabis for any medication, effectively removing the oldest known medicine from a whole generation of healers across the globe.
In 1971, the Shafer Commission was created by the U.S. president to determine the merit of criminalizing cannabis. The Shafer Commission was bi-partisan and overseen by congress. President Nixon himself ordered it to determine “if the personal use of marijuana should be criminalized.” The commission came back with an answer and Nixon ignored it because he didn’t like that they believed there was no reason to scale up action against users.
In 1971 president Nixon chose to aggressively pursue action against cannabis consumers by declaring the War on Drugs. Motivated by personal prejudice political corruption, he saw marijuana as a way to get at his political opponents. He even admitted at the time that his reasons for attacking cannabis users and increasing penalties was motivated by personal directives.

Nixon acknowledged his action was not based on empirical evidence.

He increased criminalization despite the commission he put together telling him officially and unequivocally that cannabis use should not be criminalized. Over the next two years, the Nixon built a force specifically designed to scale up violence against modern cannabis users.
The Department of Drug Enforcement (DEA) was established in 1973 by merging the Bureau of Narcotics and Dangerous Drugs (BNND) and the Office of Drug Abuse Law Enforcement (ODALE) into a single agency. It comes as no surprise that the DEA continues to aggressively pursue cannabis consumers, producers and distributors to this day. They use every tool at their disposal regardless of legality or constitutionality to continue the criminalization of marijuana.
Things continued to go downhill for cannabis in the coming years. It wasn’t until 1976 that Robert Randall (who was afflicted by glaucoma) used the Common Law Doctrine of Necessity (US v. Randall) to defend himself against criminal charges of marijuana cultivation. In 1976, federal Judge James Washington made waves with his ruling. Judge Washington ruled that Randall’s use of modern cannabis constituted a ‘medical necessity’ and the case was thrown out.
Modern cannabis 2

The next milestone for modern cannabis crusaders came in the winter of 1991.

Modern cannabis took a step forward with the passing of medical marijuana reform in California. The first medical marijuana initiative was called Proposition P and was in San Francisco. It passed with an overwhelming 79% of the vote in November of 1991.
Proposition P called on the State of California and the California Medical Association to restore hemp medical to the list of available medicines in California, and to stop penalizing physicians for prescribing hemp for medical purposes. It only effected San Francisco but the cogs of bureaucracy had been activated. It would take another 5 years for legislation to go statewide.
Voters in California passed the first statewide medical marijuana initiative on November 5, 1996. Known as Proposition 215, it permitted patients and their primary caregivers to possess and cultivate marijuana for the treatment of AIDS, cancer, muscle spasms, migraines, and several other disorders. It also protected doctors from state sponsored punishment if they recommended marijuana to their patients.

The wheels of bureaucracy turn slowly.

In September of 1998, the House of Representatives debated a resolution called H.J.Res. 117. They passed H.J.Res 117 at the same time Oregon, Washington and Alaska provided their medical marijuana programs. In H.J.Res. 117, Congress declared support for the existing federal drug approval process.
They decide not to reschedule marijuana despite the overwhelming evidence coming forth that it should be decriminalized. While cannabis is classified as having no medical benefit, the United States Department of Health and Human Services) currently holds a patent on medical cannabis.
Patent No. 6630507 covers the use of cannabinoids for treating a wide range of diseases and was submitted to the patent office in 1999. The Department of Health and Human Services was awarded the patent in 2003. Yet the Department of Health is not the only regulatory agency that has chosen to abandon science, compassion and reason.
Modern Cannabis

In 2002, the FDA decided how to use modern cannabis in a study.

They decided that shipping 300 pre-rolled joints to patients in metal canisters was the best way to judge modern cannabis. The material was frequently two or more years old upon receipt by patients and a close inspection of the contents of NIDA-supplied cannabis cigarettes revealed them to be a crude mixture of leaf with abundant stem and seeds.
The study concluded that “cannabis smoking, even of a crude, low-grade product, provides effective symptomatic relief of pain, muscle spasms, and intraocular pressure elevations…” and that “clinical cannabis patients are able to reduce or eliminate other prescription medicines and their accompanying side effects.” The FDA report was ignored by those in power and cannabis remained a schedule 1 controlled substance despite the undeniable evidence.
The DEA has still not reclassified cannabis. It remains a holistic herb used throughout time as a medicine that current U.S. legislators are violently opposed to. While international progress has been made with the UK rescheduling cannabis to Class B and the Netherlands also making great strides in medicinal research, the U.S. still struggles to come into the light. Use of scientific reasoning is about to get even harder for the U.S. government as President Trump decides who will take the reigns of power. Yet his choice of Jim O’Neill to head the FDA (who openly supports cannabis legalization) gives modern cannabis hope for the future. Only time will tell. Thanks for reading.
Featured image: shutterstock