Since January 2019 the stock value of Tilray – a prominent cannabis company in the pharmaceutical industry – plummeted, dragging down broker expectations of the company’s viability on the U.S. market. Recent reports on Tilray have suggested a variety of points. While some experts recently predicted an upswing in value, others have seen Tilray’s advances and downfalls on the stock market as evidence to model viability of medical marijuana companies as parallel to the larger pharmaceutical industry.
However, therein lies a fundamental problem in how brokers and analysts may consider the economic trajectory of the medical marijuana industry. As both the policy and socioeconomic landscape for cannabis pharmaceuticals remains in flux, a model of these industry economics must account for mobility within finite fiscal geographies.
There continues to be growing evidence on the relationship between medicinal cannabis and pharmaceutical. In states where medical marijuana is legal, pill prescriptions have been shown to significantly decrease. These data directly outline threats against pharmaceutical companies in potential state markets.
It seems almost expected that Big Pharma industry players such as Insys would donate $500,0000 to anti-legalizations campaigns like Responsible Drug Policy in Arizona. The impact of financing anti-legalization campaigns is exemplified by Arizona’s 2016 ballot, where legalization efforts subsequently failed the polls.
Through stifling policy, the pharmaceutical industry inhibits research efforts made towards uncovering the medicinal value of botanical marijuana. Because of restrictive policy in states like Arizona, research on this type of cannabis occurs way less frequently. This allows Big Pharma to advance support synthetic marijuana – a form of artificial cannabis – against theories that decry is safety.
As Big Pharma limits advancement of medical cannabis in legislature and research while also obscuring its benefits, it seems clear that the economics for companies like Tilray are in direct contrast with Big Pharma and the foothold they maintain on state policy and research. We must consider this opposition in order to better understand the economic progress of the medical marijuana industry.
In addition to considering policy, a model for medicinal cannabis company viability must also account for expenditure, return value, and patient availability. These statistics have varied vastly state by state for over 20 years. As cannabis pharmaceuticals become more widespread in the United States, it is without question there will be greater positive net growth in the industry as a whole.
Tilray exemplifies an interesting crossroad that the industry could be approaching. As media and financial analysts alike continue to hype up how lucrative cannabis companies in the pharmaceutical industry can be, their presumptions could catalyze failure of companies like Tilray.
With the eyes of financial experts continuously set on Tilray’s viability on the NYSE and an anticipation of the medicinal cannabis boom in the U.S., it is unsurprising the company stock became overbought throughout the 2019 year. The value of Tilray cannot be accurately discerned using a perspective that does not consider the material conditions at hand.
If Tilray provides one conclusion, its that hasty judgement charts us into unknown territory; and maybe even market failure. Rather than be caught up with the media’s reactionary analyses of medical cannabis companies on the market, consider the terrain for a company like Tilray and what prosperity or lack thereof could lie ahead.
It is important to be intuitive and focused on medical cannabis companies that maintain strong footholds in a market still fluctuating throughout America. As dialogue and exchanges of power between the medical marijuana industry and Big Pharma continue to intensify, investors and analysts must be attuned to how the cannabis industry will maneuver through fractured policy. Otherwise, we’ll only be left with false promises.
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