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C3 Podcast No. 10: Pharmaceutical Industry Profit Study

Updated: Feb 16, 2023

In No. 10 of the Cannabis Commerce + Chemistry (C3) Podcast, host Curt Robbins from Higher Learning LV in Las Vegas and co-hosts John Bailey from the Mindset Genesis in Las Vegas and Dena Putnam from Leafwize Naturals in Orange County, California are joined by guest Wes Williams from KND Infusions in Los Angeles.

Together, these four cannabis industry professionals discuss a 2022 research study pertaining to the effects of state-level cannabis legalization on the profitability of pharmaceutical companies.

Guest Williams describes how his company KND Infusions, which is readying low-dose infused edibles for market, approaches topics of importance to both the pharmaceutical and cannabis industries—including research and development, dosing, patient outcomes, and avoidance of negative side effects.

This podcast episode discusses nanoemulsion technology and how it is improving patient outcomes by significantly decreasing onset time and improving bioavailability.

The four participants discuss nanoemulsion technology and how it is improving patient outcomes by significantly decreasing the onset time and improving the bioavailability of nanoemulsified products compared to traditional oil-based edibles.

🎧 Listen to C3 Podcast

This weekly 30-minute podcast is targeted at cannabis and hemp industry professionals and is strategically free of profanity and crude dialog. This audio session was edited for length and clarity.

To better understand the effect of state-level pro-marijuana laws on the pharmaceutical industry, listen now at Higher Learning LV, on Apple Podcasts or Spotify, and most other major podcasting platforms (including Amazon Music, Anchor, Google Podcasts, iHeart Radio, Pandora, and Stitcher).

Pharmaceutical Profits & Cannabis Legalization Events

This weekly audio roundtable discusses a different topic each week that is of importance to the hemp and cannabis industries. For this week's episode, the following article was the topic of discussion that was shared with participants prior to the capture of the episode.

An August 2022 peer-reviewed research study entitled "U.S. Cannabis Laws Projected to Cost Generic and Brand Pharmaceutical Firms Billions" that was published in the journal PLoS ONE investigated the nuanced relationship between state-level cannabis legalization and pharmaceutical industry financial performance, including stock value and revenue volume.

The study hypothesized that cannabis legalization in U.S. states "is likely increasing the use of cannabis as an alternative to conventional pharmaceutical drugs." The researchers examined how cannabis legalization "between 1996 and 2019 affected stock market returns for listed generic and brand pharmaceutical companies," finding that pharmaceutical industry revenues "were 1.5-2 percent lower at 10 days after legalization."

The researchers referenced the stock market valuations of publicly traded pharmaceutical firms and other marketplace metrics to gain insight into how cannabis legalization in states affects profitability for both publicly listed and private pharmaceutical companies "over nearly 25 years of state cannabis legalization."

The Study

The study revealed that observed revenue decreases for pharmaceutical firms occurred among generic and brand drugmakers and were triggered by both "medical and recreational legalization." "Despite federal classification as a Schedule I drug, by 2020 33 states had legalized medical access to cannabis for severe, debilitating conditions," reported the study's authors.

"Revenue decreases for pharmaceutical firms occurred among generic and brand drugmakers and were triggered by both medical and recreational legalization."

The research explained that the cannabis plant species is "largely unpatentable" and may, following state-level legalization, play a role in the marketplace similar to that of a new generic pharmaceutical drug. "However, unlike a conventional new generic drug, cannabis use is not restricted to a single or limited set of conditions," noted the authors.


The study revealed that the average change in a pharmaceutical company's market value for each time a state legalized either medical or adult-use cannabis to be $63 million and that the cumulative impact on the pharmaceutical industry "across firms" was $9.8 billion.

"The average change in a pharmaceutical company's market value for each state medical or adult-use cannabis legalization event was $63 million, with a cumulative impact on the industry of $9.8 billion."

"This implies a change in annual sales across all drugmakers of $3 billion per [state-level legalization] event," reported the study's authors. They noted that the level of sales decrease "is about 129 percent greater" for adult-use legalization events compared to medical programs.

Brand Drugmakers Suffer Most

When comparing the effects of cannabis legalization on generic versus brand pharmaceutical drugs, "we find the effect on brand drugmakers is 224 percent larger than the effect on generic drugmaker sales."

The study's authors interpreted their results to indicate that cannabis legalization "is associated with a decrease in the stock market returns for pharmaceutical firms" and that a medical legalization event "generates a more muted effect on cumulative returns" compared to an adult-use law.

Read the full article.

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