Investors like marijuana stocks Don Cannabis (ACB 3.18%), in tilre (TLRY 8.96%)And Cureleaf (CURLF) Today is going to be a good day — their first after four days of nonstop selling for some of these stocks As of 12:12 pm ET on Wednesday, shares of Curaleaf were up 1.3%, and Aurora Cannabis was up 2.6%, while Tilray stock led the sector with a big 6% gain.
The growing popularity of medical marijuana is apparently behind it.
Efforts to legalize marijuana nationally in 2022 have hit some roadblocks, and according to the latest data from marijuana legalization advocate NORML, only 24 states and territories have the drug fully legal today. At the same time, however, 42 states and territories allow medical marijuana.
The exact date for full-scale legalization at the federal level remains uncertain, but it seems inevitable given its widespread support. And in the meantime, pot investors got some good news yesterday on the medical marijuana front.
This information has emerged in a published study Journal of the American Medical Association (JAMA) among 1,724 adults aged 18 and over in 36 states and the District of Columbia in early 2022. Studies have shown that 3 out of 10 patients suffering from chronic pain have switched (fully or partially) from opioids to marijuana. The study also found that more than half of such patients began substituting medical marijuana for opioids or over-the-counter pain relievers.
Related studies indicate that the availability of medical marijuana is leading to a significant decrease in the issuance of opioid painkiller prescriptions among cancer patients. And according to a report yesterday by marijuana news source Marijuana Moment, other studies show that states with legal medical marijuana have reduced billions of dollars in opioid sales for drugmakers.
So medical marijuana appears to be stealing market share from big pharma. But bad news for pharmaceutical stocks isn’t necessarily great news — yet — for marijuana stocks.
Neither Aurora Cannabis, Tilray nor Curaleaf have made a profit in the past five years, and none of them have ever generated positive free cash flow. But hope is eternal.
According to the analysts surveyed S&P Global Market Intelligence2023 could be the first year Curaleaf turns at least a pro forma profit ($0.06 per share, analysts say), and Aurora Cannabis could potentially turn a real profit in 2025, calculated according to generally accepted accounting principles (GAAP).
Analysts say the way things are going, Tillray could be profitable in both forms and generate a GAAP profit in 2026, even absent federal legalization.
Despite big losses over the past year, investors still seem optimistic that if they wait long enough, these investments will eventually pay off. The question is: How many investors have the patience to wait for that day to come and suffer losses?
Rich Smith has no position in any of the stocks mentioned. Motley Fool has no position in any of the stocks mentioned. Motley Fool has a revealing policy.