uploads///Patients at Quarter End

Why the Medical Marijuana Industry Is Growing

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Jan. 22 2018, Updated 7:37 a.m. ET

Serving the end user

Every industry exists to provide a service or utility to an end user. For example, the restaurant industry (XLB) exists to serve customers who prefer to eat out, while a less intuitive industry such as fiber optics exists to enable the transmission of Internet, telephone, and television signals so the end customer can browse, call, or watch television at home. For something like cryptocurrencies, the legitimacy to the end user is still at a very nascent stage. The use of marijuana falls broadly into two categories: medical and recreational.

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Medical marijuana

Using marijuana for medicinal purposes is the strongest case for its utility to an end user. This legitimacy is further strengthened with the legal status afforded to medical marijuana in Canada, Germany, Italy, Greece, and the Netherlands. In the United States, medical marijuana is currently legal in 29 states.

Big pharma companies such as AbbVie (ABBV) sell the FDA (U.S. Food and Drug Administration) Marinol, generically named dronabinol. Dronabinol is a synthetic formulation that contains a constituent similar to the marijuana plant. Dronabinol is used to treat nausea and vomiting in cancer patients following chemotherapy treatment and to stimulate appetite in HIV/AIDS patients. A smaller company, Insys Therapeutics (INSY), also launched its version of dronabinol under the name Syndros. Corbus Pharmaceuticals (CRBP) is also developing a drug called Resunab.

Legitimate medical marijuana

While the above US companies (XLB) develop marijuana-based drugs from synthetic formulations, in Canada, companies have developed actual marijuana-based drugs. Companies such as Scotts Miracle-Gro (SMG) provide products in the cultivation stage.

The above chart shows the growth in the number of patients on medical marijuana for Canopy Growth (WEED.TO).

Next in this series, we’ll discuss recreational marijuana.

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