When Bank of America Merrill Lynch released the first ever report done by a major financial institution on the prospects of the marijuana industry last December 2015, it served as a milestone for the burgeoning industry seeking for mainstream recognition and financial support. But the report also made it clear that cannabis still has a long way to go before it resembles any normal American industry.
The report, titled “Medical Cannabis has high POTential: A joint biotech and tools Primer,” focuses on the medicinal marijuana industry and its untapped possibilities of treating a wide variety of diseases like type II diabetes, schizophrenia, and even cancer. Pharmaceutical companies are working on marijuana drugs despite the rigorous approval process of the FDA.
“The good news out of all this is it just opens (Wall Street’s) eyes to an investment scene that they may not even appreciate yet,” said Alan Brochstein, a financial analyst and owner of businesses 420 Investor and New Cannabis Ventures. The report suggested that the industry could reach a value of $35 million by 2020.
Leading Market Players
Among the few cannabis companies trading in various indices, the most conventional would have to be GW Pharmaceuticals, a United Kingdom-based company traded on the Nasdaq. Its flagship cannabis drug is Sativex, which treats multiple sclerosis and has been approved in more than 20 countries all over the world including Germany, Spain, and the UK. It is also developing Epidiolex, a cannabis drug that would treat severe childhood seizure disorders.
GW currently trades at about $70, and Brochstein estimates that within a year, the stock could go as high as $180 or as low as $25.
Another mainstream company that appears at cannabis industry conventions is Waters Corporation, a Massachusetts-based company that makes scientific equipment for cannabis testing. Bank of America’s report on this sector is bullish.
While many private companies are eager for investments, institutional money has been scarce. One option for potential cannabis investors is to invest in cannabis companies being traded in the volatile over-the-counter market. But since this is lightly regulated, the potential to encounter a scam is high.
In general though, the report is optimistic regarding the future of the marijuana industry. But it might take a long time before the market fully matures.
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