Source: The Motley Fool – By Todd Campbell EBCapitalMarkets|  Matthew Kenwrick.

Recently, there has been a groundswell of support for medical marijuana that includes both the legalization of marijuana strains that can be grown and sold locally and increased access to FDA-approved marijuana-derived medicines, like those being developed by Insys Therapeutics (NASDAQ: INSY  ) . That makes Insys’ comments during a recent Wall Street healthcare conference particularly important to medical marijuana supporters.

First, some background
In a bid to gain insight into their businesses, Wall Street Goliath JPMorgan Chase invites the globe’s top healthcare companies every year to make presentations to Wall Street investors.

This year, Insys’ presentation focused more on its potential marijuana-derived therapies than on its FDA-approved opiate Subsys. Giving short shrift to Subsys — which doubled year-over-year sales to $58 million in the third quarter of 2014 — suggests Insys believes it has a significant opportunity to profit from medical marijuana.

Source: Insys Therapeutics.

Inventing a better wheel
Followers of the medical marijuana movement might be surprised to learn an FDA-approved marijuana treatment  has been on the market since 1985. That drug, marinol, is derived from the marijuana cannabinoid THC and is used to treat both chemotherapy-induced nausea and HIV-related weight loss.

Medical marijuana supporters might be even more shocked to learn that the market for generic marinol is worth more than $300 million per year, and sales grew 9% in 2014 without any significant marketing to patients or doctors.

The size and rapid growth of the marinol market, ostensibly tied to rising awareness of marijuana’s possible medical benefits, could mean Insys is about to become a much larger company. That’s because Insys has developed what it believes to be a better formulation of marinol that is delivered via an oral liquid, rather than as a pill. As a result, Insys’ formulation works more quickly and can be dosed more accurately than traditional marinol.

Insys expects to file for FDA approval of its oral marinol this quarter, and if given the OK, the company plans to launch sales in the fourth quarter. If Insys can convince doctors to prescribe its product instead of traditional marinol, the company believes it could eventually generate annual sales of $200 million.

Waste not, want not
Marinol has proven that THC can offer a medical benefit, but medical marijuana interest is being driven less by new therapies based on THC than by the opportunity to develop medicine from another marijuana cannabinoid: CBD.

CBD is the nonpsychoactive chemical component of marijuana, and early stage research suggests it could provide benefits across a variety of indications, including epilepsy.

That research is particularly interesting to Insys because CBD is a byproduct of its process to create oral marinol. Since Insys is already producing CBD, but isn’t using it, the development of CBD-based therapies could prove quite valuable.

Insys is researching whether CBD can effectively treat Dravet Syndrome and Lennox-Gastaut Syndrome, two rare forms of epilepsy. Insys expects to conduct early stage research this quarter, which could be followed by late-stage human clinical trials starting by the end of the fourth quarter. In addition to studying CBD for these two forms of epilepsy, the FDA has also granted orphan drug status for the company to study CBD’s use as a treatment for brain cancer and pediatric schizophrenia.

Advancing the cause
If Insys and its peers can prove the merits of medical marijuana to investors, they could open doors that allow entrepreneurs to obtain the financing necessary for future research.

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