Federal policies restricting marijuana research have made it difficult to study marijuana and produce cannabis-based drugs — but that isn't stopping pharmaceutical companies from doing it.



Some are researching and developing drugs made with marijuana compounds in labs just north of the border. Others are growing the raw materials for their products in South America.



Although only a single cannabis-based drug is currently approved for use in the US, others are likely on their way.

Some will appear first in marijuana dispensaries in states where marijuana has been legalized; others will await approval from the US Food and Drug Administration (FDA).



Getting marijuana-based drugs approved in America is no easy task.

According to the US Drug Enforcement Administration, cannabis has no medical use. Until two years ago, all domestic research on the drug had to rely on rotting samples from a single, well-secured weed facility at the University of Mississippi. Today, researchers who want to grow marijuana have to apply for a license in a convoluted process that can take years. Only a single cannabis-based drug has been approved by the Food and Drug Administration to date — and it contains CBD, a non-psychoactive compound in marijuana that is not responsible for its characteristic high.

But as researchers are only beginning to uncover, marijuana — with its roughly 400 compounds, each of which is potentially responsible for a distinct effect — has a wide variety of potential medical applications, from relieving pain and nausea to reducing the symptoms of rare diseases like childhood epilepsy. And these benefits are emerging just as scientists are uncovering huge downsides to traditional medications like opioids.

Some are lending their support to Canadian marijuana startups growing their products in countries like Colombia; others are applying for permits to import marijuana extracts like CBD and THC; still others are obtaining approval in Europe first and hoping that validation gives them an edge during the difficult FDA approval process.

Cannabis startups are among a handful of 'resident' startups at the Johnson & Johnson incubator in Canada

JLabs headquarters in Toronto. Johnson & Johnson Labs Toronto At Johnson & Johnson's JLabs in Toronto, scientists and entrepreneurs follow a gleaming steel road towards shared workspaces separated only by clear glass walls. Pops of bright blue honeycomb print and creative lighting imbue the center with a sense that change is right around the corner.

It was here, roughly a year ago, that the pharmaceutical giant welcomed the first marijuana startup into its JLabs Innovation network, an ecosystem designed to give budding companies access to the resources and leadership they need to get off the ground. JLabs accepted a second cannabis company, Vapium Medical, as a resident about three months later.

The first was Avicanna, a Toronto-based biotech company focused on medical cannabis.

As part of the JLabs ecosystem, Avicanna gets access to lab space, a Johnson & Johnson mentor, and the recognition they need to recruit top-notch scientists and researchers. In exchange, Johnson & Johnson get a chance to work with an innovative company and invest if and when they see fit.

"Partnering with JLabs allowed us to obtain a lot of credibility," Aras Azadian, Avicanna's CEO, told Business Insider. "It's also a great atmosphere to work in and to bring others in."

Avicanna's Pura Elements product lineup. Avicanna Before getting accepted as a JLabs resident (after applying for the third time), Avicanna was a fledgling startup, Azadian said. But that changed when the company joined JLabs.

In just over a year, the company went from a staff of five to 17 in Canada and 30 in Colombia, where the company grows and harvests the marijuana that goes into its products — which thus far include a series of patches, creams, and sprays that will be sold under the Pura Elements brand. Azadian said he expects a selection of those products to be available in dispensaries in California, where marijuana is legal, by the end of this year.

Azadian says that while Johnson & Johnson isn't yet invested financially in Avicanna, just being in the space significantly raises the chances that the pharmaceutical giant might eventually take that leap.

"Since we're part of their ecosystem it's much more convenient to cooperate and collaborate — a lot more so than to start working with new company," Azadian said. "I think we've positioned ourselves well to be a good fit for them."

Avicanna's initial product lineup will go to US dispensaries in states where marijuana is legal, like California.

But Azadian is hopeful that the company's research with scientists at the University of Toronto, including tests in cells and mice and eventual clinical trials in humans, will bolster their next line of products, which are geared towards treating medical conditions like eczema. Avicanna also hopes to eventually launch sustained-release capsule formulations aimed at pain relief.

"I think with our approach — strictly looking at this from a medical perspective with a team of some of the best scientists on board — I'm excited to see where this goes," Azadian said.

Other pharma companies are looking to study cannabis by importing extracts

A production assistant inspects a Cannabis plant in a state-owned agricultural farm in Rovigo, about 60 km (40 miles) from Venice, September 22, 2014. Italy legalised marijuana for medical use last year, but the high cost of buying legal pot in a pharmacy meant few people signed up. Starting next year, a high-security lab in a military compound in Florence will grow cannabis for Italy's health care system in an experiment the government says could bring safe, legal and affordable marijuana to suffering patients. To match Feature ITALY-MARIJUANA/ Picture taken September 22, 2014. Alessandro Bianchi/Reuters

Instead of going the incubator route, several small pharmaceutical companies are applying for federal permits to import cannabis extracts like CBD and THC.

Those companies include Virginia-based research group Sanyal Biotechnology, a contract-based drugmaker that focuses on liver diseases and was spun out of Virginia Commonwealth University in 2015; and Noramco, a Delaware-based drugmaker that focuses on medications used to treat illnesses including ADHD and addiction as well as pain.

Both companies filed reports in March with the DEA's federal register to import cannabis extracts; Noramco also applied for a permit to import whole plant material.

Sanyal's decision to import cannabis extracts comes from a recent partnership with Ontario-based cannabis drug company Revive Therapeutics. Last year, Revive reached out to Sanyal to inquire about testing CBD for its potential effects on autoimmune hepatitis, a chronic disease in which the body's immune system attacks the liver.

Around that time, Sanyal applied for a permit with the DEA to study CBD; but the company has yet to be cleared to import the extracts.

Rebecca Caffrey, Sanyal's CEO, told Business Insider that while she understands the need for approval, the application and permitting process has seemed excessive at times. If they don't recieve the required permits by this summer, Sanyal may need to refer Revive back to Canada where another lab will take over the research.

"We've just been going through all these hoops," Caffrey said. "I understand why they have to have these restrictions, but it does make it hard to do business."

Only one cannabis-based drug has the FDA's stamp of approval

AbbVie's Marinol is the only cannabis-based drug currently approved in the US. Shutterstock

So far, only one cannabis-based drug has been approved via the traditional drug-approval route, which involves working closely with multiple regulatory agencies including the DEA and FDA.

That drug, known by its generic name dronabinol, is designed to treat some of the negative side-effects of chemotherapy and AIDS, such as nausea, loss of appetite, and weight loss. It is made using lab-produced versions of THC, the main psychoactive ingredient in marijuana.

Chicago-based Abbott Pharmaceuticals spinoff AbbVie got approval for its dronabinol formulation, which is in pill form and called Marinol, by making the case that it offered advances where no other adequate therapies existed. Arizona-based drug company Insys Therapeutics also recently received approval for a liquid version of dronabinol that treats the same conditions.

The next company to secure FDA approval for a cannabis-derived drug will likely be the UK-based pharmaceutical company GW Pharmaceuticals, which recently got a green light from an outside panel of scientists in favor of its efficacy and safety. On Thursday during a unanimous 13-0 vote in favor of the drug, panel member John Mendelson, a senior scientist at the Friends Research Institute, said, "This is clearly a breakthrough drug for an awful disease."

The final decision on Epidiolex is currently slated for June 27. Notably, the drug contains only CBD, so there is no chance of getting users high.

"There's certainly demand for these products," Avicanna's Azadian said, "but we're still dealing with a strictly stigmatized industry."