2016 was one of the best years for legal marijuana in recent history. Marijuana legalization initiatives won
very decisively in eight out of nine states on Election Day, as a record
number of adults in the United States supported the legal use of marijuana. In addition, the industry hit several milestones,
including cannabis sales of more than $1 billion in the state of Colorado, investments
of over $1 billion and the IPO of the first medical marijuana properties-focused REIT, Innovative Industrial Properties
Inc (NYSE: IIPR), in the New York Stock Exchange.
Although some people are worried about how a Republican-controlled White House and Congress, along with the appointment of Jeff
Sessions as attorney general, could impact the cannabis industry, experts seem to agree that there
will be no big changes in terms of policy and states’ independence.
However, there’s more to the cannabis industry than policy. So, Benzinga decided to reach out to the top experts in the space,
and asked them to share their predictions for 2017.
1. Cannabinoid-Based Therapeutic Gets Through FDA, Latecomers Suffer
Scott Greiper, Michael Swartz and Harrison Phillips of Viridian Capital Advisors pointed out
that “the achievement of getting a cannabinoid-based therapeutic through the FDA process and into commercialization will lend
tremendous credibility to the medical efficacy of the cannabis plant. Furthermore, assuming it is GW Pharmaceuticals PLC-
ADR (NASDAQ: GWPH)’s drug that gets through the FDA
process, there will likely be fallout for other firms stemming from the exclusivity of GW Pharma’s drug from the FDA, as well as
the FDA’s and DEA’s historical and recent crackdowns on CBD companies.”
“Even the United Kingdom’s Medicines and Healthcare products Regulatory Agency (MHRA) officially classified CBD as an ingredient
in medical products, requiring manufacturers to meet safety, quality, and effectiveness standards,” they added. “These companies
had previously been operating under an ambiguity in the law, but the DEA recently clarified the issue by stating that CBD and all
other cannabis extracts are controlled substances.”
2. Cannabis Is Viewed As A Better Option Than Opioids
Alan Brochstein, founding partner at New Cannabis Ventures and founder at 420
Investor, first went into the opioid
crisis: “I expect to see the opioid abuse issue as a national crisis continue to gather attention from health officials and
state and federal government officials, with cannabis increasingly viewed as a safer option for treating chronic pain.”
3. The Federal Government Stays Out Of Cannabis
“While it's difficult to project exactly how federal policy will evolve with the change in the Presidency, I am increasingly
seeing status quo as the most likely scenario in terms of federal enforcement, certainly with respect to medical cannabis. This is
obviously speculation, as neither Trump nor anyone associated with the new Administration has said anything about cannabis since
the election or even in the few months in advance of the election,” Brochstein added.
CanPay
CEO Dustin Eide also noted that “the federal government will continue its non-interventionist approach to the
cannabis industry in states with strong regulatory and enforcement programs.”
“I do believe that [the Trump administration will not move on cannabis initiatives, even in spite of the appointment of Jeff
Sessions], but I also recognize that anything's possible in politics now. So, I'm not positive of my prediction. But I still think
it is more likely than not that the cannabis industry will be left alone by the federal government,” Troy Dayton
CEO of the ArcView Group and famed legalization advocate commented.
4. State Licenses Create A Big Opportunity
“The biggest trend is that there is going to be a bunch of states giving out licenses for the first time, and that only happens
once in every state,” Dayton continued. “I mean, they do give additional licenses as the markets mature, but they only give out the
bulk of them once. And, so, because we
won in eight out of nine ballot initiatives in 2016; in most of those states, by the end of 2017, they will have given out a
lot of those licenses through their regulatory processes. So, that's a very big opportunity.”
5. Market Morphs Into A Merged Regulatory Regime
Matthew A. Karnes, founder and managing partner at GreenWave Advisors, a firm that provides “independent
research and financial analysis of the emerging legalized cannabis industry” argued that, “We are at the beginning of what we
characterize as a marijuana market metamorphosis, as states with both legalized medical and recreational use evaluate the
practicality of a merged regulatory regime. We see this effort presently in Washington, Oregon and Alaska, and expect that Colorado
will soon follow. This trend is consistent with our thesis (‘The GreenWave Report’ October 2014) that initially bifurcated
marijuana markets will merge under a shared regulatory system into substantially larger enterprises.”
“In California, we expect implementation of a combined regulated market as soon as 2018 — but plans commencing in 2017,” Karnes
went on. “A combined California market is significant, not only because of its sheer size, but also it would mark the first state
to implement regulations for a fully legal market without initial oversight of medical use purchases. This could serve as a
catalyst for similar action in Nevada, Massachusetts and Maine.”
However, Viridian’s analysts did not seem to fully agree. “California’s current lack of statewide regulations will lead to
extensive delays in the launch of the recreational market, which will turn out to be a chaotic and messy process for the lawmakers
and current cannabis businesses in the state,” they said.
6. Markets Continue To Mature
Viridian’s analysts also explained that, “Established cannabis markets will continue to mature in their implementation of state
regulations and the maneuvering around the continued commoditization of cannabis. We have gotten to the point where we can evaluate
the effectiveness of the various regulatory structures implemented by legal cannabis markets.
“As such, both existing and future legal cannabis markets will likely seek to change their regulations to adopt better practices
as demonstrated by other, more successful markets. These will likely include loosened residency requirements for cannabis business
investment and ownership, more widespread testing protocols for cannabis and cannabis-derived products, and the push from these
states to the federal government for guidance on several issues, including but not limited to pesticide use (EPA) and energy
consumption (Department of Energy).”
Find out the other 11 predictions these and other experts shared in Part
2 of this article, coming soon!.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.