Despite the growing popularity of cannabis, there is limited information on what the substance can and cannot do. And with marijuana classified as a Scheme 1 substance in the US, it is almost impossible for researchers to conduct studies on it. In Canada, however, pot is legal for both medical and recreational use. Researchers are hoping that a new study could help address some of the uncertainties surrounding cannabis and its effectiveness in treating various diseases.
There is a lot of anecdotal evidence that cannabis helps various ailments. The Food and Drug Administration (FDA) has even approved a cannabis-based drug GW Pharma (NASDAQ: GWPH): Epidiolex. It is the only FDA-approved drug that is derived from cannabis and it can treat children with two rare forms of seizures – Dravet syndrome and Lennox-Gastaut syndrome. And the FDA recently approved it for a new designation: treatment of seizures due to tuberous sclerosis complex. Cannabis trulieve (OTC: TCNN.F) is another top medical marijuana company and it has benefited from tremendous growth in its home state of Florida. More than 380,000 patients hold marijuana cards there, which is up 28% since the beginning of the year. But despite the demand for medical marijuana, there are still many people who doubt its effectiveness, and that is why more research and studies are needed.
In an effort to achieve real results
The University Health Network (UHN) in Canada is ending a six-month study that aims to put some solid data behind claims that cannabis patients can help. The Medical Cannabis Real-World Evidence Study seeks to enroll at least 2,000 people who are prescribed medical marijuana for certain conditions, including chronic pain, sleep, anxiety, and depression. The study will use a portal run by Canadian pharmacy retailer Shoppers Drug Mart that provides accurate and reliable information about the medical cannabis products it sells, including dried flowers, oils, extracts, edibles, and topical preparations. Patients will select cannabis products from the platform and then report on the effectiveness of the product in treating their symptoms.
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One of the most important aspects of this study is that patients can have confidence in the accuracy of the levels of cannabidiol (CBD) and tetrahydrocannabinol (THC) in each product. By using blockchain and seed-to-sale tracking technology, Shoppers is able to obtain detailed information and chemistry related to a specific product. Knowledge of the specific strain that is in a product and its effects on an individual with a particular disease can help to specifically identify what works and what does not under different circumstances.
However, one of the major limitations of this study is that there is no control group. It also depends on the information that patients report on the effectiveness of a particular product. As a result, the data collected may be very subjective and will not contain the endless data that a scientific study would otherwise provide. In fact, it is more of a database with answers and reviews from patients of various products.
Why the study is important
For medical marijuana companies like GW and Trulieve, positive results from this study, although only anecdotal, may help drive the demand for their products if companies know what types of products are likely to be effective in treating patients with certain conditions. And if the study helps the FDA convince that cannabis may be safer than the agency thinks it is, that would be a big step forward for the cannabis industry.
The FDA, despite allowing Epidiolex for use, still has doubts about CBD, the compound in cannabis that is often associated with its health benefits. It issued a warning in November 2019 stating that there were many concerns about the safety of CBD.
Although there is no control group in this study to measure the safety of cannabis, if the patient’s responses from the study are overwhelmingly positive and they do not report adverse effects of using the products, then at least it can make a case that certain products and strains are safe. The study is unlikely to change the FDA’s thoughts, but it could go a long way in encouraging more patients to try cannabis, especially those who may be on the fence. And that in turn could help marijuana companies like GW and Trulieve grow their sales.
In 2019, GW reported sales of $ 311 million in the first full year that Epidiolex was available, up from just $ 13 million in the previous year. Trulieve’s revenue last year was $ 253 million and grew by 145% despite focusing on just one state.
What does this mean for investors?
The study currently accepts patients and has no set start date. It could be good next year before the study is complete and researchers can analyze and process the findings. It’s something for investors to see as positive results from the study, regardless of whether they hold the opinion of the FDA or health officials.
For now, it is still the status quo for investors of GW and Trulieve. Both pot files perform well and generate strong sales numbers and remain great tubes. Year to date, the shares are both in positive territory and they are better than the Horizons Marijuana Life Sciences ETF (OTC: HMLS.F) by wide margins.
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While certain cannabis companies continue to make progress in their overall addressing market, pot stocks are likely to rise in step with growing sales. And if U.S. federal legalization ever comes, most marijuana files will come up in a hurry.
