Marijuana News Today
The marijuana news today represents another victory for pot stocks in the U.S. market as the United States Drug Enforcement Administration (DEA) has reclassified the first cannabis-derived medicine in the U.S. from a Schedule 1 drug to a Schedule 5, significantly reducing the restrictions on these types of medicines and paving the way for a potential reclassification for all cannabis products further down the line. Meanwhile, TLRY stock continues its impressive comeback to close out the week.
“Epidiolex” first made headlines when it received approval for the U.S. market in June by the U.S. Food and Drug Administration (FDA). I discussed back then how this would automatically trigger the DEA to reclassify for cannabis for one simple reason: Schedule 1 drugs are listed as such because they have no medical benefit whatsoever and a high propensity for abuse.
The result is that drugs based on cannabidiol (CBD) are now permitted for use in the U.S. (pending FDA approval on a case-by-case basis) so long as there is only an extremely trace amount of tetrahydrocannabinol (THC), the active ingredient in cannabis that produces the euphoric effects.
Epidiolex, and likely other CBD oil and CBD products with the proper composition, will now be a Schedule 5 controlled substance. This is the lowest classification, defined as having a low potential for abuse and having proven medical effects.
In this case, Epidiolex will be used to treat patients as young as two years old with rare forms of epilepsy.
It is worth noting that this was not a blanket approval of all CBD products. But it is a start. Now, other drugs with similar compositions can petition the FDA for approval and point to Epidiolex as a precedent.
GW Pharmaceuticals PLC (NASDAQ:GWPH) was naturally ecstatic following the news. The stock surged about six percent following the announcement.
“We see our business distinct from Tilray and other companies that are seeking to be active in the broader cannabis space,” GW CEO Justin Gover said in an interview Thursday with CNBC‘s “Power Lunch.” (Source: “DEA reschedules Epidiolex, marijuana-derived drug, paving the way for it to hit the market,” CNBC, September 27, 2018.)
“That’s a different business. It’s not one that we’re involved with, but what I would say is this is yet another validation that if you apply the rigors of science and law to cannabis research, that the regulatory authorities, namely the FDA and DEA, will act and respond to the needs of patients to make these kinds of medications available.”
The company is looking to have the drug land within the next six weeks.
What This Means for Marijuana Stocks
This approval and reclassification of a CBD oil-derived medicine opens the doors for the medical marijuana business in the U.S. to explode.
This is an important first step toward total reclassification of marijuana—something that is inevitable at this point.
The DEA’s prohibition against pot is one of the main obstacles facing marijuana at the federal level. Should the agency move all cannabis products out of Schedule 1, then expect to see a proliferation of pot stocks operating in the medical marijuana space in the U.S.
While we’re not quite there yet, the marijuana news today represents a big first step.
On the pot stock market, Tilray Inc (NASDAQ:TLRY) continues its impressive bounce back after a drudging last week, now up about eight percent in early-morning trading.
Tilray stock continues to behave erratically and will continue to do so for many months, I expect.
The volatility and excitement surrounding TLRY stock will combine to continue pushing the stock to extremes.
I’ve said it before and I will say it again: Tilray stock, as a long-term option, is a high-risk, high-reward play.
The company does still have room to grow, but an investor-wide backlash is not unfathomable.
Such a scenario would see a massive drop in value, much like the 50% wipeout we saw in TLRY stock last week.
But as a short-term, day-to-day play, TLRY stock offers great opportunities to make quick cash, and lots of it, provided your timing is solid.
One stock that has been a little forgotten of late in all the Tilray madness is Canopy Growth Corp (NYSE:CGC).
CGC stock is up about three percent in early-morning trading.
More importantly, shareholders approved the massive $3.8-billion investment made by Constellation Brands, Inc. (NYSE:STZ) in August.
While the deal’s fate was never in doubt, it is an important reminder that CGC stock is still the leader in the industry when it comes to blockbuster deals.
The company also released a statement applauding moves by the Ontario government that we covered in yesterday’s marijuana news.
“The future of the Ontario cannabis market is bright,” said Mark Zekulin, co-CEO and President, Canopy Growth, in a statement. (Source: “Canopy Growth Provides Comments on Ontario Retail, BC Production, First Recreational Shipments,” Cision, September 27, 2018.)
“As a cannabis business with multiple licenses and a variety of diverse subsidiaries, we feel we have a distinct advantage at this stage in the game. The Tweed and Tokyo Smoke retail experiences will offer unique and distinct experiences to appeal to anyone interested in cannabis. And we might even change a few minds.”
GWPH, TLRY, & CGC Stock Performances
GWPH stock (black line), CGC stock (blue line), and TLRY stock (red line) are surging, as seen in the chart below.
Chart courtesy of StockCharts.com
The marijuana news today is resoundingly positive.
Across the industry, we’re seeing strong gains of several points.
Meanwhile, the approval of Epidiolex in the U.S. paves the way for an expanded CBD medicine market in the U.S. on a federal level, an important step toward opening the country up to marijuana more broadly.