Over the past two or so decades, a growing body of scientific research has proved that cannabis has the potential to treat a variety of medical conditions. Even though federal law classifies cannabis as a Schedule I controlled substance with no medical applications, studies have found that the drug can be effective against inflammation, anxiety disorders, chronic pain and high blood pressure, among other things.
As people become more cognizant of the short- and long-term side effects of using pharmaceutical medications, “safer” alternatives such as cannabis have grown increasingly popular. Dozens of states now allow their residents to purchase and consume cannabis for medical purposes, with most people using medical marijuana to alleviate pain.
A first-of-its-kind study has now revealed that the pharmaceutical industry stands to lose almost $10 million a year with each state that legalizes cannabis, costing the industry untold billions of dollars in losses over the next few decades. The research analyzed prescription drug sales and stock return data from more than 500 pharmaceutical companies from 1996 all the way to 2019, focusing on market trends before and after the passage of state medical and recreational cannabis laws. Researchers found that each legalization event had a negative impact on the industry, decreasing stock returns by 1.5 to 2% within days after cannabis reform was passed.
Study authors write that pharmaceutical companies saw their returns falter in the wake of both medical and recreational legalization, with investors in both brand and generic drug makers expecting an average annual sales reduction of $3 billion with each legalization event. This may be because cannabis has appealed to millions of Americans who want a safer, side-effect-free alternative to pharmaceutical medications.
Lots of data-based studies, observational analyses and anecdotal reports have indicated that more people are turning to cannabis as an alternative to conventional prescription drugs such as sleep medication and opioid-based painkillers. In addition, one 2022 study that examined Medicaid data on pharmaceutical prescription drugs found that cannabis reform is often associated with significantly reduced prescription medication use.
But the researchers from the California Polytechnic State University and the University of Mexico say their new study on the economic impact cannabis legalization will have on Big Pharma is completely novel. They say that cannabis will disrupt the pharmaceutical industry for a couple of reasons.
One, cannabis is largely unpatentable, meaning it may be a new generic entrant into the market that could pull patients away from prescription drugs. Second, medical cannabis is versatile and isn’t restricted to treating a limited set of conditions, allowing it to break into several different drug markets at once.
The financial impact on pharmaceutical firms could be massive, the study concludes, stating that each legalization event could end up costing companies around $9.8 billion.
As more health conditions are added onto the list of qualifying conditions for medical marijuana, the sales of cannabis companies such as Cannabis Strategic Ventures Inc. (OTC: NUGS) look set for a sustained upward trajectory in the years to come if innovation and awareness of consumer needs are consistently kept at the fore.
NOTE TO INVESTORS: The latest news and updates relating to Cannabis Strategic Ventures Inc. (OTC: NUGS) are available in the company’s newsroom at http://cnw.fm/NUGS
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