From ‘Weed rush’ to a ‘Pot of Gold’ – Medical Marijuana and the Pharma Industry

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The story back then…

Cannabis’ (Marijuana) use as medicine dates back to 4000 BC in China. During the 19th century and till early 20th century, marijuana was used globally, to treat various illnesses such as migraine, neuropathic pain, musculoskeletal pain and in childbirth.2

In Canada, cannabis was added to the Confidential Restricted List in 1923 under the Narcotics Drug Act Amendment Bill.3

Cannabis was listed under Schedule 1 drugs and made illegal in the United Kingdom in 1928 but doctors could prescribe it until the Misuse of Drugs Act came into play in 1971.

By 1961 the United Nations Single Convention on Narcotics Drugs made a coordinated global effort to prohibit and monitor the use of illicit drugs.6

In the U.S., cannabis was listed for the first time in the United States Pharmacopoeia in 1850. With the passing of Marihuana Tax Act in 1937, cannabis use was restricted and was ultimately dropped in 1942. Further to this, the Controlled Substances Act in 1970 imposed a complete federal prohibition and listed cannabis as a Schedule 1 controlled substance.3

Despite US federal legislation, New Mexico became the first state to legislatively recognize the therapeutic benefits of cannabis in 1978 and by 1982, there were varying medical cannabis frameworks in place within thirty states. In 1996, California became the first state to legalize the use of botanical cannabis for medicinal purposes under physician supervision with the enactment of the Compassionate Use Act.2

The story now…….

The legal landscape of medical marijuana has evolved dramatically over the last decade.

In the U.S., the medical use of marijuana has now been legalized in 33 states. Fourteen other states have laws that limit tetrahydrocannabinol (THC) content, while allowing access to cannabidiol (CBD) rich products, given it is a non-psychoactive effect. The recreational use of marijuana is legalized in 11 states (Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington), the District of Columbia, the Northern Mariana Islands, and Guam. Another 15 states and the U.S. Virgin Islands have decriminalized cannabis use.5

Clinical research on the possible uses of cannabinoids for medical treatment, is steadily increasing. However, since cannabis is listed as a Schedule 1 controlled substance in the United States, conducting research and raising funds for cannabis-related research is not easy for pharmaceutical companies. Research conducted on cannabis requires licensing from the DEA (specific to Schedule I drugs), and approval from the FDA as well.15

Prior to 2015, research also required approval from the U.S. Public Health Service, but this requirement has now been eliminated to make it less difficult for cannabis research to be approved.

European Union now allows its EU member states to make cannabis available for pharmaceutical purposes. Doctors may prescribe cannabis for relief of symptoms arising from multiple sclerosis, AIDS, cancer, long-term neurogenic pain, Tourette syndrome, Crohn’s disease and PTSD and other illnesses.3,7

In the U.K., medical cannabis products have been moved from Schedule 1 to Schedule 2 substance in 2018, which allows doctors to prescribe them under certain circumstances.16

In 2018, Canada put in place, a federal legislation of cannabis and established co-existing frameworks for recreational and medical use of the plant. Even though recreational marijuana segment has always been under the limelight since Canadian legalization, the medical marijuana segment of the cannabis industry has seen some growth over the years: from being commonly prescribed for pain management all the way to new drugs being approved for the treatment of childhood epilepsy.11

Let’s look at the marijuana based pharmaceutical products approved so far….

Even though cannabis and cannabis-derived products are being used for a number of indications, to-date, only three prescription cannabinoids are FDA-approved and legal in the U.S. to be prescribed in all states:10

