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3 Uncertainties Edward Jones Sees in Canadian Medical Cannabis Investments

December 27, 2017

 

Recently, investment advisory giant Edward Jones released a research report regarding Canadian cannabis investments. While the report noted the tremendous growth of the cannabis industry thus far, analysts Ashtyn Evans, CFA and Brittany Weissman, CFA concluded that there are "many uncertainties associated with the market."

 

3 Uncertainties in Canadian Medical Marijuana Investments

 

  1. Small market size - "The size of the medical marijuana market is still relatively small when compared to the over C$25 billion Canadians spend on traditional pharmaceuticals, or the over USD$18 billion in annual sales that the largest global drug, Humira (autoimmune disease), has in sales (1,4)."

  2. Lack of regulatory approval - "Unlike traditional pharmaceutical drugs, medical marijuana has not been approved by any regulatory agencies, including Health Canada (1)." 

  3. Increasing competition - "Nongovernment companies have only been allowed to grow, distribute and sell medical marijuana since 2013 (3). We believe competition will continue to grow over time, which could pressure prices."

 

(1) Health Canada

(2) Public Safety Canada

(3) Canopy Growth Financial Statements

(4) AbbVie Financial Statements

 

Conclusion

 

Based on a recent report, Canadians consumed up to $6.2 billion CAD worth of pot in 2015. If that's how much cannabis was consumed in 2015, we expect this number to have grown drastically since then along with public acceptance of the plant's medicinal qualities. 

 

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