With leading recent estimates clocking the 2016 North American legal cannabis market between $6.7 and $7.2 billion, the only thing more impressive about the industry is the growth projections. Research estimates a whopping compound annual sales growth rate of 25 percent through 2021. This stupendous growth, driven by more and more states adopting medical and even recreational legislation, has combined with the fact that the FDA has not yet approved any drug product containing or derived from botanical marijuana to create a perfect storm for cannabis biotechs like Vancouver-based InMed Pharmaceuticals, Inc. (CSE: IN) (OTCQB: IMLFF) (IMLFF Profile) and GW Pharmaceuticals (NASDAQ: GWPH). Medical marijuana has among the highest values in the broader marijuana space, and as with any burgeoning industry, savvy investors are looking for evidence of the market’s core value. A look at the operations of Canopy Growth Corp. (TSX: WEED) (OTC: TWMJF), Aphria, Inc. (TSX: APH) (OTC: APHQF) and Aurora Cannabis (TSX: ACB) (OTC: ACBFF) provides insight into various niches within the marijuana industry to help identify why cannabis biotechs are the value sweet spot.
Despite its incredible potential, the success of medicinal marijuana’s success in the U.S. is crimped by cultivation capabilities. Due to the notoriously stringent regulatory environment in the U.S., much of the research and even plant cultivation has historically been done outside the country, with Israel rapidly evolving into the premier cannabis research and development location on earth, as the nation’s scientists and producers chase what will potentially be a $50 billion global market by 2025. Second only to Israel in this regard is Canada, where top growers are benefitting from Access to Cannabis for Medical Purposes Regulations (ACMPR) that allow commercially licensed production. This limited participation market has been very good for Canadian growers that have achieved licensing, with only 58 participants to date. However, the real value of the industry lies in the biotechs using cannabinoids extracted from the cannabis plant to develop their drug candidates and potentially change the entire future landscape of the medical marijuana industry.
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Cannabis Biotechs Taking Leading Stance in Global Marijuana Market
