米メリルリンチがマリファナビジネスにクレイジー的に期待大・秘密レポートが明らかに/Merrill Lynch is bullish on marijuana Powered by RebelMouse
It was only a matter of time: Wall Street heavyweight Merrill Lynch, the wealth management division of Bank of America…www.attn.com
It was only a matter of time: Wall Street heavyweight Merrill Lynch, the wealth management division of Bank of America, has apparently already started thinking about its role in the marijuana industry.
A 45-page equity report leaked to Philly Inquirer columnist Chris Goldstein suggests that Merrill Lynch is paying close attention to the budding industry. The company says that it’s particularly “bullish on the cannabis testing market.”
A prospective investor who received the report last week recently shared it with Goldstein. It included information about various components of cannabis such as THC and CBD, state medical marijuana laws, medical conditions that marijuana has been shown to treat, public polling, and details about “publicly traded companies already operating in the sphere.”
“The Merrill Lynch report did not in any way touch upon investing in any company that was directly in the business of growing, processing, or selling marijuana products for medical or personal use under state laws,” Goldstein reports. “However, they did note that the cannabis market could be more than $7 billion annually already and could grow exponentially if legalization happened nationwide.”
So far, Bank of America (and every other major financial institution in the U.S.) has refused to accept accounts from marijuana businesses in states where pot has been legalized for medical or recreational purposes. But if marijuana is legalized on a federal level, that could quickly change. The industry couldgrow to be worth $13 billion by 2020, and Wall Street is taking notice.
Rather than investing in the federally illegal industry directly, Merrill Lynch says it’s looking at “Life Science Tools” associated with cannabis. That includes equipment used to test cannabis potency and quality, and the market for that equipment is expected to grow to between $50 million and $100 million by 2020.
One of the companies cited in the report is GW Pharmaceuticals, which is currently conducting FDA-approved clinical trials on the CBD drug Epidiolex. (CBD is a component of cannabis that is non-psychoactive and has been shown to have a range of health benefits, including pain management and the treatment ofepilepsy.)
“GW made headlines this week when they presented the most recent data from the trial to the American Epilepsy Society Annual meeting in Philadelphia,” Philly.com reports. “They reported that the drug was well tolerated and showed promise. Further testing will continue in 2016.”
“In order to tell how much THC is in a given bud or if it contains any adulterants requires some expensive and specialized devices. Gas chromatographs, mass spectrometers and liquid chromatography equipment were exclusively in academic research laboratories or in the pharmaceutical industry. Now, labs exist specifically to only test cannabis plants and products.”
“Medical cannabis has high POTential,” the report notes (yes, Merrill Lynch made a marijuana joke).
A Bank of America representative declined to comment on the report, but told ATTN: that Merrill Lynch has equity reports on a wide range of markets and that the cannabis testing market report does not necessarily reflect changes in the company’s stance on the marijuana industry.
Learn more about the real history of why marijuana is illegal in the U.S. and check out this ATTN: video.
● Additional related article
December 11, 2015 at 4:13 pm / Exclusive article by Alan Brochstein, CFA
Research analyst Derik De Bruin, who has been at Bank of America Merrill Lynch as its lead analyst for the Life Sciences Tools and Diagnostics sector since 2011 following a nine-year stint in a similar role at UBS, issued along with several other analysts at the firm what appears to be the first research piece on the cannabis industry from a major Wall Street Firm.
The 45-page report, Medical cannabis has high POTential: a joint biotech & tools primer, covered a lot of ground, but it was short on actionable ideas. The table of contents reveals that it really was more of a background piece:
The report covers publicly-traded GW Pharma (NASDAQ: GWPH) extensively, but there is no recommendation provided. It also mentions peers Insys Therapeutics (NASDAQ: INSY) and Zynerba Pharmaceuticals (NASDAQ: ZYNE), both of which are developing drugs with synthetic cannabinoids (not plant-derived like GW Pharma’s products).
Several publicly-traded companies that manufacture equipment used by cannabis testing labs could benefit from what supplying what the firm says could be a $50–100mm opportunity, including Agilent (NYSE: A), Thermo (NYSE: TMO) and Waters (NYSE: WAT), which are covered by the firm, as well as Bruker Corp (NASDAQ: BRKR) Danaher (NYSE: DHR) and PerkinElmer (NYSE: PKI).
The report doesn’t provide details about individual testing labs, but it shared a bullish sentiment on the industry, which it called “highly fragmented and rapidly evolving.” It mentioned publicly-traded companies CannLabs (OTC: CANL), which is defunct though the report failed to mention that fact, as well as DigiPath (OTC: DIGP) and Signal Bay (OTC: SGBY), along with Steep Hill, The Werc Shop and Green Standards Diagnostics, all of which are privately-held.
The cannabis industry is poised for growth if cannabis legalization and use expand. As the cannabis industry expands, we expect to see a corresponding increase in cannabis medical research and the implementation of cannabis testing and labeling regulations, which should drive adoption and growth of life sciences tools within this market in our view.
While the opportunities for the life sciences tools companies that are equipping the lab testing industry pale in comparison to their current revenues, perhaps the cannabis industry can help boost growth at least slightly.
The significance of the report is that it brought what many who are following the industry already know to a more mainstream audience. By focusing on the science of medical cannabis and sharing the solid ideas regarding the potential for GW Pharma and for testing labs, Merrill Lynch may be setting the stage for a broader and more institutional set of potential investors as the legal cannabis industry continues to evolve.
Exclusive article by Alan Brochstein, CFA
Originally published at www.rebelmouse.com.