Why Medical Marijuana May Be the Best Way to Play the U.S. Cannabis Market

Medical Marijuana May Be Best Way to Play U.S. Cannabis Market
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U.S. Medical Marijuana Markelarger pot t Gains Steam

Investors are very focused on the recreational marijuana market (as they should be). That is where the real money will be made for years to come when the global market becomes fully accessible.

But the push for U.S. marijuana legalization will come in incremental steps, not giant leaps forward. And that’s why it’s important to turn our attention to the U.S. medical marijuana market.

Across the country, states are pushing through marijuana legalization that more and more includes recreational pot. Despite its growing popularity however, these states are the outliers; the norm is still very much for states to pass medical marijuana laws first.

And that makes sense as far as strategy goes. While many polls have shown that over half of Americans support recreational marijuana legalization, an overwhelming number of citizens support medical marijuana legalization.

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In fact, there already exists a form of legal medical pot: “Epidiolex.” The drug, developed by GW Pharmaceuticals PLC (NASDAQ:GWPH), was approved by the Food and Drug Administration (FDA) last year, and it has forced a bit of an upheaval in how the federal government deals with marijuana.

You see, marijuana remains a Schedule I drug according to the Drug Enforcement Administration (DEA). Schedule I means that the drug has no medicinal value. Epidiolex, by virtue of it existing, proves that marijuana does not belong on that list.

The caveat is that Epidiolex is primarily a cannabidiol (CBD) derivative, so only CBD was reclassified while marijuana is still considered a Schedule I drug.

But Epidiolex paved the way for other medicines to potentially push the issue when it comes to drug policy in the United States.

So, if we were to see a marijuana-derived medicine receive approval from the FDA, we could also see a huge rift develop between law and practice, forcing the issue.

That is to say, while marijuana legalization may come all at once in the U.S., it could also be segmented, with medical pot leading the way. Were this to happen, you could expect to see major marijuana companies enter the market via medicinal marijuana.

And the momentum behind the political push for legalized medical marijuana is growing.

Two House representatives recently penned a letter celebrating the potential of medical marijuana and pushing for reform. (Source: “If marijuana remains a Schedule I substance, we can never do the research everyone knows we need,” NBC News, April 29, 2019.)

That essay once again shows the rising tide of marijuana reformers in politics, with medical marijuana likely being the easiest front on which to score a victory.

In that case, medical marijuana stocks are likely to see a huge resurgence, while other larger pot companies will certainly find a way to exploit this opening.

Analyst Take

While federal U.S. marijuana legalization is closer to becoming reality than it has ever been, the fact of the matter is that there are still real forces of opposition.

Medical marijuana legalization is therefore the best chance at seeing legal pot in America in the near future, and pot stocks will likely bloom as a result.