By John Schroyer and Omar Sacirbey
Illinois medical cannabis sales start off on a positive note, Merrill Lynch takes an in-depth look at the marijuana industry, and a British MMJ company boosts production in anticipation of a U.S. expansion.
Here’s a closer look at several notable developments in the marijuana industry over the past week.
Solid Start in Illinois
Initial results are in: The eight medical marijuana dispensaries that have opened their doors in Illinois so far collectively brought in just over $800,000 in sales since the program launched in early November.
It’s a decent start in a market that has just 3,600 patients registered for MMJ cards.
“Given that a lot of the businesses are still not open, especially retail dispensaries, I think that that’s a good sign,” said attorney Bob Morgan, the former statewide project coordinator of the Illinois Medical Cannabis Program. “That number will certainly continue to grow.”
Morgan emphasized that only a fraction of eligible dispensaries and grows are up and running. Under the state’s MMJ law, for instance, up to 60 dispensaries may eventually open.
And despite the low patient count – as well as an obstructionist health commissioner that has declined to expand the qualifying condition list – there are still hundreds of thousands of patients that could potentially qualify.
With just 47% of registered patients having purchased from a dispensary so far, “there’s a lot more room for expansion and upward trajectory for sales, which is a positive thing,” Morgan said.
“There’s a lot of room for growth, not just getting businesses open, but certainly getting patients enrolled in the program,” Morgan said.
That means Illinois operators should take heart, even those who don’t think $800,000 for the first month is a decent benchmark to hit.
Banks Banking on Cannabis?
Despite tremendous growth forecasts, the marijuana industry has struggled to win over mainstream investors.
But a recently leaked Merrill Lynch report about the marijuana industry suggests that the sector may be garnering attention from the nation’s biggest investment firms.
Matt Karnes, managing partner at research firm GreenWave Advisors in New York City, said it’s no shocker that banks are studying the cannabis trade, “but it’s a surprise that they’re actually publishing about it.”
“It makes a statement,” Karnes said.
The Merrill Lynch report has not been made public but was leaked to Philly.com. The 45-page document discusses the cannabis plant, covers how it’s being used in science and highlights some pharmaceutical companies developing cannabis-based medicines. It does not, however, discuss growers or retailers.
If Merrill Lynch and other banking firms are so optimistic about the industry, why are they so hush-hush about their research into the sector?
Jerome Dewald, a managing member with Two Worlds Consulting in New York, thinks it’s because they worry about inviting government scrutiny since cannabis is still federally illegal.
“These guys are all federally licensed. They don’t want to get dragged into litigation with someone who decides they are an exploitable target,” Dewald said.
Nevertheless, the big banks will continue to research the cannabis industry with the expectation that legalization will happen at the federal level.
“This group of large investment banks are at least preparing themselves to be able to answer questions (from investors) about this sector,” Dewald said.
What’s Good For the Goose…
GW Pharmaceuticals is poised to make history if it wins a first-ever federal stamp of approval in the U.S. for a marijuana-based medicine.
The British company has been working towards getting the U.S. Food and Drug Administration to sign off on an epileptic medicine called Epidiolex. The company is so confident it will win approval that it announced a move this week to ramp up production. GW Pharmaceuticals believes it will be serving tens of thousands of patients in the United States within the next year or so.
Just let that sink in for a second. A United States federal agency appears poised to formally approve a marijuana-based medicine.
That seemingly simple-sounding incident could have a wide range of ripple effects.
For one thing, it would pit the FDA against the U.S. Drug Enforcement Administration, since the DEA maintains marijuana’s status as a Schedule I narcotic, meaning it has no accepted medicinal value. (The head of the DEA has been under fire recently for referring to MMJ as a “joke.”)
That means the FDA ruling could provide substantive political cover for officials to either reschedule or deschedule cannabis.
It could also lead to further legalization bills in states that don’t have citizen petition systems for changing state laws. There’s more than one instance just in the past year of hesitant politicians balking at supporting MMJ because of its status on the DEA’s schedule – and because the FDA hasn’t weighed in on the medical efficacy of cannabis.
The GW Pharmaceutical ruling could change that as well.
Not to mention the waves such a move could make in the halls of Congress. There are any number of pro-marijuana bills languishing in the U.S. Senate and House of Representatives, and if a federal agency acts before Congress does to provide medicine to epileptic kids, it could spur action in one or both chambers.
So the industry as a whole should have its fingers crossed for GW Pharmaceuticals.
John Schroyer can be reached at firstname.lastname@example.org
Omar Sacirbey can be reached at email@example.com