Why Investors Shouldn’t Overlook the Booming Medical Marijuana Sector

Medical Marijuana Continues to Grow

No, it’s not as sexy as the recreational marijuana industry, but medical marijuana is quietly taking over the U.S. Republican, Democrat, anything in-between, it doesn’t seem to matter when it comes to medical marijuana, making it one of the few non-partisan things left these days in the U.S. This is a shining example of why investors ought to pay attention to medical marijuana stocks is Oklahoma.

Oklahoma has two Republican senators and a Republican governor—hardly a shining beacon of progressivism. And yet the state has not only wholeheartedly accepted medical marijuana, but also become one of the most pot-crazy states in the union.

One year ago, when voters approved a medical marijuana bill, officials thought about 80,000 patients, or about two percent of the state’s population, would register in the first year of a legal medical marijuana program. As of last week, the Oklahoma Medical Marijuana Authority (OMMA) puts the number of registered patients at about 3.5% of the population, with little sign of applications slowing. That participation rate puts Oklahoma near number one among the 33 states that have some form of medical cannabis legislation in place as of May. (Source: “One year after SQ 788 vote, Oklahoma near No. 1 for patients among medical marijuana states,” Tulsa World, June 26, 2019.)

Those numbers actually put it ahead of California when it comes to a per capita measurements. Of course, some of that may be due to the fact that California has legalized recreational pot, no doubt siphoning some users away from the medical field. But still, that’s very impressive.

After all, when one thinks of high-flying pot smokers, one would imagine they’d be from some beach town in Cali rather than the plains of Oklahoma. But it appears that either location would suit them just fine.

So what’s the reason for Oklahoma’s success? Something I’ve been prattling on about for ages now: government getting out of the way. Comparatively low financial barriers, combined with a lack of restrictions on qualifying conditions, allowed for a wide cast of people to apply for licenses, according to OMMA Executive Director Adrienne Rollins. (Source: Ibid.)

Other states like Maine have similarly removed qualifying conditions from their medical marijuana programs, much to the benefit of the industry. Moves like this have helped increase access to marijuana and therefore benefited pot businesses greatly.

The OMMA has approved 3,211 grower, 1,548 dispensary, and 859 processor licenses. That’s a far cry from other states which only just begun to open up a handful of licensed dispensaries for medical marijuana, despite having legalized its use several years ago.

So the numbers are there when we consider the future of the medical marijuana industry. Let’s take a step back and now look at the big picture.

Medical Marijuana Stocks’ Future

While much of the focus has been on recreational marijuana stocks as Canada became the first modern economy to legalize its use, there’s one thing people have seem to forgotten in the rush of excitement: recreational marijuana may be many years away as a global trade.

While I have no doubts that it will soon come to be a multi-billion-dollar, worldwide industry, with many investors today seeing major benefits from getting in early, I also know that it will be a long and arduous process to see the product legalized across the globe. Hell, look at the U.S. and its difficulties with legalization; you think other countries with less liberal values are going to have an easier time?

Which is all just a long way of saying you have to learn how to walk before you can run. Walking, in this case, may be the easier sell of legalizing medical marijuana.

There is still a lot of stigma surrounding marijuana. After all, for older people, they’ve lived entire lives where the drug was considered contraband and illicit by governments the world over. It’s only a recent development that we’re seeing people begin to consider the prospect that marijuana may, in fact, be an acceptable vice not all that different from alcohol.

One way to sell marijuana to these folks is to package it as a medicine that can potentially have a number of positive effects. Whether it be used to treat certain aspects of cancer, epilepsy, or pain relief, marijuana has a number of applications in the medical field that could benefit millions of people.

Furthermore, marijuana as pain medication could also help to alleviate much of the opioid epidemic if it is found to be a suitable alternative.

While this is all theoretical at the moment, legalization of medical marijuana would allow companies to engage in full-throttle pursuits of pot as a medicine.

So there’s certainly potential locked away within medical marijuana that is currently not being explored due to U.S. restrictions. While other countries have legalized medical marijuana, much of the research power of “Big Pharma” lays within American borders and therefore is being stifled by the lack of pot reform. Not to mention that Big Pharma is far less likely to pursue an area of research if huge swaths of its potential market (much of the U.S.) is closed off to it.

Medical marijuana stocks could be one of the best ways to make money in the near future if the U.S. decides to take piecemeal approach to marijuana and legalize medical pot before going full bore on recreational products.

I could very easily see medical marijuana reform being passed within the next year, as it is an issue that has appeal across the political spectrum, as demonstrated by Oklahoma. Recreational pot, meanwhile, remains rather divisive.

Analyst Take

Consider medical marijuana to be the gateway drug to the “harder stuff:” in this case, recreational pot.

Medicinal weed is easier to sell to naysayers and has the capacity to bring relief to millions of people, not to mention that medical marijuana stocks would likely yield big returns for investors.