GW Pharma and the Future of America
Moments ago and in a milestone decision, the FDA approved a drug derived from the cannabis plant called: Epidiolex. The approved drug, the first of its kind, is used to treat rare forms of epilepsy that are especially predominant among children. GW Pharmaceuticals, a British drugmaker, tested Epidiolex with more than 500 children and adults, and concluded with results substantial enough for the FDA’s approval. According to The Globe and Mail, Wall Street analysts predict the drug “could cost $25,000 per year” and bring in $1 billion in new revenue for GW Pharma.
Epidiolex doesn’t contain any THC which means sufferers of these rarer forms of epilepsy can benefit from the medical properties of cannabis without feeling any of the psychoactive properties typically associated with it (i.e. ‘getting high’). The medical properties of cannabis are contained predominantly in a chemical compound called CBD, also produced by the cannabis plant.
The FDA formally acknowledging and accepting cannabis’ medical properties is a watershed moment for the thousands whose anecdotal positive experiences were brushed aside by skeptics. From Sanjay Gupta’s multi-episode exploration on the effects of CBD to the viral videos of children miraculously settling down after violent epileptic seizures upon ingesting CBD — this has been a long time coming for many.
Here’s where things take a little bit of an interesting turn, as one more thing needs to actually happen before anyone can get their hands on Epidiolex. Something that virtually no drugmakers have to wait for after FDA approval. If you work in the cannabis industry, you probably know what I’m talking about.
What Is The DEA’s Next Move?
The Drug Enforcement Agency (DEA) currently has cannabis classified as a Schedule I substance. According to their website, “Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse.”
Because CBD-based Epidiolex has proven medical use that has been formally accepted by the FDA, the DEA is now forced to remove cannabis from being a Schedule I substance and has about 90 days to decide what they will do.
Will the DEA reschedule cannabis entirely, or just CBD? What if there are trace amounts of THC (the psychoactive component of cannabis) found in future CBD drug ingredients? What percentage of THC is acceptable? Will police have to check the THC and CBD content in possession before placing charges if there are different charges for each substance? Is there a chance that that’s even operationally feasible?
And if the DEA reschedule the entire plant (that contains both THC and CBD), well, I think it’s pretty clear that every potential decision brings up dozens of questions.
How the DEA decides to proceed will have massive implications on cannabis research, innovation, and the evolving/eventual status of cannabis in the US. You can surely count on both Canadian LPs with US exposure (ex. Aphria through their 20% stake in Liberty Health Sciences Inc.) and US companies with a CBD focus (ex. Isodiol who has a wide range of CBD products), to pay extra close attention to the aforementioned developments. In fact, I’ll bet the spectrum of companies paying attention will be much broader than you think.
Dough, Cheese, and Sauce Make A Pizza…
If you combine this news with other major developments happening in the US, like New York Mayor Bill de Blasio and the NYPD announcing that they will relax their enforcement of marijuana laws. This includes issuing a ticket instead of arresting someone caught consuming marijuana, in a move the Mayor estimates will eliminate upwards of 10,000 arrests a year. Many believe New Jersey’s anticipated legalization of recreational cannabis influenced this decision by New York’s top dogs given the sheer volume of people who cross the shared NY-NJ border on an hourly, yet alone daily, basis.
President Trump’s verbal support of Sen. Gardner’s STATES Act is another developing event worth following, as the bill “looks to amend the Controlled Substances Act so it no longer applies to any person acting in compliance with state laws”. Or essentially, back off of States that have passed laws to regulate how cannabis is purchased, sold, and consumed within their borders. When Trump was asked about Sen. Gardner’s claim that he has the President’s support, he said “I really do, I support Sen. Gardner. I know exactly what he’s doing. We’re looking at it. But, I probably will end up supporting that, yes.”
Interesting and exciting times are ahead, no matter which way you grind it.
Disclosure: I mentioned a couple companies in the above post and have in the past or currently owned shares in at least one or all of them.