Marijuana stocks have been on a tear this year as investors have become attracted to the massive potential coming from the opening of Canada’s recreational marijuana market, which is expected to top sales of $5 billion annually, and the wave of states in the U.S. passing both medical and recreational marijuana bills.
But while investors are focused on the potential for recreational marijuana, there’s a much bigger opportunity in the future of cannabis that has nothing to do with getting high.
Last weekend, entrepreneurs, researchers, and health advocates gathered in Anaheim, California, for CBD Expo West. The conference was devoted to showcasing the massive opportunity of cannabidiol – or CBD for short.
In California, CBD is a booming industry, showing up in products ranging from vaporizers and oils to candies and skin creams. And the beauty of CBD is that you don’t even have to go into a dispensary to find it and can often buy CBD products at just about any convenience store.
The Brightfield Group estimates that sales of CBD will reach $22 billion by 2022 – far surpassing the potential sales of Canada’s recreational market. And it’s no wonder why: CBD has been shown to soothe pain, anxiety, and inflammation, and could be a possible treatment for everything from opiate addiction to depression and PTSD.
“The reason people get excited about CBD is that it doesn’t cause euphoria,” said Dr. David Bearman, who has studied the effects of medical marijuana for the last couple of decades. “People say it’s not psychoactive, which isn’t true – it is both an anti-anxiety drug and antidepressant.”
Investors wanting to profit on the future of CBD should consider these two stocks.
India Globalization Capital (AMEX: IGC)
India Globalization Capital (AMEX: IGC) is up 3,259% in the last year, and 892% just in the last month alone.
Because the Maryland-based infrastructure and cannabis pharmaceutical company just entered into the cannabidiol-infused energy drink business with an agreement to distribute a drink called “Nitro G.”
IGC will offer 797,000 shares of restricted, unregistered common stock for a 10-year license—with an option for multiple five-year extensions—to market the product in the U.S., Canada, Mexico, and South America, as well as global rights to all CBD-infused products that are developed under this new partnership.
The company has plans to develop a branded, CBD-infused version of the formulation to address the market demand for energy drinks with cannabis properties, including CBD.
“According to a Grand View Research forecast, the global energy drinks market is projected to be almost $85 billion by the year 2025, with non-alcoholic beverage sales expected to account for a significant portion of the market. This represents a unique opportunity for the development and commercialization of a CBD-infused, sugar free energy beverages,” said IGC’s CEO, Ram Mukunda.
“By combining the experience of IGC with Hyalolex with the manufacturer in Malaysia, we potentially bring together unique expertise in microencapsulation, solubility, infusion, controlled dose delivery, and sugar free processes, among others,” Munkunda continued. “This will help introduce an exciting CBD-infused energy drink to the market and the acquired knowledge base can be further leveraged to diversify the delivery method for IGC branded products including Hyalolextm, our flagship product for patients suffering from Alzheimer’s.”
IGC’s move comes at a particularly good time as the language of the 2018 Farm Bill currently addresses the possibility of legalizing industrial hemp on the federal level, including products derived from it like hemp oil that contains CBD.
Analyst Bobby Burleson at Cannacord Genuity believes revenue share for cannabis-infused beverages “should expand meaningfully over the next several years,” significantly outpacing retail demand for marijuana, which is very good news for IGC.
GW Pharmaceuticals (NASDAQ: GWPH)
Early this summer, GW Pharmaceuticals’ (NASDAQ: GWPH) cannabidiol-based oral treatment, Epidiolex, was approved by the FDA for the treatment of two rare forms of childhood-onset epilepsy, Dravet syndrome and Lennox-Gastaut, becoming the first such drug approved in the U.S.
“This is the first FDA-approved drug that contains a purified drug substance derived from marijuana,” the FDA’s press release said. “It is also the first FDA approval of a drug for the treatment of patients with Dravet syndrome.”
Then just last week, the company announced a new Drug Enforcement Administration (DEA) stance on its FDA-approved cannabidiol-containing drug. More specifically, the DEA now places FDA-approved drugs with CBD in the “Schedule V” category, which the agency defines as having the lowest potential for abuse, placing the drug in the same category as treatments for diarrhea and cough suppressants.
This move by the DEA effectively means that GW Pharmaceuticals can actually sell the FDA-approved Epidiolex, a major win for both the company and for the patients effected by the two childhood-onset epilepsy diseases the drug treats.
All seven of the analysts covering the stock rate it a Buy. Their average 12-month price target for GWPH is $189.29, indicating possible upside of nearly 17%. Just last week, Morgan Stanley boosted its price target for the stock to $240 – 48% higher than Tuesday’s closing price.