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Pardon the pun, but the marijuana industry is growing like a weed.
Heading into Election Day, half of the country had already approved medical cannabis, and another four states (along with Washington, D.C.) had approved the sale of recreational pot. After Election Day, four more states had gained recreational approval (California, Nevada, Maine, and Massachusetts), while residents in Florida, North Dakota, and Arkansas approved their respective medical cannabis initiatives/amendments. According to New Frontier Data, in partnership with ArcView Group, the legal weed industry could be worth $21 billion by 2020, up from an estimated $7.9 billion in 2016.
We only need to look at rapidly changing opinions on marijuana to understand why we're witnessing a "green revolution." National pollster Gallup, which has measured public opinion on pot from time to time over nearly five decades, found in its 2016 survey that 60% of respondents want to see it legalized nationally, an all-time high. It's also more than double the 25% approval rating cannabis received just two decades ago.
Even the pot industry has its shortcomings
But marijuana's expansion hasn't been without its fair share of speed bumps.
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In August, the U.S. Drug Enforcement Agency denied two petitions that would have possibly rescheduled cannabis. The DEA cited a lack of understanding of the safety of the drug, minimal understanding of its chemical makeup, and a lack of clinical evidence of its medical benefits, as reasons why it was choosing to leave its scheduling unchanged. Keeping pot as a schedule 1 substance means it remains federally illegal and is not recognized as having medical benefits.
This DEA decision also perpetuated two substantial disadvantages for the industry, including an inability for marijuana-based companies to take normal business deductions on their taxes and a difficulty in securing basic banking services ranging from checking accounts to lines of credit. Both factors work to slow the pot industry's expansion efforts.
Last week, in the wake of election euphoria, the marijuana industry hit yet another speed bump.
This study could leave marijuana users "heartbroken"
At the annual scientific conference of the American Heart Association, researchers from St. Luke's University Hospital Network released their findings from a large, backward-looking clinical study. Needless to say, the findings may be a bit "heartbreaking" for regular marijuana users.
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Lead investigator Dr. Amitoj Singh and his team attempted to connect the dots to see whether there was a link between marijuana use and stress cardiomyopathy. Stress cardiomyopathy is a sudden weakening of the heart muscle that can affect its ability to pump blood throughout the body. As the name implies, it's often brought about from emotional or physical stress, and in rarer cases can lead to more serious effects, such as cardiac arrest.
Using National Inpatient Sample data between 2003 and 2011, researchers analyzed patient admissions and outcomes with stress cardiomyopathy, paying close attention to those cases where the patient was an identified marijuana user. In all, 33,343 patients were examined, 210 of which were noted marijuana users.
What the researchers found were two very distinct groups. On one hand, the non-users with stress cardiomyopathy tended to be older women who had a host of cardiovascular risk factors to begin with, such as diabetes, hypertension, and hyperthyroidism. However, the marijuana users were typically young males with far fewer cardiovascular risk factors. The researchers noted that the marijuana users were three times as likely (2.4% vs. 0.8%) to go into cardiac arrest than the patients who didn't use marijuana, and they were four times more likely (2.4% vs. 0.6%) to require an implanted defibrillator to detect and correct an abnormal heart rhythm compared to non-users.
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With this initial data, researchers were able to dig a bit deeper and exclude all of the known causes of stress cardiomyopathy to establish that marijuana itself could be the cause. Their findings showed that weed led to an almost two times-greater likelihood of stress cardiomyopathy.
At the same time, Singh and his team also note that some of the marijuana users smoked tobacco and other illicit substances, too, so pointing the blame solely at marijuana may be premature. According to Singh, "This is a retrospective study, so we cannot determine causation. Further research is needed to evaluate this study, especially considering the current increase of recreational marijuana in our country."
A fitting reminder of the challenges that lie ahead
Even though the researchers at St. Luke's University Hospital Network were crystal clear that more analysis needs to be conducted, this study, like the many before it, stands as a glaring reason why Congress and the DEA aren't likely to legalize medical cannabis anytime soon.
One of the more interesting Catch-22s of pot is that lawmakers on Capitol Hill want to see more all-encompassing clinical data that lays out the benefit and risk profile of the drug. Yet the restrictive nature of weed's scheduling makes it very difficult for universities and researchers to get their hands on the drug to conduct tests. Further, even if tests are conducted, they're not likely to be accepted as valid by the Food and Drug Administration (FDA). This one-door-leads-to-another approach could slow down medical marijuana's progress at the federal level for years to come.
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Even if medical cannabis is rescheduled, it isn't necessarily a reason to jump for joy. Rescheduling marijuana could mean putting the drug under the strict regulation of the FDA. The FDA has the power to control marketing and packaging, and would almost assuredly oversee the growing and processing of medical cannabis -- and most importantly, it could require that strictly controlled and costly clinical trials be run to confirm the purported medical benefits of pot. Small businesses would probably struggle to survive in such a high cost regulatory environment.
Thus while it may be encouraging to see America "go green," it's important that as investors we embrace a longer view. Namely, that the marijuana industry still has plenty of hurdles to overcome before it's a long-term, viable, and investable business model.
