By Charles Roques
Muddled legalization and banking issues tend to prolong the also muddled state of regulatory standards which guarantee purity and consistency in cannabis-infused products. The standards exist but they don’t always agree. The research and capability is certainly there as evidenced by not only full-size labs but also emerging products such as pocket analyzers. But antiquated or misinformed traditionalists are hindering changes in the law.
It is little like the Victorian dramas that questioned the propriety of a relationship that crossed class lines—one based on love instead of tradition. But the passion could not be thwarted and lovers would still find ways to see each other. Confidantes or servants would act as go-betweens from the proper drawing rooms to perhaps the proletarian stables. They might carry passionate notes or arrange a rendezvous. Our own illicit affair with cannabis will only grow as more discoveries surface, but cannabis might develop its own go-betweens in the meantime.
The stodginess of the drug laws is creating ironic work relationships across borders, if not classes. GW Pharmaceuticals (NASDAQ: GWPH) is storing and testing its extracts in a facility in Kansas City, Missouri, but they are sent from the United Kingdom. The irony of course is that this business arrangement doesn’t actually benefit any U.S. growers. It is also fairly small scale for both companies so it doesn’t affect the market value; however, it does help keep the affair alive and draws some attention to it.
Just as the Victorian family might finally acquiesce to a forbidden romance, the Feds may see these legitimate liaisons from outside companies and realize there is substance and value in medical marijuana research. The fact that companies are sending extractions to the United States is a testament to the quality of the research, but their presence is even more important. Perhaps the legitimacy of this relationship could help politicians realize that it is not a political issue, but rather a humanitarian one. It may take these kinds of refined products to finally convince the government, instead of trying to convince them to legalize the plant, that marijuana has medicinal properties.
Extracts are legal in Canada and these potent distilled concentrates along with other infused products could easily be the real future of the industry. Reductions and distillations by their nature require large quantities of raw material. The ancillary industries necessary to produce that much growth will flourish. The real money and research may not be about the actual acreage or number of plants as much as the many products manufactured from it.
When products are refined and concentrated, so is their value. We gladly pay for highly concentrated products like brandy or perfume, but we might not be interested in owning the vineyard or lavender field that produced them. Perhaps these concentrates will be the perfume of your future investment relationships.
We have been carrying on this illicit romance with cannabis for years and long-time users have become versatile and creative about how we ingest or consume. (The narcs couldn’t bust you for brownies if they didn’t know they were laced.) The current preference for edibles and extracts is growing for many reasons other than subterfuge. This has created a potentially huge subsector.
Cannabis grows, once they become federally legal, may mirror the vast midwest cornfields. There may also be vast greenhouses and no doubt cannabis prices will continue to drop. The smart investor might view the plant as the source of even more valuable products rather than as a mere end product.
A smart investor would also investigate how these products are made and tested and learn about these interesting industries. Make connections between information sources, e.g., publications about food products that discuss cannabis-infused edibles. You might be surprised at some of the relationships you discover. Those businesses can alert you to trends or other new fast-growing companies.
There are many ways to continue the investment affair with cannabis. Many products beside the plant could be your go-betweens.