Nov 11, 2014
The Motley Fool - The results of the midterm elections were mixed for supporters of marijuana legalization, though mostly positive.
Hopes were high that the states of Oregon and Alaska, as well as Washington, D.C
., would legalize marijuana for recreational adult use. In all three instances this happened. Floridians, however, weren't as pleased. In Florida marijuana was on the ballot for use in medical situations, but since it would have required a change of the state's constitution it needed a 60% "yes" vote to pass. Ultimately only 58% of residents voted in favor of the amendment, meaning medical marijuana won't become legal in Florida anytime soon. Florida was vying to become the 24th state to approve medical marijuana.
Medical marijuana gets a mixed bag
Making matters even tougher to judge is the fact that the strength of marijuana strains
has been changing over the years. Better understanding of the growing process has resulted in considerably more potent strains, which as you might imagine can heighten the benefit or risk profile for the above age groups.
How medical marijuana companies could benefit
The initial implication from this mixed study is that an older generation of Americans might see significant benefits from medical marijuana use -- which is perfect for cannabinoid-based drug developers, since they're focused on a generally older patient audience anyways.
As psychologist Dr. Max Wachtel has noted, marijuana can help patients reduce stress levels and can improve sleep. Of course, it's only fair to also point out that Wachtel, who is a local correspondent in Denver, also believes that marijuana has dangerous properties, which we'll get to in a moment.
The two specific names that come to mind here that may benefit are GW Pharmaceuticals (NASDAQ: GWPH ) and Insys Therapeutics (NASDAQ: INSY ) .
Insys is developing dronabinol, a synthetic THC-based drug designed to treat chemotherapy-induced nausea and vomiting. Insys' drug is currently under review by the Food and Drug Administration and could represent a substantial leap over existing therapies considering its fast-acting formulation and varying dose options.
GW Pharmaceuticals has an even more extensive pipeline, with a little more than half a dozen label indications currently being researched, ranging from cancer pain to type 2 diabetes. This is all possible because of the five dozen cannabinoids that GW Pharmaceuticals has discovered since its inception, which it plans to use to effect positive biologic change in patients.
If older adults are seeing benefits from marijuana usage it could mean one more step to getting these cannabinoid drugs to market, and may even encourage physicians to prescribe them to patients (as long as they're approved by the FDA).
But there's a downside
Yet, the report also suggests that there is a sizable potential for paranoia and psychosis associated with marijuana use. Dr. Wachtel notes that marijuana has the potential to adversely impact decision-making and memory over the long term in kids because their brains are still developing.
We need more data
Ultimately, as we've discussed recently, we need more data on marijuana since the majority of studies on the drug have had little to do with its medical benefit profile. With too many unknowns still on the table it's hard to put too much faith in its ongoing expansion in the medical field, especially with studies on marijuana still largely mixed.
For investors, it means investing in the marijuana space will continue to come with above-average risk and most likely a lot of volatility. In other words, it could be the perfect reason to keep your nose clean of these stocks until the data swings conclusively one way or the other.
Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor’s portfolio. To see our free report on these stocks, just click here