For a change of pace, in the marijuana news today we’re looking at the medical marijuana subsector and, more specifically, cannabidiol (CBD) stocks.
A new study found that the extract, combined with chemotherapy, was able to increase the longevity of mice with pancreatic cancer threefold, compared to chemotherapy alone. (Source: “Study: CBD From Marijuana Plus Chemotherapy Tripled Cancer Survival Rates In Mice,” Forbes, July 31, 2018.)
The study, published by the cancer journal Oncogene, goes on to mention the potential for human treatment. While the study obviously needs to be replicated in human trials, the success in treating cancer could lead to a massive uptick in the value of CBD oil stocks.
Cannabidiol is the non-psychoactive compound in marijuana, often making it an easier sell, even in places with stringent anti-pot legislation.
The extract is already approved for use in human trials in the U.K., which could fast-track the drug’s implementation as a cancer treatment. In the U.S., cannabidiol is still considered a Schedule I substance under federal law, which defines it as having no medical uses.
That designation is provably false, and the U.S. Food & Drug Administration (FDA) said as much when it approved the first drug comprised of CBD oil earlier this year.
Aside from potentially treating cancer, cannabidiol is linked to treating ailments such as seizures, strokes, and migraines.
The development of medical CBD oil is important as the marijuana industry matures. For marijuana consumers who live in a place where medical marijuana is the only available legal pot, of course we’re going to see an uptick in people coming to their doctors with “anxiety,” “trouble sleeping,” or various other ailments that would get them a pot prescription.
That has created a little confusion over the market segments, since we get genuinely sick people mixed in with those who just want to get high but buy marijuana under the pretense of a medical need.
Now, however, as recreational marijuana legalization continues to spread, we’re going to see two very distinct segments form. When that happens, the medical marijuana market is going to take on a much different personality than it currently has.
Expect the medical marijuana market to develop more in line with traditional pharma stocks. By which I mean that clinical trials will grow in importance as medical marijuana companies vie to develop breakthrough treatments.
The pharma industry is a very different beast than anything we see in the medical marijuana industry at the moment. But, in the future, I expect the two subsectors to have much more in common.
After all, we’re not talking about just treating glaucoma anymore. Cancer treatment is big business and, if one company can take the lead on it, we could see CBD oil stock values explode.
The cannabidiol industry is set to be very lucrative. According to recent market analysis reported by Forbes, the market is forecast to increase by 700% by 2020. (Source: “Pot Stocks Gearing Up for Strong 2018 as Cannabis CBD Frenzy Intensifies,” Cision, December 12, 2017.)
Another study, by Hemp Business Journal, estimates that the sector will reach $2.1 billion by 2020, which would be an enormous rise from the $202.0 million in 2016.
Marijuana Stock Performances
While the marijuana news today has been kind to CBD oil, it has been equally solid for the overall pot stock market.
The following stock chart shows the recent performances of Canopy Growth Corp (NYSE:CGC) in black, Aphria Inc (OTCMKTS:APHQF, TSE:APH) in blue, and OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI) in red.
Chart courtesy of StockCharts.com
Canopy Growth Stock News
Canopy Growth Corp is again on the uptick, gaining around two percent since last week and achieving slight positives in early-morning trading today.
While two percent isn’t exactly head-spinning, if it means that the end of the marijuana correction is here, then marijuana investors ought to be celebrating.
While there’s no guarantee that CGC stock will continue to gain or that the pullback has withdrawn, the first few days of this week have been promising—with slight gains. Compared to most of July, that’s a welcome change of pace.
Most of the legal marijuana industry appears to be experiencing some degree of this positive upswing, with several stocks also gaining about two percent in value.
CGC stock was, of course, hit hard in July after its surge in mid-June following the announcement of the Canadian legalization date. Still, the company remains one my strongest picks and I believe it will continue to thrive en route to Canada’s legalization—especially when the market correction abates.
Another stock that has experienced a nice two-percent boost from last week is Aphria Inc.
While Aphria stock has not been one of the bright spots in the marijuana industry in 2018, it appears that it’s now falling in line with the gains that we’re seeing across the industry.
Aphria stock has, of course, been battered by the recent correction. And that was after the stock failed to make any sizable recovery this year after falling to near half its value.
Aphria stock has attempted several big moves to help spur growth, including international expansions, but those moves have yet to pay off in the form of stock price gains.
It could be argued that Aphria stock is at a bargain price, but I thought that long ago it would have had a steadier recovery. So now I’m wary about APHQF stock.
It’s worth noting, however, that Aphria stock has performed better than its competitors during the recent pullback, even if it’s still down significantly in 2018.
OrganiGram Stock News
A third stock we’re seeing jump about two percent on the week is OrganiGram Holdings Inc.
OrganiGram stock is at a similar level as Canopy Growth stock and Aphria stock, falling between the two in its performance in July. While CGC stock tumbled by about 15% and APHQF stock by about six percent, OGRMF stock settled in the middle, losing about nine percent.
I like the future of OrganiGram stock because it maintains a strong price-to-earnings (P/E) ratio and has yet to experience a massive price surge, which means one may eventually be in the cards.
The legal marijuana industry is constantly evolving. Investors who are able to keep up with the changes will be rewarded handsomely, and I believe that one such lucrative evolution is taking place in the medical CBD oil market.
If breakthrough treatments start to come from that subsector, there will be a lot of potential for gains.
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