Source: Flickr user James St. John.

The midterm elections may be over, but the jockeying over marijuana's ultimate fate as a medical -- and recreational -- drug hasn't died down one bit.

Marijuana's enormous market potential
Over the past two years, we've witnessed four states, and Washington D.C., approve marijuana for recreational purposes. Two of these states -- Washington and Colorado -- are already reaping the rewards of being able to tax legal marijuana sales, which can be a critical tool to closing budget gaps. Oregon and Alaska will soon be collecting taxes on marijuana sales as well.

Additionally, 23 states have approved the use of marijuana for medical purposes. Florida had been vying to become the 24th state this past election; however its amendment required a 60% "yes" vote to pass. It wound up receiving a painfully close 58%.

There's a lot riding on future elections, as well as the shift in public sentiment toward marijuana, because the market value of marijuana (both recreational and medical) has the potential to be enormous. Greenwave Advisors projects the marijuana market in the United States to be worth between $21 billion and $35 billion by 2020, while NerdWallet's projections call for annual tax revenue of $3.1 billion if it were legalized across the board in every state.

A big hurdle remains
The big reason why we haven't already seen a sweeping legalization occur is there are still far too many unknowns surrounding marijuana. Just 6% of all studies conducted on marijuana have examined its benefits -- thus researchers, consumers, physicians, and investors really don't have much data to comb through other than a number of conflicting reports concerning its safety.

To be clear, there are cannabinoid-based drugs (drugs derived from cannabinoids found in cannabis plants) approved in markets outside the United States, so it's obvious that marijuana has some degree of positive therapeutic benefit.

Patient taking Sativex. Source: GW Pharmaceuticals.

GW Pharmaceuticals (NASDAQ:GWPH), for instance, has Sativex, a drug designed to treat spasticity associated with multiple sclerosis, approved in more than a dozen countries overseas. Sativex utilizes both THC and CBD to effect biologic change along the natural cannabinoid receptor systems in our bodies. In addition to MS spasticity, GW Pharmaceuticals is exploring the use of cannabinoids to treat cancer pain, glioma (a type of brain cancer), and type 2 diabetes, to name a few indications. It's opportunities like this that have consumers and investors excited about medical marijuana's ultimate potential.

But getting back to that first point, why we haven't seen a big proliferation of marijuana, the federal government still views it as a schedule 1 drug. In short, marijuana is illicit; as such, states have had to approve it by vote and regulate it one-by-one. Due to the political leanings and demographics of certain states, the chances of recreational marijuana or medical marijuana being approved across the board lie somewhere between slim and none. Compounded with conflicting safety reports, it's clear that marijuana has an uphill battle to fight.

Can marijuana tackle this tough-to-treat disease?
That battle, however, may have gotten a bit easier on the medical marijuana front following a recent abstract published in the Journal of Alzheimer's Disease that suggests marijuana could hold a key to unlocking measurable benefits for Alzheimer's patients.

Source: Flickr user Donireewalker.

The study itself looked at the possible therapeutic effects of cannabinoid THC on amyloid-beta protein precursor cells. Beta-amyloid leads to the development of plaque, which is what sticks to the brain of Alzheimer's patients and causes progressive cognitive decline.

The results as outlined in the abstract show that at the six-hour, 24-hour, and 48-hour time marks THC lowered beta-amyloid levels "at extremely low concentrations in a dose-dependent manner" with no toxicity noted and no upregulation of the CB1 receptor. The study also specifically noted that THC interacted directly with beta-amyloid to disrupt aggregation of the protein, which could be of key importance to slowing the progression of the disease. 

Source: Centers for Disease Control and Prevention.

Because of the tricky blood-brain barrier, development of Alzheimer's therapies has resulted in far more failures from pharmaceutical companies than successes. What's even scarier is that deaths attributed to Alzheimer's disease rose by 68% between 2000 and 2010, while deaths associated with other major diseases fell. Furthermore, the number of people aged 65 and older (the age that's the most susceptible to Alzheimer's) who are expected to have Alzheimer's will more than double to 13.8 million by 2050 from 5 million today (a 176% jump) per the Alzheimer's Association's latest report.

Cannabinoid-based compounds may get an even closer look considering the low success rate of existing clinical pathways to treat Alzheimer's. Two promising candidates in 2012, Johnson & Johnson's and Pfizer's bapineuzumab and Eli Lilly's (NYSE:LLY) solanezumab, both failed to hit their primary endpoints in late-stage clinical studies, although further research into solanezumab demonstrated it may hold therapeutic benefits in the early stages of the disease.

Only time will tell
I, for one, would love to see cannabinoid-based medicines affect positive change for Alzheimer's patients, who currently have only a handful of pharmaceutical options available to them. But the reality is that we're probably still years out from seeing any large scale studies of a cannabinoid-based drug to treat Alzheimer's disease. Until we have a clearer picture of marijuana's long-term benefit-versus-risk profile, which takes time to develop, it's going to remain a very dicey investment, as well as a hot-button topic for many Americans.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.