Medical marijuana remains very controversial despite the favorable regulatory progress made over the past couple of years. While NORML polls suggest 80% of U.S. citizens support medical marijuana legalization, the remaining 20% represent a vocal minority that continue to campaign against it. Perhaps most importantly, the U.S. federal government still considers marijuana to be a Schedule I Controlled Substance.
GW Pharmaceuticals plc (NASDAQ: GWPH) began challenging these sentiments with the first FDA-sanctioned clinical trials, but the approval process for pharmaceuticals is often measured in years rather than months. The U.S. federal government is also likely to wait for the outcomes of these types of trials before making a definitive move to decriminalize medical marijuana nationwide.
In this article, we’ll take a look at one company that’s using industrial hemp – a type of cannabis that faces far less scrutiny due to its low THC content – in order to avoid the Schedule I Controlled Substance hurdle associated with marijuana, and to bring their products to market sooner.
The Many Benefits of CBDs
Cannabis Therapy Corp. (OTC: CTCO) believes that there’s an alternative for some of the patients seeking the benefits of medical marijuana. By using naturally low-THC hemp rather than traditionally high-THC marijuana cultivars, the company aims to develop over-the-counter nutraceutical products that offer the beneficial components of cannabis, known as cannabinoids, in a format that is free of the psychoactive THC.
According to ProjectCBD, studies have shown that CBD, an abundant cannabinoid, could be beneficial in over 50 different conditions ranging from acne to traumatic brain injury. GW Pharmaceuticals’ own clinical trials of Sativex (a natural CBD-containing formulation) have demonstrated effectiveness in patients suffering from neuropathic pain while also studying the use of CBDs in a host of other conditions.
States like Colorado also officially permit the use of medical cannabis for conditions like cancer, glaucoma, HIV/AIDS, muscle spasms, seizures, severe pain, severe nausea, and cachexia or dramatic weight loss and muscle atrophy. In these cases, patients use cannabis and extracts in order to reduce pain, gain weight, and/or treat a number of palliative conditions associated with major medical diseases like cancer.
Hemp Helps Bridge the Gap
Cannabis Therapy plans to focus on low-THC, CBD-rich hemp in order to bypass one of the major concerns associated with the use of medical marijuana. Since hemp contains virtually none of the psychoactive THCs, hemp has been widely used as an additive in many consumer products including food, oil, wax, resin, rope, cloth, pulp, paper, and even fuel in the U.S. for some time. The U.S. government has taken few, if any, actions to try and regulate the hemp side of the industry since the early 2000s.
Hemp foods have been fully legalized under federal law following a February 2004 court decision. In HIA v. DEA, the court ruled that the DEA could not regulate naturally occurring THC not contained within or derived from marijuana. The ruling means that non-psychoactive hemp is no longer included as a Schedule I Drug under the Controlled Substances Act governing marijuana in general.
In February of this year, the U.S. government’s new farm bill contained a provision allowing universities and state agriculture departments to establish industrial hemp growing programs. These programs could pave the way towards commercial hemp farming becoming a reality in the U.S. Ten U.S. states have already passed laws enabling hemp cultivation, including Colorado, Washington, Montana, and Oregon.
Significant Market Demand
The potential for over-the-counter cannabinoid-based therapeutics is highlighted by the success of CBD-rich and THC-light strains like Charlotte’s Web. Developed by the Stanley brothers in 2011, the cannabis strain was created by crossbreeding a strain of marijuana with industrial hemp. The CBD-rich oil extracted from the strain, called Realm Oil or Alepsia is commonly used in cases of Dravet syndrome.
Demand for Charlotte’s Web was so great that CBS Denver reported “there is now a growing community of 93 families with epileptic children using marijuana daily” adding that “hundreds are on a waiting list and thousands are calling.” The potential for a hemp-only strain of cannabinoid-based oils, which could be legally sold throughout all 50 states, could prove highly successful over the long-term.
The medical benefits of cannabinoids are likely to be increasingly realized over the coming years, thanks to companies like GW Pharmaceuticals and eventually Cannabis Therapy Corp. By proving what observational studies have already shown, cannabinoids could become more widely prescribed and used by physicians and an increasingly less-skeptical public. The only downside is that efforts to develop pharmaceutical products, regardless of the ingredients, are generally prolonged and cost intensive, requiring years to get products to market.
Unique Market Approach
Cannabis Therapy is taking a unique approach to the market relative to peers like GW Pharmaceuticals plc or Cannabis Science Inc. (OTC: CBIS). By using hemp instead of conventional marijuana, the company aims to avoid the regulations associated with THC-containing products. Furthermore, Nutraceutical products with cannabinoid content offer a short path to market, and are increasingly permissible for sale in a growing number of U.S. states.
While cases like HIA v. DEA have paved the way for hemp-based foods in the past, the recently passed farm bill is further opening up the sector for additional growth. The popularity of medical marijuana strains like Charlotte’s Web also bode well for the use of cannabinoid-enriched, THC-free formulations for the treatment of serious medical conditions like childhood epilepsy or inflammation.
Investors may want to take a closer look at Cannabis Therapy due to these favorable trends and its potential for near-term commercialization.
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