Times have surely changed over the past decade, and marijuana's perception among the public is only gaining steam.
In just a matter of days, voters will go to the polls in Oregon, Alaska, and Washington, D.C., to decide whether or not to approve marijuana for recreational use, while Floridians will weigh in on whether it will become the 24th state to approve marijuana for medical purposes.
Gallup notes that for the first time ever, in 2013, more respondents were in favor of legalizing marijuana than were opposed to it. An even more recent poll from The Huffington Post and YouGov from March confirmed this favorable public bias, with 70% of respondents favoring the legalization of medical marijuana compared to 17% that opposed it. Legalizing marijuana as a whole saw a slightly tighter vote, though 51% of respondents were still in favor of making it legal, compared to just 34% who said it shouldn't be legal.
Medical marijuana's most dangerous myth
Just because the public's perception of marijuana is rapidly evolving doesn't mean it necessarily has all of the pertinent facts about the drug. In fact, perhaps the most dangerous myth of all concerns medical marijuana and the idea that researchers have a handle on its risks versus benefits profile.
For example, in 2010, the University of California Center for Medicinal Cannabis Research, which is connected to my alma mater, the University of California San Diego, released study findings that concluded that inhaled cannabis should be considered as a first-line treatment for patients with neuropathy and a number of other serious illnesses. Unlike many other studies, the CMCR ran a by-the-book, randomized, placebo-controlled study just as the U.S. Food and Drug Administration would have recommended had this been a designed clinical trial. In other words, the results are plausibly strong in favor of medical marijuana's benefits.
On the other hand, a Harvard Mental Health Letter released the same year suggests that there are a number of reasons medical marijuana's benefits versus risk profile may sway heavily toward the risk side of the equation. Specifically, the letter mentions the challenges associated with delivering cannabinoid-based drugs in that either they take a while to work, lose their potency in the delivery process, or have to be inhaled via smoking, which can expose the lungs to a number of potentially harmful chemicals.
In addition, the Harvard Mental Health Letter points out a number of psychiatric risks associated with marijuana use, including addiction, anxiety, mood disorders, and other forms of psychosis. The letter also alludes to studies that have suggested long-term marijuana use can lead to "persistent cognitive problems."
There's simply not enough data
As you might imagine, there are supporters and opponents on both sides of the aisle. The truth is, we really just don't know a lot about marijuana's benefit versus risk profile because, as a schedule 1 drug, there simply hasn't been any reason for the U.S government to support ongoing research into its effects, be they good or bad.
In Canada, for instance, researchers identified a mere 31 studies (23 randomized controlled trials and eight observation trials) where medical marijuana's benefits and risks were examined as of 2010 -- and medical marijuana is legal in Canada!
Furthermore, Dr. Sanjay Gupta, the chief medical correspondent for CNN, noted in 2013 while working on a documentary about marijuana that just 6% of all studies conducted on marijuana focus on its benefits. In other words, while we have snippets of potentially positive data on medical marijuana's benefits, the reality is that not enough research has gone into analyzing the drug to get a complete picture on its risk versus benefit profile -- and this is something most people are simply not aware of.
What this means for marijuana stocks
The interesting thing about the myth that we fully understand the benefits versus risk profile of medical marijuana is that either side, proponents or opponents, could still be proven correct. However, for medical marijuana stocks, it means investors could be playing with fire before more conclusive studies are undertaken.
This isn't to say companies like GW Pharmaceuticals (NASDAQ:GWPH), which is developing a host of drugs based on some five dozen cannabinoids discovered by the company, haven't produced meaningfully positive results in their clinical studies. Clearly Sativex holds some medical benefit as a treatment for spasticity associated with multiple sclerosis, otherwise it wouldn't be approved in more than one dozen ex-U.S. countries. Also, the company wouldn't be running three late-stage cancer pain trials for Sativex in the U.S. had it not shown earlier-stage promise. Clearly there are benefits offered by cannabinoids, which are harvested from the cannabis plant.
Yet, regulatory agencies like the Food and Drug Administration are very well aware of the lack of clinical benefit versus risk analysis surrounding medical marijuana and will likely be exceptionally critical of any drug derived from a currently illicit substance. This won't preclude GW Pharmaceuticals or Insys Therapeutics from getting their drugs approved in the U.S., but it could certainly make it tougher or, even if they are approved, make it more difficult to market these drugs to physicians and the public.
I continue to personally believe investors' best course of action with marijuana stocks is to watch them safely from the sidelines until a substantial amount of additional clinical research is undertaken on medical marijuana.