Cannabis Could Disrupt the Lucrative Market for Painkillers

Experts are zeroing in on cannabis as a potential disruptor to the multibillion-dollar prescription-opioid market.

According to the 2015 National Survey on Drug Use and Health, 37.8% of the United States adult population was prescribed opioid drugs in 2015.

The extremely high rate of prescriptions in the United States as well as internationally has led Grandview Research to forecast the global opioids market to total $34.96 billion by 2025.

Dr. Stuart Titus, CEO and President of Medical Marijuana, Inc.  (MJNA)  , the first ever publicly traded cannabis company in the U.S., thinks this market is ripe for disruption.

The disruption, while most importantly a possible solution to the burgeoning opioid crisis, could offer great benefits to investors in cannabis stocks.

Risk Reduction

Titus first noted that the potential for overdosing on cannabis versus opioids is no question in favor of cannabis.

"Opioid receptor sites are very close to the parts of the brain that control your breathing reflex," he explained in an interview with Real Money. "In overdoses this causes a number of individuals to asphyxiate."

By contrast, cannabinoid receptors are located in the center of the brain and pose no threat to the brain stem, even if an overdose were possible.

As such, he thinks regulators and physicians will come to accept cannabis and cannabidiol as first-choice painkillers if their efficacy continues to be proven in clinical trials.

"I think that even anti-inflammatories could be replaced by cannabinoids, so we can't wait for more research there," he added.

To be sure, there is little long term clinical study as of yet.

"For the science, many will say there hasn't been clinical work (on cannabis)," Canopy Growth CEO Bruce Linton told Real Money. "But principally, this has been a criminal business. Do you think criminals are going to do clinical trials?"

Linton, like Titus, said he is looking forward to more research as the industry comes out from the shadows.

Can't Beat 'Em, Join 'Em

Titus likened medical cannabis disruption of the opioid and pharmaceutical industry to the disruption that alcohol distributors have felt from recreational cannabis.

The disruption in this market resulted in a $4 billion investment from beverage leader Constellation Brands (STZ) in Canopy Growth Corporation (CGC) in order to hedge that disruption.

Titus said he expects this exact type of trend coming in pharmaceuticals.

His suspicions echo those of Tilray, Inc. CEO Brendan Kennedy who said he sees cannabis as a replacement for a number of pharmaceutical products.

"Cannabis is a substitute for prescription painkillers, prescription opioids," he said. "So, if you're an investor in a pharmaceutical company or you're a pharmaceutical company, you have to hedge the offset from cannabis substitution."

His interview, along with federal approval for studies, helped spark an incredible run for the stock this week that was only slightly eaten into on Thursday.

If the disruption in pharmaceuticals does in fact cause pharma companies to open what Linton called "the really big checkbooks", it should be a boon for cannabis investors.

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