More investors are placing their bets in marijuana stocks than ever before. With the average marijuana stock showing gains over 330% since the following year now we know why. A report titled the “Marijuana Business Factbook 2017” predicts legal U.S. sales quadrupling to $17 billion by 2021. This would imply that the marijuana sector will continue to gain around 25 percent per year.
Although 64% of Americans favoring national legalization. Attorney General Jeff Sessions and federal law that classifies marijuana as an illegal substance without acknowledging any type of medical benefit which contributes the sectors high volatility.
Last week the sector’s volatility reached Insys Therapeutics, causing the Securities and Exchange Commission to halt the stock’s trading on Thursday. Insys shares are roughly down 90% from previous highs, crushed by a scandal involving the company’s star drug, Subsys. The drug is a fentanyl sublingual spray that the Food and Drug Administration (FDA) approved as a treatment for breakthrough cancer pain.
Lawsuits claiming that the Insys management and marketing teams advertised Subsys to physicians for off-label use of pain management while paying bribes to physicians to boost the drug’s sales. The company’s founder John Kapoor, also was recently arrested and charged with engaging in conspiracies to commit racketeering, mail fraud, and wire fraud. Adding to the company’s predicaments, President Trump declared the opioid crisis a public-health emergency this Thursday which can induce stricter regulations hindering sales for Insys.
There may be a light at the end of the tunnel for Insys with its new oral dronabinol solution, Syndros. The drug is a synthetic form of tetrahydrocannabinol (THC), the psychoactive component of cannabis, has been approved for the treatment of nausea and vomiting associated with chemotherapy and anorexia related to AIDS. With no other drugs like it on the market, Syndros could generate sales over $200 million annually. The only question now is whether Syndros will come to the rescue or will Insys go down in flames?
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