Medical Marijuana Offers Opportunities For The Daring Investor

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Summary

• Growing consensus for the potential medical benefits of cannabis-based drugs.
• Difficult to pick winners amongst a welter of small medical marijuana start-ups.
• Political as well as financial considerations need to be taken into account by investors.
• Recent volatility in Nemus Bioscience's share price illustrates the unexpected twists and turns in the market.

There are a growing number of companies emerging in the medical marijuana space. More companies and more scientists are starting to believe in potentially huge medical benefits of marijuana. This is despite the fact that it is not easy to do research on medical marijuana in the USA. Even small amounts of cannabinoids have to go through a welter of approvals at the state and federal level.

Interestingly, many of these companies have overlapping areas of medical conditions they are investigating. This illustrates a common opinion on the potential treatment efficacy of cannabis-based drugs.

Research is centered around developing cannabinoids. These are chemically diverse compounds extracted from the cannabis plant which bind to specific cannabinoid receptors in the body (CB1 and CB2). They have specific effects on specific conditions in the human body. The two most studied are cannabidiol (CBD) and THC (tetrahydrocannabinol). The latter has psychoactive effects on the body, the former does not.

In October, CBD was officially classified as a medicine by the MHRA (Medical & Healthcare Regulatory Agency) in the U.K. This is encouraging for medical marijuana companies. It restricts the use of pure cannabis for medical purposes, something which is quite common under the radar. In general, medical marijuana has been hard to research in the USA due to its status as a Schedule 1 drug.

My recent article considered GW Pharma (NASDAQ:GWPH) was undoubtedly the best investment in the medical marijuana space.

Most companies in this area are small-cap, high-risk plays. Drug development plays are always risky at the best of times, dependent as they are on the complex FDA approval process. The link with cannabis makes them doubly so.

Story Source: The above story is based on materials provided by SEEKINGALPHA

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