IPO Corner: Cannabis Pharma Goes Big Time

Attitudes around cannabis are changing, big time. Congress has passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which would end the federal cannabis ban and make legal cannabis operations eligible for Small Business Administration loans and checking accounts.

Why does this matter? Because with changing attitudes and policies comes a shift in the flow of money in the medicinal cannabis space. An excellent example is a new program launched recently by the University of Mississippi called the National Center for Cannabis Research and Education (NCCRE), a center that will prioritize resources toward patient and public safety on the medicinal use of cannabis. The center will emphasize research, advising, education in medical cannabis, cannabis-related drug development, and will perform data collection and analysis to aid in the training and education of those in the industry, medical professionals, and government officials.

More R&D Means More Financial Opportunities

Traditionally, due to restrictive policies, lack of funding, and attitudes surrounding the space, cannabis related R&D has been tricky… but that’s no longer the case, as things are rapidly changing. As this space continues to open up through the decriminalization of cannabis in Canada, some parts of the U.S. (maybe now the entire U.S.), and parts of Europe, studies are teaming, and research institutions and private companies are being let out of the gate and are now able to launch cannabis research programs.

Recently, the Drug Enforcement Administration (DEA) announced its initial acceptance of several cannabis grower applications to expand the production of federally approved research-grade cannabis. Up until now, the production of cannabis for research has been handled by a single facility to serve the entire nation. Cannabis-focused R&D projects will be an invaluable source of data for lawmakers who wield the power to further progress cannabis policy within their jurisdictions and will provide a wealth of information for these lawmakers to draw from when constructing medical cannabis frameworks. It’s safe to say, there’s about to be a boom in cannabis research.

Along with policy and wider cultural and mainstream adoption, there is growing consensus of medical professionals within the field that cannabis medicines hold deep potential in the treatments of diseases like Alzheimer’s, epilepsy, sleep problems, anxiety, pain, and a myriad of others. And the U.S. Food and Drug Administration (FDA) is playing a part in paving the way through the approval of cannabis-based medicines like Sativex and Nabilone.

Big Pharma Bets on Cannabis Medicine

Larger companies getting involved in the space include Pfizer (PFE), who recently announced the purchase of Arena Pharmaceuticals (Arena) in late 2021. Founded in 1997, Arena is a clinical-stage American biopharmaceutical company with a pipeline dedicated to cannabinoid-type therapeutics. Integral to its operations is an investigational cannabinoid drug called Olorinab, which aims to treat patients with diseases affecting the stomach and intestine, and the company is working on developing innovative therapies for the treatment of immuno-inflammatory diseases.

With this acquisition, Pfizer has put itself in the forefront of the cannabis medical industry and is helping to usher in a new era in the medical sector, thus highlighting big pharma’s waltz into the cannabinoid treatment space, acknowledgement of Cannabinoids in medical treatment, and the fostering of adoption in the space. Cannabis-based medical treatment is open for business.

Another industry giant, Johnson & Johnson is also in play, with its first Cannabinoid Company as a part of its Incubator (JLABS) readying for pharmaceutical distribution, a company called Avicanna. In 2017, Avicanna became the first marijuana company to be accepted into Johnson & Johnson’s JLABS, a 40,000 square-foot life science innovation center, which provides an environment for startup companies pursuing new technologies and research platforms to advance medical care.

Avicanna is a biopharmaceutical company focused on innovative and biotechnological advancements in the medical cannabis industry. The company is focused on using scientific research related to plant-derived cannabinoid products through its internal research platforms and strategic collaborations with world-class research institutions. This far, the company has commercialized over 30 advanced formulations and entered 14 international markets.

It’s safe to say that big pharma is betting on the medical cannabis industry, and we can expect to see more companies getting into this promising, fast-evolving space. This far, R&D on cannabinoids has achieved fantastic results, so expect to see wider adoption, more recognition of the efficacy of cannabinoid treatments, and more exciting developments with pharmaceutical companies in the coming years.

Another Wave Of Green IPOs?

With all this going on, there have been a number of cannabis-related companies in the space that have either gone public or filed the paperwork. Such as Leafly (LFLY), an online cannabis marketplace and content provider based in Seattle, which recently went public via SPAC.

Leafly estimates that licensed cannabis businesses represented a $19 billion market last year, a mere fraction of spending in the overall cannabis market, which sits at an estimated $61 billion. Through the deal, Leafly merged with Merida Merger Corporation at a target equity value of about $532 million.

The company’s CEO Yoko Miyashita sees incredible potential in the space and an opportunity to shift spending in the space from illicit legacy business to legitimate licensed dispensaries.

Early-stage London-based medical cannabis company Akanda (AKAN) just made its debut on the NASDAQ as well, raising $16 million in its IPO. The Akanda deal consisted of 4 million shares at $4 each. Akanda will continue to grow and build up its legal cannabis business in the U.K. and will sell medical cannabis and related products to wholesalers in international markets. Upon opening for trading, the stock jumped to $30 and closed at $10.50, up 162.5% from its IPO price.

I’ve been keeping my finger on the pulse of this developing space and have been keeping subscribers updated on this space through information on my site and through my newsletters.

You can rest assured that I have years of experience with IPOs, and I’ll continue to bring you valuable information as we see an evolution and the continued adoption of cannabis-based medicines, changes in legislation, and further R&D so you’ll know where to invest, at just the right time.

Together, we can find the best companies in this cutting-edge space to add to your investment portfolio . . . so stay tuned!