GWPH - Better Cannabis Stock: Charlotte's Web vs. GW Pharmaceuticals
If you want to invest in cannabis companies that are safe, long-term bets, you might be hard-pressed to find a few standouts. If one thing's for certain, though, it's that investors should at least consider picking stocks that aren't dependent on recreational marijuana, where future growth is still a question mark. Only 11 U.S. states, Canada, and Uruguay permit recreational pot. Thirty-three states currently allow it for medicinal use, but individual states' rules are complicated by the fact that marijuana is still an illegal Schedule 1 drug at the federal level. Note that hemp, a derivative, is federally legal, as it contains no more than 0.3% tetrahydrocannabinol (THC).
Rather than investing in companies that sell both medical and recreational products, another attractive option is to invest in pure-play medical marijuana or hemp companies with a focus on one type of quasi-legalized cannabis product. Two companies that fit that criteria are GW Pharmaceuticals (NASDAQ: GWPH) and Charlotte's Web (OTC: CWBHF). Although Charlotte's Web is technically in the hemp market, its focus is still on the medicinal benefits of cannabis and its non-psychoactive substance, cannabidiol (CBD). Both companies' business activities can give you some great exposure to the growing market for medical marijuana. Let's take a look at which is the better investment today.
The big moneymaker for GW Pharmaceuticals is its Epidiolex drug. It is the only cannabis-based drug that the U.S. Food and Drug Administration (FDA) has approved for use in the U.S. In 2018, the FDA approved the drug as a treatment for Lennox-Gastaut syndrome and Dravet syndrome, two rare forms of epilepsy. In August, the FDA also approved Epidiolex to treat tuberous sclerosis complex.