Legalized Marijuana: Companies Moving Now To Cash In On Cannabis

on February 20 2014 10:59 AM
  • Marijuana Retailer
    Nate Johnson, managing owner of the Queen Anne Cannabis Club, sells a marijuana strain called "Beast Mode OG," named after NFL player Marshawn "Beast Mode" Lynch of the Seattle Seahawks, in Seattle Jan. 28, 2014. Reuters
  • Marijuana Bust
    An unidentified police officer surveys an indoor marijuana farm, also known as a "grow house", in an empty swimming pool, concealed by a thick slab of concrete, in this undated handout photo provided by Miami-Dade County Police Department in Miami, Florida on January 31, 2014. Reuters
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As momentum builds in the U.S. toward widespread decriminalization or legalization of marijuana for either medical or recreational use, a small crop of companies are moving to capitalize on the psychoactive plant.

Largely illegal in the U.S. for a century, weed became legal in Washington and Colorado at the start of the year after voters in those states gave the go-ahead in 2012. Further north, voters could decide in August whether Alaska will become the third state to remove prohibitions on the recreational use of pot. A poll released Monday by Quinnipiac University suggests residents of New York, a state notorious for its strict drug laws, are in favor of legalizing small amounts of marijuana for personal use by a comfortable margin of 18 percentage points.

Estimates of the total value of a legal pot industry in the U.S. are hard to establish in part because the current price of marijuana is artificially high; illegal substances, after all, are a significant risk to black market dealers and buyers, and with that comes a premium. A 2011 report by See Change Strategy, which focuses on growth in new markets, estimated that the value of medical marijuana alone would grow from $1.7 billion to about $9 billion by 2016.

Here are some companies that have begun positioning themselves to cash in on this cash crop:

PetroTech Oil and Gas Inc. – The Henderson, Nev.-based oil and gas concern said Wednesday it set up a subsidiary company in Colorado and Washington called LP.US Management Group Inc. to arrange deals with growers to deliver their goods to market. PetroTech claims it already has agreements with five unnamed producers in those states. The company’s website touts plans to set up branded strains and make marijuana-based edibles, butane hash oils and even pot-based topical body lotions.

Hemp Inc. – The Las Vegas company specializes in products based on hemp, the tough fibers of the marijuana stem, popular among environmentalists who view it as a natural alternative to petroleum-based fibers. As medical and recreational marijuana spreads, the company sees itself expanding relationships with growers since hemp is derived from the parts of the plant that have little or none of the active, mind-altering ingredients and are typically discarded by growers who harvest the psychotropic buds. On Thursday Industrial Hemp and Medical Marijuana Consulting Company Inc., a Hemp Inc. subsidiary announced a deal with Webxu Inc., a Los Angeles digital media and e-commerce development company, that will help Hemp expand its Web and mobile presences in the industrial hemp and medical marijuana industries. Earlier this month Hemp Inc. and Dewmar International BMC Inc. agreed to market hemp-based edibles that would be qualified for sale in all 50 states.

Nuvilex Inc. – This Silver Springs, Md.-based biotech firm is primarily involved in research and development of pancreatic and breast cancer treatments but is moving to become a player in medicinal marijuana. In December the company hired Mark L. Rabe, a physician and expert on medicinal uses for cannabis, to develop the company’s role in medical marijuana, which is often prescribed as a treatment for chemotherapy-induced nausea.

GW Pharmaceuticals PLC – This Salisbury, U.K., biopharmaceutical firm specializes in cannabis-based prescription medicines. In January the company signed a deal with French pharmaceutical company Ipsen SA to supply Sativex, a cannabis extract that is used to treat spasms caused by multiple sclerosis, in Central and South America.

Alternative Fuels Americas Inc. – This biofuel company, based in Hollywood, Fla., announced earlier this year it established Marijuana Holdings Americas Inc. to “serve as a vehicle for entry into the legal marijuana sector.” The company is pursuing licensing for the cultivation and sale of marijuana for recreational and medicinal uses and says it intends to own greenhouses and retail outlets.

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