Following last November's election, 28 states have legalized medical marijuana, and according to Gallup, Americans' attitude toward medical marijuana use has never been better. As a result, the use of medical marijuana is soaring. Tapping into that growth could be a big opportunity for drugmakers GW Pharmaceuticals (NASDAQ:GWPH) and Insys Therapeutics (NASDAQ:INSY), two publicly traded companies with marijuana drugs close to commercialization. Is one of these stocks a better buy than the other?

Marijuana falling out of a  prescription bottle onto a pile of money.

IMAGE SOURCE: GETTY IMAGES.

Proving marijauna's use as medicine

While it's easy to find personal stories of marijuana's medical benefits, it's harder to find evidence of medical marijuana's benefit in large, scientifically controlled studies.

As a result, medical marijuana's use has been hamstrung by doctors relying on the Food and Drug Administration to make sure medicines are safe and effective.

Overcoming doctors' scientific objections to marijuana as medicine requires carefully controlled trials. Fortunately, GW Pharmaceuticals and Insys Therapeutics are conducting those studies to prove that marijuana-based drugs can be a better option.

Recent big wins

Until last year, it's been a mixed bag for these companies in terms of trial results. For instance, GW Pharmaceuticals proved to EU regulators that its THC-based drug, Sativex, can help muscle spasticity in multiple sclerosis patients. However, a massive trial evaluating Sativex in cancer pain failed to outperform placebo in 2015.

However, 2016 was a banner year for marijuana drugmakers. GW Pharmaceuticals delivered news that validates medical marijuana in epilepsy, and Insys Therapeutics won FDA approval for a new formulation of a THC drug used to treat chemotherapy-induced nausea and vomiting.

In three separate trials, GW Pharmaceuticals' CBD-based drug, Epidiolex, reduced monthly seizures by around 40% in patients with rare forms of childhood epilepsy. That's important news to thousands of patients whose disease is currently poorly controlled by existing antiepileptic therapies.

Meanwhile, Insys Therapeutics got a green light from the FDA for Syndros, a reformulation of marinol, a decades-old nausea, vomiting, and appetite-boosting drug. Thanks to better bioavailability and improved dosing flexibility, Syndros could improve the quality of life for many cancer and HIV patients.

Sizing up these marijuana markets

The commercial launch of both of these drugs could result in hundreds of millions of dollars in sales annually for these companies.

GW Pharmaceuticals' estimates that there are 470,000 children with epilepsy in the United States, and that more than one-third of them have their disease inadequately controlled by existing medication.

Initially, Epidiolex will be filed for approval for use in patients with Dravet syndrome and Lennox-Gastaut syndrome, two rare and hard-to-treat forms of epilepsy. The Dravet and LGS patient population are admittedly small. However, studies are underway in additional indications that could significantly expand Epidiolex's addressable market. Since antiepileptic medications can cost thousands of dollars per year and there may be more than 150,000 cases of childhood epilepsy that aren't being controlled by drugs on the market today, Epidiolex's commercial opportunity is big.

Insys Therapeutics' Syndros could also fetch sales that reach into the nine figures annually. According to management, applying brand pricing to the existing market for generic marinol makes the marinol market worth an estimated $525 million. Because the marinol market is growing 5% per year, Insys Therapeutics thinks Syndros could eventually deliver peak annual sales of $200 million.

Which marijuana stock is a better buy?

Investing in GW Pharmaceuticals and Insys Therapeutics comes with risk.

Epidiolex has put up solid results in studies, but there's no guarantee that the FDA will approve it or that the DEA will give it favorable scheduling. Furthermore, doctors could still be slow to embrace Epidiolex if it doesn't win approval. 

Insys Therapeutics' Syndros won FDA approval last year, but the Drug Enforcement Administration has yet to schedule it, and until it does, the company can't begin to market it. Once it does become available, there's no guarantee that Insys Therapeutics' marketing team will be able to convince doctors who have decades of experience using marinol to switch to it. Also, Insys Therapeutics is mired in controversy stemming from investigations into the illegal marketing of its opioid painkiller, Subsys, whose sales have been declining sharply as doctors rein in use amid growing concerns of opioid abuse, and it's unclear when this matter may get resolved or when Subsys sales will find their floor.

Overall, both companies have solid balance sheets, but given that GW Pharmaceuticals has more cash on its books, its business isn't being distracted by investigations, and it's a pure play on medical marijuana, it could prove to be the better buy.

Marijuana stocks have been hotter than a firecracker lit at both ends. Are they the right investment for you?

Todd Campbell has no position in any stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.