Please ensure Javascript is enabled for purposes of website accessibility

The Marijuana Industry Has Some Brand-New Opposition

By Sean Williams - Mar 6, 2017 at 7:42AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A new report highlights the growing concern of teen pot use.

The marijuana industry has been practically unstoppable this decade. Just this past year alone, five states legalized medical cannabis (including two that did so entirely through the legislative process), while the number of recreational weed states doubled to eight. With the exception of Arizona, where a recreational pot measure failed by just 2 percentage points, marijuana initiatives and amendments had a clean sweep in the November elections.

The success of marijuana essentially boils down to two factors.

First, the public opinion of pot is rapidly evolving and becoming more favorable. Over just the past 21 years, according to Gallup's polling, favorability toward a nationwide legalization of marijuana has increased from 25% to 60%. The number of respondents that would like to see medical marijuana legalized is considerably higher.

Marijuana plant on a hillside.

Image source: Getty Images.

Second, there are serious dollar figures behind the marijuana industry, which are influencing state governments and businesses to get involved. Colorado, one of the first two states to legalize recreational weed in 2012, wound up selling $1.1 billion worth of legal pot through the first 10 months of 2016. Mind you, the state "only" sold $996.2 million in legal weed last year, leading to $135 million in tax and licensing revenue. This added revenue can be critical in helping to close state budget gaps.

However, marijuana doesn't have everyone seeing green. In fact, a new report has one group strongly cautioning against its expansion.

Doctors share their concerns about teen pot use

On Monday, Feb. 27, the American Academy of Pediatrics (AAP) published a report online in Pediatrics that strongly warns against teen marijuana use and encourages physicians to discuss the dangers of pot use with parents and teens. In particular, the report cites the potential for adolescents who regularly use cannabis to develop serious mental health disorders, dulled sensory awareness, and decreased short-term memory and concentration, to name a few concerns.

The AAP's report also mentions a number of potentially damaging, and worrying, statistics. For example, since 1995 the concentration of tetrahydrocannabinol (THC), the psychoactive component of cannabis, has increased from about 4% to 12% as of 2014. Higher THC content means a greater likelihood of dependency and overdose, according to the report. In total, 9% of the people who experiment with pot become addicted. This percentage rises to 17% for those who began using weed during adolescence and to 50% for teens who use marijuana daily.

Doctor holding a bag of cannabis in one hand and cannabis-infused pills in the other.

Image source: Getty Images.

Meanwhile, as marijuana strains are getting stronger in terms of THC content, the perception of marijuana as a "risky' drug is ebbing with teens. Between 2007 and 2015, the number of teens who'd proclaim marijuana as a risky drug has fallen from 55% to 41%.

It's worth pointing out that researchers at AAP aren't completely opposed to the idea of cannabis being used for medical purposes. Some studies have suggested that cannabis and/or cannabinoids can be helpful in reducing seizures. For instance, GW Pharmceuticals (GWPH) has an experimental drug known as Epidiolex that led to a statistically significant reduction in seizure frequency in two rare types of childhood-onset epilepsy in multiple phase 3 trials. Its chances of approval by the Food and Drug Administration look better than 50-50.

Overall, though, the AAP remains very cautious of lax marijuana regulations and what legalization might do to teens. In the words of study co-author Seth D. Ammerman, M.D., FAAP, "Marijuana is not a benign drug, especially for teens. Their brains are still developing, and marijuana can cause abnormal and unhealthy changes." 

Will the White House be a friend or foe?

Of course, the AAP may not be the pot industry's only source of opposition. The Trump administration could turn out to be a wild card as well.

During his campaign, Donald Trump suggested that he was 100% in support of medical marijuana and that he believed recreational marijuana was a state-level issue. In other words, the status quo was expected to continue for the states, with perhaps an outside chance of a medical marijuana approval at the federal level.

President Donald Trump flanked by VP Mike Pence.

Image source: U.S. Department of Homeland Security, Flickr.

However, in recent days White House press secretary Sean Spicer has suggested that the Trump administration could be more stringent in its enforcement of federal marijuana laws in the weeks and months to come. While Spicer's commentary suggests that the President will respect the medical benefits of cannabis, it's looking as if some level of tougher enforcement could be expected on the recreational side of the equation.

The big question at the moment is that we don't known what this enforcement might entail. It may just involve stricter oversight of marketing, packaging, and retail laws so as to keep recreational marijuana out of the hands of minors, which would please the AAP. Then again, it could mean a crackdown whereby the federal government prevents recently approved states like California, Maine, Massachusetts, and Nevada from getting their recreational pot industry off the ground.

A vicious Catch-22 continues to haunt the cannabis industry. Lawmakers on Capitol Hill want better benefit-versus-risk data from well-thought-out clinical studies on pot, but these studies can't be run as long as the federal government keeps such a tight leash around marijuana, which is a schedule 1 drug.

As always, pot's future continues to be very much in flux, which is all the more reason why, despite its rapid growth in recent years, investors would be wise to remain firmly on the sidelines.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GW Pharmaceuticals plc Stock Quote
GW Pharmaceuticals plc

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.