OTC company sees huge global potential for cannabis market
OK, get all the Cheech and Chong jokes out of your system now. Cannabis Science, which develops medicines based on marijuana, just retained Robert Kane, formerly a retail broker at Stifel Nicolaus, to provide IR management.
Cannabis Science is a very real, if small, over-the-counter small-cap company that does R&D in medical marijuana. CEO Robert Melamede is the retired chair of the biology department at the University of Colorado.
Last year, Cannabis Science bought a private company that had both an organic medical marijuana facility and a patented medicine delivery system – a vending machine – that allows patients to purchase medicine in a verified way that provides regulatory documentation.
Work in the medical marijuana industry is currently a thorny pursuit. The efficacy of some of the dozens of substances called phytocannabinoids – found in marijuana – as treatments for pain relief, nausea, glaucoma and some movement disorders is well known in the medical field. Many social and legal pressures can make it difficult to do business with it, however.
For example, just about a third of the states in the US have medical marijuana laws but these are in conflict with federal law. There are a number of countries that have legal medical marijuana use, if not full legalization.
This helps outline the difficulties facing Cannabis Science, even though its research doesn’t involve THC, the active psychotropic substance that governments are trying to regulate.
‘I’m doing the financial projections, rewriting everything for the firm in 2012 to come out with a solid financial plan,’ Kane says. ‘We are a global company, and the global picture and opportunity is huge compared with the domestic. Israel just legalized. A lot of countries in Asia and Europe [have legalized medical uses].’
He points to Sativex, a cannabis-based treatment for multiple sclerosis symptoms from GW Pharmaceuticals, as an example of the increasing business opportunities in the field.
Another challenge for the company is that the vending machine can generate some revenue now, but the real product line will be drugs – and that means clinical trials and FDA approval. Even with the new federal fast track and accelerated approval programs to get drugs to market more quickly, the process would still take some years.
Cannabis Science is looking to restructure its current stock organization to help create more value for shareholders, according to Kane. Even then, however, he admits that sustaining a stock price will require more revenue than the company currently generates.
