This has truly been a year of marijuana firsts. A growing number of marijuana stocks previously traded over the counter made the move to reputable exchanges, and the U.S. Food and Drug Administration (FDA) approved its first-ever cannabis-derived drug from GW Pharmaceuticals (NASDAQ:GWPH). Now Canada stands less than three months away from waving the green flag on recreational cannabis.
What's more, last year, according to cannabis research firm ArcView, North American legal weed sales jumped 33% to $9.7 billion, and they're on track to grow by 28% per year through 2021. If this forecast proves accurate, we could be talking about nearly $25 billion in annual legal pot sales by the end of 2021.
At the heart of this rapid growth is a discernible shift in the way people view marijuana. Within the U.S., no less than five national polls have demonstrated overwhelming support for the legalization effort. National pollster Gallup found that 64% of its respondents, an all-time high, favored the idea of legalization in its October 2017 poll, while the independent Quinnipiac University polling center noted overwhelming support for medical marijuana's legalization (93% in favor) in its April 2018 survey.
Despite changing perceptions, the U.S. federal government has stood firm on cannabis
Yet as much as the industry has moved forward, Capitol Hill has hardly budged. Within the U.S., marijuana remains a Schedule I drug at the federal level. For context, this means cannabis is considered on par with LSD and heroin, is entirely illicit, is considered prone to being abused, and has no recognized medical benefits.
Also, as previously noted, this scheduling can create a lot of problems for U.S. cannabis companies, as well as for potential medical marijuana patients. In particular, weed-based companies have little or no access to basic banking services, and due to a more than three-decade-old tax section known as 280E are unable to take normal corporate income tax deductions, assuming they're even profitable. This usually leaves them to pay an effective tax rate of as much as 90%.
As for patients, the red tape associated with marijuana's Schedule I classification compromises and/or slows the ability of researchers to run clinical-benefit testing.
The United States isn't alone in its stance of completely banning the use of medical cannabis. But very soon, one of its closest allies could break rank and consider rescheduling the drug.
This global powerhouse may be the next to legalize medical marijuana
As reported online by Marijuana Moment, Professor Sally Davies, Chief Medical Advisor to the U.K. government, released a report this week highlighting a few of the potential medical benefits of cannabis, and her belief that, given these benefits, marijuana be rescheduled in the U.K. Said Davies:
There is clear evidence from highly respected and trusted research institutions that some cannabis-based medicinal products have therapeutic benefits for some medical conditions.
In particular, "conclusive evidence" of marijuana's benefits was observed in treating chronic pain, muscle spasms associated with multiple sclerosis, and chemotherapy-induced nausea and vomiting. The report also noted "moderate evidence" that marijuana can be used to improve short-term sleep outcomes for individuals suffering from a host of ailments. Davies continued:
Schedule 1 drugs by definition have little or no therapeutic potential. As summarized in this review, there is now conclusive evidence of medicinal benefit of cannabis-based products for certain medical conditions, and reasonable evidence of benefit for indications that they may be useful under restricted circumstances.
My recommendation is that cannabis based medicinal products are moved out of Schedule 1 of the Misuse of Drugs Regulations 2001. It may be pragmatic for them all to be moved to Schedule 2 pending a fuller review by [the Advisory Council on the Misuse of Drugs] that can differentiate different product into the appropriate different Schedules.
According to Marijuana Moment, the next step is for the Advisory Council to review the report, which should take about three weeks, and make a recommendation on the scheduling of cannabis. If the Council's view matches that of Davies, a path could be laid out that would allow the U.K. to become a new source of revenue for Canadian growers looking to export dried cannabis and cannabis oils in the not-so-distant future.
Could this pressure Washington to act?
The bigger question is: Would England's choosing to reschedule (and in effect legalize) marijuana also coerce politicians in the U.S. to give cannabis a closer look? Interestingly enough, the answer might be yes.
As noted, on June 25, the FDA approved GW Pharmaceuticals' oral cannabidiol-based medicine known as Epidiolex for the treatment of two rare types of childhood-onset epilepsy. For patients with both ailments, Epidiolex demonstrated a statistically significant reduction in seizure frequency from baseline relative to the placebo. The mere approval of GW Pharmaceuticals' lead cannabis-derived drug is in direct conflict with the definition of a Schedule I substance in the U.S. -- namely, that it has no recognized medical benefits.
With Canada having legalized recreational weed, Mexico giving the green light to medical cannabis last year, and now England potentially reforming medical marijuana policy, outcry in the U.S. may leave politicians with little choice but to, at minimum, increase research into the benefits and risks of medical cannabis.
And even then, rescheduling of medical marijuana in the U.S. is no sure thing. Republicans are still in firm control of the legislative branch of government, and self-identified Republicans in cannabis polls generally have a poor-to-mixed view on the drug. It's worth noting that self-identified Republicans do overwhelmingly support access to medical marijuana -- 86% of Republicans in Quinnipiac's April 2018 survey favored allowing physicians to prescribe cannabis -- but popular support in itself offers no guarantee of any progress at the federal level.
Things are changing rapidly across the legal cannabis landscape. What remains to be seen is if the U.S. will play a role in that change. For now, the answer appears to be no.