Like many biotech companies, GW’s value hinges on whether it can get a drug approved by the Food and Drug Administration. It is developing a drug called Epidiolex to treat severe childhood-seizure disorders. Cannabidiol (CBD) a chemical found in marijuana has received high-profile media attention, notably on CNN as a miracle treatment for these devastating diseases, but officially the FDA doesn’t recognize that marijuana has any medical value.
Of the one’s that have, Brochstein says their profits from marijuana remain small compared to the rest of their business.One of the only mainstream companies that appears at cannabis-industry conventions is Massachusetts-based Waters Corporation, a maker of chromatography, mass spectrometry, and other scientific equipment used in testing cannabis for contaminants and potency. The report is “bullish” on marijuana testing, ironic for an industry that continues to operate underground.
The situation is similar with the gardening company Scott’s Miracle-Gro. It acquired General Hydroponics, which sells equipment that can be used to grow pot, and a soil company this year for a reported $130 million, but it’s hardly a marijuana company. Many private cannabis companies are eager for investments but with a few exceptions, institutional money has steered clear.The other option for potential cannabis investors are the cannabis companies traded in the lightly regulated and volatile over-the-counter market. Much of Brochstein’s work focuses on these companies that tend to go ignored by Wall Street analysts. On several occasions, he has called companies out for being scams.
In the dollars-and-cents language of Wall Street, the report is generally optimistic about the industry’s prospects. It notes that “Due to rapidly evolving and potentially conflicting legislation enacted on a state-by-state basis, the cannabis-testing industry is subject to disruptive changes.” Indeed, the testing company CannLabs that two sentences earlier it calls a “leading” service provider, went out of business a few weeks before the report came out.