The Motley Fool.com recently raised some valid questions in connection with the challenges the medical cannabis industry faces. The author, Sean Williams, is concerned that there are issues medical marijuana patients might not be aware of.
Whereto from here for medical cannabis?
After marijuana was approved for compassionate use in California in 1996, its use has been growing, and half of the states in the U.S. have legalized it for medicinal use. Four states legalized its recreational use, something no-one could imagine even a decade ago.
ArcView Market Research recon reports that $5.4 billion worth of legal cannabis was sold in the U.S. in 2015, and the total value will reach $22 billion by 2020. In every aspect, cannabis is showing astronomical growth.
The one unexpected hindrance medical marijuana faces according to a report by CNN, is a knowledge gap physicians are confronted with when prescribing medicinal marijuana.
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Doctors don’t have sufficient knowledge
Why physicians have insufficient knowledge, and confidence to prescribe marijuana is understandable, as the U.S. DEA considers it a schedule 1 drug, which designates it as illegal with no medicinal value. There is only one grow farm in Mississippi approved by federal law. Plus the government has never approved of clinical studies on the efficacy and safety of medical marijuana for particular illnesses.
In the absence of such data, it is impossible for doctors to obtain reliable information in regard to which ailments cannabis can, and cannot treat effectively.
It is only through small studies done by universities that clinical benefit was shown in managing chronic pain, epilepsy and cancer tumors, to name but a few conditions medical marijuana could possibly be of benefit to. In the absence of large-scale, long-term studies, and given the fact that prescribing medical marijuana at all is still in violation of federal law, not enough doctors have gained enough knowledge about marijuana to responsibly prescribe it.
In some states, physicians are being required to do educational courses before they can register to prescribe cannabis in order to bridge the knowledge gap.
Medical marijuana became legal in New York in 2014, and such a cannabis certification program was implemented by October 2015. The course takes four hours, and costs $249. The pharmacology of marijuana, its benefits and side effects, contraindications and potential abuse and addiction are among the subjects taught. More than 600 doctors in New York have already obtained this accreditation.
The cost and time to get certified may be a concern, as doctors might be discouraged from gaining the knowledge needed to write medical marijuana prescriptions. Without proper accreditations, if doctors feel uncertain of their understanding of medical marijuana, or if they don’t have access to necessary information, the growth of medicinal cannabis could be stunted.
Apart from these challenges, the cannabis industry faces some other limitations, which probably won’t disappear overnight either.
No Bank loans or services
Marijuana’s schedule 1 status keeps access to basic financial services out of bounds. Similar to doctors being afraid to cross federal law by prescribing medical marijuana, banks also want no business with the illegal industry even though state laws stipulate ways banks can lend a helping hand. Only 3% of banks in the USA are prepared to deal with the marijuana industry, and most dispensaries have to deal in cash, which adds to security risks, and inhibits expansion of businesses.
Tax rates are a great deal higher than other business’ tax. The 280E Tax code prevents businesses selling illicit substances from exercising the right to deduct business expenses. This means marijuana businesses are taxed on their gross profits rather than net profits.
No win for schedule 1 or 2
The conundrum facing the marijuana industry is this: if it remains schedule 1, banks won’t deal with the industry, tax remains exorbitant, and patient’s rights are constrained. But ironically if marijuana were to be rescheduled, banks could do business, and tax could be lowered, but the FDA would then implement very tough regulations, putting small dispensaries right out of the league. Big businesses would take over the industry, which might be great for investors, but would most likely mean much higher prices for medical and recreational users.
At present, it seems there is a no-win situation for marijuana supporters, and to a certain extent, for prospective investors.
The medical cannabis future
The future of medical cannabis can probably not be determined or speculated upon by analysts of markets, as it is growing organically through word of mouth, and it seems it is setting a trend. Full legalization at federal level would solve the problem altogether. What do you think the future holds for medical cannabis?