Twenty three states and the District of Columbia have legalized medical cannabis. Around one million people use medical cannabis for various ailments in the United States. The medical cannabis industry is estimated to be valued at nearly $3 billion and could dramatically increase were it to become legal throughout the country.
Now, big banking in America is seriously looking into the business of medical cannabis. Bank of America Merrill Lynch published a report earlier this month full of research into the world of medical cannabis as a prospective industry. It marks a significant step forward for the industry having such a reputable financial institution take the time to conduct a report.
Based on the research, the financial institution believes the medical cannabis industry will be valued at $10.8 billion by 2019 based on the current medical cannabis laws and sales. If it were to become legal in all 50 states, the report says it could skyrocket into a $35 billion industry by 2020. The estimated potential of a relatively young industry is more than enough to open some eyes.
One of the big concerns within the medical cannabis industry for investors is the overall lack of cannabinoid-based drugs. None of the products used medically are approved by the FDA and lack pharmaceutical grade quality assurance and control for the most part. This means the direction of the industry is cloudy at the moment as to how it can fit seamlessly into the pharmaceutical world.
Currently, medical cannabis is used to treat ailments such as schizophrenia, diabetes, PTSD and some forms of cancer. Though, the plant’s potential for treatments is still unknown and believed to be much greater than it’s currently being utilized. Cannabis is something that can be grown virtually anywhere, so the potential of it as a super drug capable of treating a variety of illnesses can be utilized by anyone, anywhere. The report believes medical cannabis could soon be approved through the FDA so it can be approved by the administration and gain some credibility in the pharmaceutical world.
“The good news out of all of this is it just opens [Wall Street’s] eyes to an investment scene that they may not even appreciate yet,” Alan Brochstein, an analyst for 420 Investor and New Cannabis Ventures, told The Atlantic. Though, Brochstein added the report lacked information to truly take action on, unconvincing for someone interested in buying stock.
While the report does show there is a significant interest in the future investment into the medical cannabis industry, it doesn’t show much opportunity for immediate investment due to the current state of the industry. Once FDA approval is obtained, all insurance agencies start including medical cannabis under their wing of reimbursed medications and a clear direction for the industry as a whole is established, the industry likely will see an investment boom.