Despite major Election Day victories in eight out of nine states in November, the U.S. marijuana movement may now be derailed.
It seems the worst-case scenario could be unfolding for marijuana investors and supporters. White House spokesperson Sean Spicer told reporters Thursday that President Trump and Attorney General Jeff Sessions intend to spearhead “greater enforcement” of the federal marijuana ban.
“There are two distinct issues here: medical marijuana and recreational marijuana,” Spicer said. “There’s still a federal law that we need to abide by when it comes to recreational marijuana and other drugs of that nature.”
While Spicer seemed to be drawing a distinction between recreational and medical marijuana use, Height Securities points out that the law draws no such distinction.
“Under current federal law, however, there is no distinction between intended use in how the drug is classified/should be viewed by federal law enforcement,” the firm wrote in a research note.
In other words, by the letter of the law, a federal marijuana crackdown should impact both the medical and recreational marijuana markets equally.
“While shutting down ‘recreational’ cannabis would be a tremendous blow to the industry, Spicer made it very clear that ‘medical’ cannabis is sacrosanct,” Alan Brochstein, founding partner at New Cannabis Ventures and founder of 420 Investor, told Benzinga. “I would argue that a medical-only industry will still be a large and growing industry.”
GW Pharmaceuticals PLC-ADR GWPH spokesperson Stephen Shultz tells Benzinga its cannabinoid drug candidates should not be impacted by any potential crackdown in federal enforcement.
“Once a Schedule 1 drug that is based on cannabinoids is approved by the FDA, then there’s an automatic process for rescheduling of that approved medicine, not for marijuana or cannabis in general, but just for the compound that was approved by the FDA," Shultz explained.
Schultz said if the company's Epidiolex drug is approved by the FDA, investors can expect cannabidiol to be rescheduled and federally legalized shortly thereafter.
In that respect, shareholders of GW Pharmaceuticals, Zynerba Pharmaceuticals Inc ZYNE and other marijuana-based biotech stocks shouldn't be particularly concerned about the federal crackdown.
It remains to be seen what exactly Trump will do to enforce federal marijuana laws, but Americans living in states with legalized medical or recreational marijuana may soon no longer have easy access to the drug.
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