Whitefish, MT / July 18, 2014 / In April 2014, Marijuana Business Daily forecast that US retail cannabis sales will rise from an estimated $2.2–$2.6 billion in 2014 to $7.4–8.2 billion in 2018. Recreational marijuana sales comprise the bulk of the increase, but medicinal use is expected to more than double as well--up to $4 billion in the next five years.
More and more cannabis-related companies are taking root around the country in the wake of local, state, and federal governments easing restrictions on marijuana use and commerce, and investors are taking notice of this growth industry. The so-called marijuana Green Rush will pay off for canny investors, but like the California Gold Rush of 1849, many more prospectors will strike out.
If you want to strike gold in the Green Rush, you need to stake your claim carefully. How do you decide which of the new cannabis-related companies are good bets? Grow operations such as Tweed Marijuana Inc. (TWD.V)(TWMJF) often claim the headlines, but other kinds of cannabis businesses are worth a close look.
DigiPath, Inc., a Nevada corporation, recently announced a plan to diversify and expand its line of services to support the medical marijuana industry--a smart move that builds on its core competency of developing innovative digital-pathology solutions for private and academic institutions. Digital pathology is an image-based information environment that supports the management of information generated from digital slides for use in education, diagnostics, publications, and research. DigiPath's PathCloud(tm) is the first and only high-performance network engineered exclusively to support telepathology. This line of business generated $217,248 in sales during the quarter ending June 30, 2014.
DigiPath raised $8.2 million from accredited investors in 2014 to launch two new services–ingredient testing and vocational training services–for the cannabis and nutraceutical industries. The expansion is progressing quickly and in June 2014 DigiPath received approval from the Clark County Commission to operate a testing laboratory in Las Vegas. Final approval is expected from the State of Nevada within a few months.
To construct the initial business plan for its education and training division, DigiPath has enlisted the services of Oak Tree Educational Partners, a holding company that acquires and manages educational training centers.
DigiPath has also overhauled its management team to be better equipped for future growth as it increases the breadth of its portfolio. Changes include appointing lab and imaging industry veteran Steve Barbee as Chief Executive Officer and adding medical-device startup and turnaround expert Joe Tanner as Executive Chairman of the Board.
On June 10, 2014, DigiPath announced the appointment of Cindy Orser, PhD, to its executive team. As Chief Science Officer at DigiPath, Dr. Orser is tasked with designing the next generation of FDA- and CLEA-compliant testing lab, and testing procedures and protocols to ensure accurate and consistent assessments of nutraceuticals, including cannabis and cannabis-based products.
Dr. Orser's credentials are unparalleled in the cannabis industry. She earned her PhD in plant pathology and genetics from the University of California, Berkeley; holds eighteen issued patents; and has authored forty-one peer-reviewed publications. She draws from more than twenty years of innovative bioscience experience in both academia and private industry. Her responsibilities have included conceptualizing, executing, and managing key projects such as lab benchmarking, fundraising, and budgeting; staffing; managing personnel; identifying collaborators; and directing subcontractors. She has served as the liaison between several companies and regulatory agencies, including the FDA and CDC.
This is a prescient move because one of the major components that is greatly lacking in the marijuana industry--and one of the areas that will see strong demand going forward--is standardization to ensure the safety and efficacy of products.
The pharmaceutical industry operates with detailed knowledge of how one drug is different from another at the cellular level and whether it is being manufactured to a precise purity, but the medical cannabis industry lacks this important knowledge. DigiPath's pathology software will develop a massive database of plant tissues matched to biotech industry standards to create future medical cannabis treatments.
GW Pharmaceuticals is a recognized world leader in cannabinoid science. The British company has garnered approval in twenty-five countries for its flagship product Sativex, a spray version of marijuana indicated to help control severe spasticity in certain multiple sclerosis patients. While not yet approved in the U.S., Sativex is undergoing an FDA Phase 3 trial for multiple sclerosis spasticity through a partnership with Otsuka Pharmaceutical, which is funding the trials and holds exclusive rights to commercialize the drug in America.
Otsuka is also funding a separate Phase 3 trial for Sativex is ongoing under a Fast Track designation from the FDA for the treatment of pain in late-stage cancer patients.
GW Pharmaceuticals is developing the oral drug Epidiolex, an experimental cannabinoid-based drug for the treatment of epilepsy. The FDA last November granted an orphan drug designation for Epidiolex for children with Dravet syndrome, a rare and severe type of pediatric epilepsy. The FDA upped the stakes to expedite development of Epidiolex with a Fast Track designation in May and a phase 2/3 trial is expected to start by the end of 2014.
The FDA also granted GW Pharmaceuticals an orphan drug designation for Epidiolex in the treatment of Lennox-Gastaut syndrome, another rare form of childhood-onset epilepsy. In addition, GW is moving forward with a cannabinoid-based pipeline of products targeted toward treatment of glioma, Type 2 diabetes, and schizophrenia.
These developments point to a bright future for GW Pharmaceuticals, and for investors. Many patients and doctors would prefer government-approved, safety tested, and dosage-controlled medicine instead of the less formal approach that is currently the norm for medical cannabis. GW recognized this need early, and positioned itself as the pharmaceutical leader for cannabis-derived drugs. As its products are approved, GW, its shareholders and patients will reap immense benefits.
Today's cannabis industry lacks analytics, organization, oversight and intellectual property. Different marijuana strains are identified through a litany of names. However, there is no standard for ensuring that a strain is identical each and every time for the end user. There isn't any protection against a different grower, whether next-door or across the country, using the same name and formulation for a completely different product. Imagine if a consumer went to a pharmacy and couldn't be sure if the Tylenol that he purchased in New York City was identical to the Tylenol that he bought in Newark or San Francisco. Both GW pharma and DigiPath are pioneers in avoiding industry confusion by identifying and standardizing various categories of cannabis-based products.
GW's FDA-approved, late-stage clinical research on cannabis-derived products could be just the catalyst needed for hockey-stick-type growth in the biotech and pharma industries.
Laboratories educated on the properties and pathologic processes of marijuana should thrive from the new wave of research coupled with the speedy standardization of data. DigiPath should benefit by parlaying its diagnostic expertise into cannabis as an integrated solutions provider and from its education and training programs designed to educate industry members, consumers and entrepreneurs on all aspects of the cannabis industry.
As Elvis reminded us, "Wise Men Say, Only Fools Rush In." The advice is as relevant during the Green Rush as it is when forming any personal or business relationship. Those investors who pause to consider all aspects of the emerging cannabis industry in order to mitigate risk and consider growth potential predicated upon actual demand and competition stand to benefit the most.
Company Website - http://www.digipath.com/
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SOURCE: Emerging Growth LLC