Source: Flickr user Mark.

Midterm elections may be over, but that doesn't mean the number of issues that Congress and individual states are yet to tackle have been moved to the back burner.

One particular hot-button issue that took center stage this election was the debate over legalizing marijuana. Citizens of Oregon and Alaska, as well as Washington, D.C., cast their ballots on whether or not to allow marijuana to be legalized for recreational adult use. In all three instances, voters were in favor of legalization, which may wind up bringing in significant long-term tax revenue generation for Oregon and Alaska.

However, another key marijuana vote didn't quite go as planned. Floridians cast their ballots on Tuesday to decide whether or not to allow marijuana to be used for medical purposes within the state. Because the ballot amendment would have required Florida to change its constitution, it required a 60% "yes" vote to approve it. With 95% of ballots in at the time of this writing, just 58% of voters were in favor its approval, with another 42% voting against it. Had Florida approved this measure, it would have become the 24th state to legalize medical marijuana.

One important lesson learned from Florida
This certainly wasn't the outcome marijuana proponents were expecting. But, it did remind those interested in the marijuana movement, as well as investors, that demographics and political views are going to cap medical marijuana's potential unless the federal government and U.S. Drug Enforcement Agency changes its tune on marijuana as a schedule 1 drug.

Source: Flickr user Nicolas Alejandro.

Heading into Tuesday's medical marijuana vote in Florida, marijuana proponents should have known it was going to be an uphill battle. According to a survey from the Pew Research Center, conducted in October, just 27% of persons in the Silent Generation (those aged 69-86) were in favor of legalizing marijuana (in general, not just for medical purposes). This compares to 51% for the Boomer Generation, 54% for Generation X, and 63% for Millennials. Essentially, the younger the focus group, the more support increases. Yet, Florida has the highest percentage of retirees in the country, so it really shouldn't be a surprise that medical marijuana failed to garner the required 60% of votes.

Of course, generational gaps aren't the only factor that could keep medical marijuana from becoming a law in certain states. Politics, as much as we like to throw it out of our investing thesis and our thinking, may play a role. States like Texas, which has a tendency to lean heavily toward the Republican Party, are unlikely to bring medical marijuana legislation to vote anytime soon. As Pew Research also noted, just 31% of Republicans are in favor of a sweeping legalization of marijuana.

In short, the lesson learned from this week's vote is that medical marijuana's upside could be capped.

What this means for investors
Unfortunately, if medical marijuana's momentum begins to hit a ceiling it could potentially be bad news for companies focused on creating drugs utilizing cannabinoids found in the cannabis plant -- namely GW Pharmaceuticals (NASDAQ:GWPH) and Insys Therapeutics (NASDAQ:INSY).

Source; Flickr user Dank Depot.

GW Pharmaceuticals is the most prominent investable name in the marijuana space. The company has discovered five dozen cannabinoids that it believes it can use to create drugs to effect positive biologic change, beyond just the basic medical marijuana uses we see now, such as pain relief. In addition to a U.S. cancer pain late-stage study involving Sativex, GW Pharmaceuticals is also looking at ways to use cannabinoids to treat schizophrenia, type 2 diabetes, ulcerative colitis, glioma and epilepsy. All of these indications are currently in early or mid-stage trials, and considering the company's success in getting Sativex approved in more than a dozen ex.-U.S. markets, investors have been clearly optimistic that the overall perception of marijuana for medical purposes would continue to be positive.  

Insys doesn't have nearly the extensive pipeline GW Pharmaceuticals does, but it could nonetheless be stung by a ceiling on medical marijuana. Insys' prize pipeline product is dronabinol, a synthetic THC-based product that the company hopes to use to fight chemotherapy-induced nausea and vomiting. As a quicker-acting CINV medicine with more dosing options than its predecessor, dronabinol is currently under review for approval by the FDA.

Though individual states can't regulate what drugs can and can't be distributed, as we saw with Massachusetts Governor Deval Patrick's attempt to keep Zogenix's Zohydro ER out of the state despite the FDA's approval, physicians' desire to prescribe marijuana-based medications in states where medical marijuana isn't legalized (assuming the FDA approves these drugs) may not be very strong, and it could act as a sales cap on cannabinoid-based drugs.

Watching marijuana's momentum evolve in the coming years is going to be interesting as recreational growth is expected to soar, while medical marijuana's growth may begin waning. Investors in this space will want to pay close attention to public sentiment as well as individual state views, as they could have a huge bearing on the prospects of cannabinoid-drug developers GW Pharma and Insys.