Medical cannabis is a potential $140-billion market that's "being unlocked as the global march towards legalization continues," according to the market research firm Edison.

A Question Of When, Not If

While there is hype surrounding the market, the "undeniable reality" is that it has tremendous potential, Max Jacobs, director of health care research at Edison Research, said in a report this week.

"It could easily be an almost $90-billion market in the U.S. and an over $40-billion market in the EU-5 countries," Jacobs said.

"It is not a question of if this will happen, just a question of when as governments are incentivized to move towards legalization, not just by broad popular support but the promise of meaningful taxes that can be raised by making this illegal market into a legal one."

The Edison researcher compared the burgeoning cannabis industry to the internet — in that it is revolutionary, but not all companies in the sector will be successful.

"Just as it was important to differentiate between Amazon.com and Pets.com among internet companies, it is important to focus on the right brands and the right segments in the cannabis sector.”

The Thesis

The U.S. will likely be the most important market for cannabis, despite Canada's first-to-market advantage, according to Edison.

The report cites efforts made by companies like Epidiolex manufacturer GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH), which received credit for driving growth in the therapeutics market, including expected sales of $1.7 billion in 2024.

Other potential drivers of the market include extraction technology. Biosynthesis may be the future of the sector, Jacobs said; Tuesday's report outlines the extraction method as a process that is more cost-efficient than current options on the market.

The "forbidden fruit" potential was also addressed, with Jacobs noting how cannabis has opened the door for consideration of other drugs, particularly in mental health.

Ketamine, psilocybin and MDMA are now being studied as possible medical treatments, he said.

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