Pardon the horrible pun, but the marijuana industry is budding right before our eyes.
Marijuana gains momentum
Over the past two decades, 23 states have approved the use of marijuana for medical purposes, and since 2012, four (along with Washington, D.C.) have passed legislation allowing adults ages 21 and over to purchase marijuana for recreational use. Such sweeping legalization would have been a laughable idea about 20 years ago, when just a quarter of the country, based on a Gallup poll, had a favorable view of the federally illicit drug. But marijuana's momentum right now is very real.
In Colorado, recreational marijuana tax revenue could wind up netting the state's education system $40 million, depending on whether voters choose to allow the state to apportion the tax revenue to education in the upcoming election. In Washington state, marijuana tax revenue hit $70 million over its first 12-month period. Although this represents less than 0.4% of Washington's annual budgetary needs, it's nonetheless a step in the right direction to meeting the state's growing need for tax revenue.
Yet, in spite of marijuana growing like, yes, a weed, hurdles still stand in the way of a full-fledged legalization or decriminalization. Arguably No. 1 on that list of hurdles is the safety and long-term effects marijuana has on the user.
To be clear, the battle between marijuana risks and benefits hasn't been fair from the start. For decades, researchers focused on examining the risks of marijuana use and undertook very few studies that examined its potential benefits. The result is that we have a copious amount of data about the drug's potential dangers and very little mature data on its possible benefits. We do have new ongoing studies that are combing through the list of potential benefits, but it takes time for this data to mature enough for Congress and the president to make an informed decision on marijuana's future.
Two new marijuana studies confuse rather than clarify
Last week, we received data on two new studies looking at the long-term safety of marijuana on users' brains (as it pertains to size and cognitive function), and I'm sorry to say the results only fueled more questions than they did answers. Both studies were published in the Journal of the American Medical Association Psychiatry.
The first study sought to examine whether or not marijuana use caused a change in brain structure since previous studies have suggested that marijuana can have an impact on brain size or shape. The way researchers went about studying this is by using MRIs to compare the brains of siblings (one who used marijuana and the other who did not) in order to remove the influence of genetic makeup or familial environment in the final results.
Of the 483 participants in the study, researchers discovered that cannabis exposure was related to a "smaller left amygdala and right ventral striatum volumes." The amygdala is critical to controlling emotions, while the striatum is the rewards processor of the brain. But the findings also showed that in many cases it wasn't cannabis causing these volumetric reduction in the size of patients' amygdala. Instead, these reduction were likely caused by genetic predisposition. In terms of striatum volume differences, researchers were unable to make any discernible conclusions.
However, researchers did note other intangibles that weren't visible from an MRI. Specifically, Dr. David Goldman of the National Institute on Alcohol Abuse and Alcoholism in an interview with NBC News had this to say on the study:
The cannabis-exposed individuals were worse off. The tended to be poorer, less agreeable, more likely to use other drugs, and more like to discount larger future rewards for the immediacy of smaller ones. There is something else that's going on. THC, one of the main active components of cannabis, is a psychoactive drug. These types of drugs affect brain function, if not its physical structures.
The second study examined 1,574 adolescents across three sample groups that were identified to have a high risk for developing schizophrenia. The results of the study showed that boys regularly had a thinning of their cortical thickness (the outer layer of the brain where you'll find gray matter) if they reported using marijuana regularly.
Now here's the catch: Just because this layer was shown to be thinner in marijuana users doesn't mean that marijuana leads to a higher instance of schizophrenia in those same users. It does, however, merit further discussion based on the results of the study.
If there is one certainty here, it's that the safety of marijuana over the long term isn't going to be answered by a single study, nor will we know this answer overnight. Just like a multithousand-piece puzzle, researchers are slowly filling in the blanks as to whether the federally-illegal drug is truly safe or not.
What you need to know as an investor is that the uncertainty over how long it might take to find the answers that regulators are seeking could prove to be bad news. The majority of publicly-traded marijuana stocks are losing money, and without a reversal in the federal government's scheduling of marijuana, there doesn't seem to be any immediate recourse that would suggest marijuana businesses are suddenly going to flourish on a national level.
Make no mistake: There are other worrisome aspects beyond just safety that we've recently covered, including marijuana businesses' minimal to nonexistent access to basic banking services, and the incredibly high tax rate that marijuana-based businesses are forced to pay since they're involved in the sale of a federally illegal drug.
Altogether, these worries remain a major impediment for marijuana's nationwide expansion and act as a strong reminder for investors to keep their distance until we witness some degree of change on the federal level.