  • Cesamet (nabilone, a synthetic cannabinoid similar to THC)
    • Originally developed by Eli Lilly and received marketing approval in 1985 but withdrew from the market in 1989. It was subsequently acquired by Valeant Pharma in 2004 and received marketing approval for the drug in 2006. Cesamet is prescribed for the treatment of nausea and vomiting associated with chemotherapy in patients who have failed to respond adequately to conventional antiemetic treatments.13
  • Marinol and Syndros (dronabinol, a synthetic THC)
    • Insys Therapeutics commercially launched Syndros (dronabinol oral solution) in 2017, becoming the first marketed, FDA-approved liquid dronabinol. The agent was FDA-approved in July 2016 for chemotherapy-induced nausea and vomiting in patients who have not responded to conventional antiemetic therapies, and for treating anorexia associated with weight loss in AIDS patients. Syndros is a liquid version of dronabinol, which was originally FDA-approved in 1985 in capsule form, and is marketed by AbbVie under the brand name Marinol.14
  • Epidiolex (plant-derived CBD)
    • Manufactured by GW Pharmaceuticals, Epidolex was approved in 2018 as the first drug to contain a purified extract from the marijuana plant. It is approved for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, in patients two years of age and older.8,12
  • Sativex (a combination of THC and CBD in a 1:1 ratio) is a prescription cannabinoid available in Canada and Europe but not yet U.S. FDA-approved.

The pharmaceutical and biotech companies entering this space face many challenges….

The recent FDA approval of GW Pharmaceutical’s Epidolex was seen as a tipping point for the industry, potentially ushering a new era of cannabinoid medicines.

However, there are several hurdles in the path towards getting a marijuana-based drug to the market starting with the discrepancy between State and Federal legislation on cannabis: despite being legal at the state level, cannabis is still considered illegal at the federal level and is listed in the Schedule 1 substance which makes it is illegal to manufacture, distribute or sell in the U.S.20

Being a Schedule 1 substance, there are strict limitations imposed by DEA as to how much marijuana can be available for research purposes. Pharmaceutical companies had a little breather, when DEA announced that it will oversee and allow additional entities to register with DEA for growing and distributing marijuana for FDA-authorized research. Currently, the University of Mississippi is the only facility allowed, under federal law, to grow and supply marijuana to all FDA-authorized research projects.15

According to an article published in the UCSF magazine in 2017, the NIDA puts a limit on the varieties of cannabis strains that can be used in research. NIDA supports cannabis research that mostly focuses on substance abuse and dependence (in line with its mission), rather than therapeutic benefits. In 2015, only ~16% of NIDA’s spending on cannabis research supported studies investigating therapeutic properties of cannabis.19,20

Since the U.S. federal laws have not legalized marijuana, investing in cannabis is highly complicated for companies and investors, thereby creating bottlenecks in access to cash and credit. Most large banks and credit card companies refuse to work with cannabis manufacturers. This has led the cannabis industry to have mostly cash based businesses, which exposes the industry to increased theft and other crimes. Cannabis companies are working around these issues by seeking capital from Canadian investors.17,18

The evolving regulatory environment within and across states is another problem. Companies have to navigate the complicated regulatory environment that are not uniform across all states on growing, processing and dispensing cannabis. Such hurdles makes it difficult for the cannabis-companies to establish commercial scale operations across multiple states.17

Packaging is another issue: there are tight state restrictions on child-proof packaging; at the same time the regulations also demand that the packaging is easy to open for elderly patients. While there is a federal standard in place for what constitutes “child-resistant,” the standards vary between states. The sometimes mutually antagonistic requirements of opacity, re-sealability, tamper-proofing, childproofing further complicates packaging. This problem is further exacerbated by the individual packaging needs of different product formats e.g. flowers, concentrate, edibles etc.22

The future looks bright…

The legal medical marijuana market is expected to reach $66.3B by the end of 2025, globally. Increasing legalization across the globe and use of marijuana in medical as well as recreational applications are some of the drivers for the market growth. Growing adoption of cannabis as a pharmaceutical product to treat various illness will boost demand for medical marijuana in the coming years.9,21

In summary

Despite the regulatory and financial challenges, the medical cannabis industry has witnessed significant achievements over the past year: FDA approved Epidolex and the global regulatory landscape opened up for the medical cannabis-based pharmaceutical research. The medical marijuana market is poised for growth as more governments across the globe open up regulatory and financial pathways for medical cannabis research and commercialization.

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Preeti Parikh
Preeti Parikh
Preeti has been with RAS since its inception in 2014. She has worked on several projects involving strategy development, competitive intelligence and market analysis. She is passionate about data which she combines with her natural knack for visualisation and creating engaging content. Preeti began her career with a Masters Degree in Biotechnology from University of Abertay

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