WHITEFISH, MT / ACCESSWIRE / June 3rd, 2014 / The U.S. cannabis industry grew 64% in 2013 and is expected to reach $2.34 billion by the end of 2014, according to ArcView Market Research. With additional states expecting to legalize the drug over the next five years, the same group projects that the industry could hit $10.2 billion in size by 2018. These growth rates have attracted both public companies and investors to the space.
Unfortunately, the U.S. federal government has taken a very conservative approach to legalization of both medical and recreational cannabis. Companies like GW Pharmaceuticals plc (GWPH) are spending millions of dollars to push CBD-based compounds through clinical trials in order to get them on the market, since the federal government will require solid data before changing its stance.
Many public companies targeting the medical cannabis space could therefore be years away from significant revenue given these long development times. On the other side of the equation, medical cannabis users are forced to consume a drug that the federal government still classifies as a Schedule I Controlled Substance, which means they aren’t totally immune from prosecution even in “legal” states.
Bridging the Gap
Cannabis Therapy Corp. (CTCO) aims to bridge the gap by developing and marketing phytocannabinoid-based medicinal products that can be legally sold over-the-counter throughout the United States. Under the same rules that apply to hemp-based energy drinks and other products, the company will be able to sell products that contain low THC and high CBD (the drug’s beneficial component).
Hemp-based products have been legal in the U.S. for several years, while growing hemp was recently permitted in a handful of states. Industrial hemp has a THC content below 0.3% compared to 3% to 20% in marijuana, while the CBD content can be very high relatively compared to the THC content. The low overall THC/CBD content of industrial hemp can be overcome by efficient breeding.
U.S. hemp production was also legalized on a federal level in 2014 as a part of the $1 trillion U.S. Farm Bill, which sets the agricultural product apart from marijuana. State Agricultural Departments, colleges, and universities will be permitted to grow hemp as the non-drug oilseed and fiber varieties of cannabis for academic or agricultural research purposes in states where industrial hemp farming is legal.
Focus on Inflammation
Cannabis Therapy’s primary focus will be on prevention and alleviation of the symptoms associated with inflammatory and auto-immune diseases, according to a recent interview with management. Cannabinoid-based therapeutics are predicted to mitigate inflammation through the immune cells, rather than the central nervous system that typically is affected by THC-containing products. CBD and other cannabinoids are predicted to exert their effect directly on immune cells and tissues to decrease cytokine production thereby relieving the symptoms of the patients.
According to government research, “endogenous cannabinoid system signaling is likely to produce intrinsic protection against colonic inflammation and cannabinoids may also contribute to pain modulation through an anti-inflammatory mechanism … Based on these results, one hypothesis posits that phyotcannabinoids and endocannabinoids are useful in the prevention and treatment of colorectal cancer.”
Hemp’s other components, including polyunsaturated fats and gamma-linolenic acids (“GLAs”), could also be effective in treating rheumatoid arthritis, certain types of cancers, and Alzheimer’s disease among other conditions, according to some studies. As a result, medical hemp could end up being even more efficacious than other forms of marijuana and cannabis-based CBD products that may have lost medicinal properties in the pursuit of high THC content.
Cannabis Therapy appointed Dr. Cohava Gelber to its Board of Directors in April 2014 and secured a Colorado land lease with crop management services in May 2014. With the scientific expertise and organic farmland in place, the company is well positioned to begin growing hemp with the help of Rocky Mountain Hemp and the first Colorado farmer in 57 years to grow, successfully harvest, and process commercial-scale hemp.
Cannabis Therapy President and CEO, Soren Mogelsvang, recently stated that the company was close to having products ready for testing and release. The nutraceutical approach places the firm in the same industry as mainstream companies more so than a biotechnology or pharmaceutical company.
Investors may want to take a closer look at the company as an alternative to other companies in the cannabis industry, including hemp-focused firms like Hemp Inc. (HEMP), given its potential for near-term commercialization. With a market capitalization of $67 million, investors willing to assume the risk of a micro-cap development-stage company could benefit over the long-term.
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SOURCE: Emerging Growth LLC