This article was updated on August 9, 2017, and originally published on March 21, 2017.

There have been quite a few reasons to be pessimistic about Insys Therapeutics (NASDAQ:INSY).

Its stock has dropped more than 45% over the last 12 months. The company's top drug, Subsys, continues to see sales plunge. Insys is the target of several federal and state investigations over its marketing practices. Some of the company's previous executives were charged with bribing doctors to prescribe Subsys. And these are just a few of the problems that Insys has faced. 

Despite all of that, could Insys actually be the best marijuana stock to buy right now? Maybe so.

Marijuana in test tube with black background

Image source: Getty Images.

Temporary issues

One thing that jumps out about some of the issues that have plagued Insys Therapeutics stock in the past is that they were only temporary. Although the U.S. Drug Enforcement Agency (DEA) took a long time to schedule cannabinoid drug Syndros after the drug won approval from the Food and Drug Administration (FDA), that slow pace isn't unusual. It sometimes takes the DEA more than a year to schedule a product. 

Insys stock suffered earlier this year because of a delay by the company in reporting its fourth-quarter and full-year 2016 results. While it's never a good thing when a company has to delay reporting its results, Insys did submit those results shortly afterward. The issues were related to the estimation of, and increases to, certain sales allowances recorded during 2016 and some extended payment terms offered to a few customers during the third quarter of 2016. There ended up being no reason for investors to be overly concerned.  

What about the former executives that were alleged to bribe doctors to prescribe Subsys? The key word to note in that question is "former." Insys has replaced those executives with a competent management team headed by new CEO Saeed Motahari.

The investigations into the company's marketing practices are still ongoing. However, Insys' new management team appears to be fully complying with these investigations and has taken several steps to improve compliance processes and procedures. It's impossible to know how long it will take for the investigations to wrap up or what the final outcomes will be. However, Insys seems to be doing all that it can do for now. 

That leaves the issue of dropping sales for Subsys. There are a couple of positive developments on that front. First, a large pharmacy benefits manager (PBM) that had excluded Subsys in the past reinstated the drug on its formulary. Second, beginning in 2018, Subsys will be listed as the preferred transmucosal immediate release Fentanyl (TIRF) product on the formularies of the nation's top two PBMs as well as one of the largest health insurers.

Not a happy time for some marijuana stocks

Many marijuana stocks have languished in 2017 due to uncertainty about what actions the Trump administration plans to take to enforce federal laws against the sale and use of marijuana. Every comment made by the White House and every tweet from President Trump about marijuana holds the potential to cause shares to rise or fall. This could go on for another three and half years -- and potentially longer.

However, this uncertainty doesn't affect developers of cannabinoid drugs like Insys and GW Pharmaceuticals (NASDAQ:GWPH). Those companies are on the right side of federal laws and regulations. Their fates don't hinge on what happens with how the federal government might or might not enforce existing marijuana laws.

In some ways, Insys has less to worry about than GW Pharmaceuticals does. While Insys has already obtained FDA approval for Syndros, GW Pharmaceuticals still faces the FDA review process for its cannabinoid product, Epidiolex. And while the DEA has already scheduled Syndros, GW hasn't gotten to that step yet.

Best marijuana stock?

I have argued in the past that GW Pharmaceuticals was the best marijuana stock on the market -- and I still think it should do very well. However, there is a decent argument as to why Insys could be the better pick right now.

Syndros could generate annual sales of more than $200 million. Dronabinol is already frequently prescribed as a treatment for anorexia in patients with AIDS, and for nausea and vomiting associated with chemotherapy. As the first oral form of dronabinol, Syndros' ease of use should allow Insys to grab a significant chunk of the market. 

The positive developments for Subsys could help stabilize sales for the opioid drug. I don't expect Insys to enjoy revenue from Subsys like it did a couple of years ago, but it doesn't seem unrealistic to expect Subsys could contribute annual sales in the ballpark of $180 million.

With Syndros and Subsys combined, Insys could easily be looking at annual revenue of nearly $400 million in the not-too-distant future. The company's market cap currently stands at around $670 million. I see no reason why this stock shouldn't be able to move significantly higher. 

GW Pharmaceuticals has perhaps even better growth potential. Again, though, the biotech isn't as far along in the regulatory process as Insys is. Is Insys Therapeutics the best marijuana stock to buy right now? It could be. Even if not, I think it deserves a spot in the top tier of marijuana stocks with solid prospects.

Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.