There's been a lot of hype around some younger stocks oriented at the medical marijuana market, including Medbox (OTCQB:MDBX), Medical Marijuana, Inc. (OTCPK:MJNA), and GrowLife (OTC:PHOT). This has brought drastic swings in price and volume traded for many of these stocks. All of this has been happening while the original marijuana stock, GW Pharmaceuticals plc [GWP.LON] has been slowly dropping.
Likely looking to take advantage of the enthusiasm in US medical marijuana stocks, GW Pharmaceuticals plc (GWP) recently announced their intention to offer American Depository Shares on the Nasdaq Global Markets, under the symbol GWPH.
Despite the London shares' lackluster price performance, the US ADS's could bring some attention to the little-followed/hyped stock. On top of being the longest-operating, publicly-traded, marijuana company, GWP is arguably one of the safest investments in this industry. In the long-run, even without a US IPO it would be worth investing in the London shares, but the foreign market seems to scare off the bulk of US investors.
GWP was started in 1998. They make Sativex, a sublingual thc and cannabinoid spray, that is available for use in treating the symptoms of multiple sclerosis in 8 countries (not in the US). Adding 12 more markets this year in Europe alone, and possible expansion of approved uses for cancer treatment, epilepsy, and diabetes (among other ailments) will extend use significantly. The company also collaborates on R&D with 8 Universities/Institutes across the world and partners with Big Pharma companies like Bayer and Novartis, indicating that GWP is by far the most legitimate, experienced, and legal medical marijuana company out there.
If and when the US loosens its policies on cannabis for medicinal and recreational use, GWP has a lot to gain. Not only would it open up one of the largest markets available for Sativex and likely unlock millions of R&D dollars, it would also open up the possibility for them to expand into areas of the industry that are currently too risky for GWP. They have the most experience out of any of the publicly-traded marijuana companies in consistently growing indoor cannabis and in extracting its useful compounds. This expertise could easily be translated to the recreational market if that ever becomes an option.
Right now, GWP does not do anything remotely illegal. All of their operations are in countries that have approved, at a national level, the use of their product, Sativex. They are licensed to grow marijuana in the UK. This is unlike one of the most popular stocks in the industry, Medical Marijuana, Inc., that has subsidiaries that violate US federal law.
Their profit of 1.8pence per share for 2012 isn't great, but that should grow accordingly as their markets expand. A US expansion could not only put Sativex behind the counter in traditional US pharmacies, but also possibly into dispensaries in medical marijuana states, and retail outlets in Colorado and Washington. This would be a huge boost to their available customer base, as the US would be by-far their largest market.
If Sativex is ever approved in the US, look for one of their larger partners (Bayer or Novartis) to think about buying out GWP. The approval of US regulators would legitimize the company enough for someone in Big Pharma to take the plunge into the medical marijuana market. This will be big news if the FDA approves Sativex before the federal government legalizes marijuana for medical or recreational use, as it would allow Big Pharma to put a toe in the water, without running afoul of US regulations.
If you want to delve into the hot market of marijuana stocks, it might be best to avoid the most publicized companies. They may be good companies at their core (some may not be so good also), but with all the media attention, the prices are pretty lofty at, (OTCPK:HEMP), and (OTCQB:CBIS). Not to mention that many of these other stocks carry large risks, either due to the legality of their operation, the dubious credibility of their operators, a lack of defined business plans, or a combination of all the above. GWP doesn't have any of those associated risks, yet is poised to gain just as much if not more if/when the US relaxes marijuana laws.
The market has likely ignored GW because they don't make outlandish financial projections, don't pay stock promoters, don't make splashy press releases every week, and generally don't court the media attention so beloved by some of the other executives in the industry. GWP quietly treads along, making real medicine out of cannabis, and steadily expanding into new markets. Look for the US IPO, of GWPH, around the end of April.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I may initiate a long position in GWP.LON (the London shares of GW Pharmaceuticals plc) in the next 72 hours.