Although its track record at the state level may not be perfect, medical marijuana has scored far more victories than defeats in recent years.

Medical marijuana spreads its wings

Following its first approval 20 years ago in California for compassionate use cases, medical marijuana has now become legal in 24 states, as well as Washington, D.C. The latest state to legalize the use of medical marijuana was just as much of an eye-opener as the first. Pennsylvania legalized the use of liquid, pill, or oil formulations of marijuana for medicinal use in mid-April, though it did so entirely at the legislative level (i.e., without residents voting). Pennsylvania could be the first of many states taking matters into their own hands from a legalization perspective.

Medical marijuana has two primary supporters fueling its cause. In one corner we have patients and some physicians who see discernable treatment benefits from medical marijuana. GW Pharmaceuticals (NASDAQ:GWPH), a predominantly clinical-stage drug developer that's focused on creating medicines derived from cannabinoids from the cannabis plant, is in the process of testing Epidiolex on patients with two types of childhood-onset epilepsy, Dravet syndrome and Lennox-Gastaut syndrome. In midstage studies, Epidiolex reduced seizure frequency by more than 50%! GW Pharmaceuticals' Epidiolex is just one of many examples of the possible benefits of medical marijuana and its cannabinoids.

In the other corner we have states that are basking in the job opportunities being created by the pot industry, as well as the tax revenue and licensing fees being generated that are going to fund schools, drug abuse programs, and even law enforcement.

Image source: Cannabis Culture via Flickr.

The federal government stands its ground

But, of course, we still have the federal government blocking progress in the marijuana industry. With the exception of softened rules regarding research into the benefits and risks of marijuana at the clinical level, the federal government hasn't changed its stance on marijuana one iota. Because of this, marijuana businesses are still being taxed at high levels since they can't take normal business deductions, and their access to basic financial services, such as checking accounts or lines of credit, is minimal at best.

Calls for reform on Capitol Hill have generally fallen on deaf ears, even with the latest Gallup poll demonstrating pretty strong support (58%) from the American public to legalize the drug nationally. However, all that changed last week as the medical marijuana industry scored, dare I say it, a big victory.

Medical marijuana scores a rare victory on Capitol Hill

By a vote of 233-189 in the House of Representatives, and 89-8 in the Senate, Congress voted to forbid the Department of Veterans Affairs, or VA, from prohibiting government doctors from prescribing medical marijuana to veterans. The bill will make its way to President Obama next, and if signed into law, it could mean relatively quick access for veterans in the 24 states, and Washington, D.C., where medical marijuana has been legalized. Note, passage of this law wouldn't mean all veterans would have access to medical marijuana -- just those in currently legal states. The VA's ban in the remaining 26 states would still be valid.

Medical marijuana would specifically be targeted at treatments such as anxiety, insomnia, chronic pain, and post-traumatic stress disorder. According to the National Institute on Drug Abuse, the stresses of wartime and the uniqueness of military culture creates a situation where veterans are much more likely to get addicted to prescription drugs compared to civilians. Thus medical marijuana may be able to step in and curb this trend. 

This may not be the overwhelming victory that a majority of Americans would like to see -- 84% want medical marijuana legalized nationally per a CBS News poll in April 2015 -- but it's an undeniable step in the right direction on Capitol Hill for the marijuana industry.

Weighing this victory from an investor's point of view

While marking a step in the right direction for the marijuana movement, it's not necessarily a victory for those hoping to profit off of marijuana's expansion. As of now, most marijuana businesses remain very small in scale, with big businesses finding numerous obstacles to profitability standing in the way.

To begin with, just because the federal government is changing its stance toward veteran access to medical marijuana, it doesn't necessarily imply that Congress or President Obama plans to entertain the idea of legalizing or decriminalizing marijuana at the federal level. As long as marijuana remains illicit federally, those same inherent disadvantages mentioned above -- higher taxes and minimal banking service access -- are going to remain firmly in place. Lawmakers have been pretty specific about wanting to see additional safety data on marijuana before passing judgment, and that's simply a proposition that could take years to resolve.

Investors are also likely to home in on the fact that most investable marijuana businesses are small and/or unproven. Most publicly traded marijuana stocks trade on the over-the-counter exchanges or pink sheets, where filing requirements may be more lax and pertinent investment information could be difficult to find. Even your bigger investment options aren't necessarily good choices. The aforementioned GW Pharmaceuticals is projected to lose money throughout the remainder of the decade, more than likely even if Epidiolex gains approval from the Food and Drug Administration.

There simply aren't any enticing investments at the moment to take advantage of marijuana's state-level expansion, meaning you safest best is to monitor marijuana's expansion safely from the sidelines.