By: Avi Lekowsky | Business  | 

Medical Marijuana: The Business Behind The Leaf

The times are definitely changing.

Once tabooed in society, marijuana is starting to lose its stigma as a “stoner” drug and gain a reputation both as a recreational tool safer than alcohol and as a legitimate medical instrument.

The first important thing to note is the difference between regular marijuana and medical marijuana. While regular marijuana is primarily used for recreational purposes, medical marijuana can be used to help treat and soothe conditions such as glaucoma, seizures, anxiety and general pain. Even the FDA acknowledges that medical marijuana can be used to treat conditions like seizures and chemotherapy-induced nausea. Today, while regular marijuana is still banned in most states, you can purchase medical marijuana in some form in all the states but three: Nebraska, South Dakota and Idaho.

Medical marijuana is an extremely fast-growing and expanding market. The passing of a new law or the opening of a dispensary invariably makes news. According to Grand View Research, the global legal marijuana market in 2016 reached 9.3 billion USD, 80.3 percent of that representing the medical variety. This is expected to grow exponentially in the coming years as the few remaining states and countries around the world begin to legalize it.

Stocks are also promising large profits for the marijuana industry. According to the Motley Fool, this past year has been a major transitional time for these stocks. In their early stages, marijuana companies could only offer promises of potential stock returns, but today there’s much hard evidence of strong returns.

Some stocks, however, have been falling due to the high costs associated with expansional resources, brand building and investments in infrastructure for international sales. However, a falling stock doesn’t necessarily mean that the industry itself is failing. Take Innovative Industrial Properties, for example. Their business revolves around buying medical cannabis development sites and then leasing them back to operators. They also marginally increase rent every year and charge a 1.5 percent management fee. They now own ten properties, up from five in the last fiscal year. Their stock has increased over 100 percent in value, launching at the end of 2016 at 18.19 and increasing to 50.74 in the beginning of Dec. 2018.

Charlotte’s Web Holdings is a more traditional medical marijuana stock. They produce a wide range of cannabidiol-based products (products without the psychoactive effects of marijuana) and sell them in over 3,000 locations in the United States. Although they only started trading publicly three months ago, they have delivered solid profit gains during this time. Upon the close of last quarter, they reported $17.7 million in sales, while in the last fiscal year they only generated $11.3 million. If a medical marijuana company stays on their toes and keeps acting in creative ways, they can secure a solid stream of revenue for years to come.

Lastly, medical marijuana dispensaries have been opening around the country to service the growing trend of assisting patients with various ailments. Today, there are thousands open around the country, with many plans to install even more. One of them, MedPharm Iowa, opened a new location right outside of Des Moines, Iowa on Dec. 1. Through an interview with the Des Moines Register, Lucas Nelson, general manager of the operation, stated: “The reaction we’ve gotten from the community about the opening has been amazing.” He also said “customers were ‘elated’ that they could finally get their hands on the product and even suggested this could help aid the opioid crisis through alternative uses of pain management.”

Many people today are affected or know someone who is affected by ailments that can be helped with medical marijuana. This helps inspire other locations to pop up and help people out. If the trend continues, medical marijuana dispensaries will grow in places wherever it becomes legalized, which helps grow small businesses — and, in turn, stocks.

Medical marijuana is no longer an unmentionable topic in society, and is now considered a legitimate way to help people with illnesses and disabilities. Many people report being able to lead a healthier, happier and more fulfilling life. Through new scientific discoveries and the creation of a large number of dispensaries, this industry is poised to grow, expand and ultimately improve the world.