PHARMACIES VS.

DISPENSARIES: THE FUTURE OF CANNABINOIDS AS MEDICINE

Pharmacies vs. Dispensaries:

The Future of Cannabinoids
as Medicine
Report Excerpt

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 PHARMACIES VS. DISPENSARIES: THE FUTURE OF CANNABINOIDS AS MEDICINE

What a chapter it will make in the history of That puts Epidiolex in a unique
science: A band of true believers in the ben- position in the history of phar-
efits of consuming cannabis gets the United maceutical drugs. GW hopes
States to authorize its use for medical pur- to sell this CBD drug at an
poses starting in 1996. Many scoff that it’s average of $32,500 annu- PHARMACEUTICAL
just a ruse to get a recreational drug legal- ally. This is a drug with COMPANIES FOR THE
ized, but it turns out cannabinoids derived
from the plant do have efficacy in the treat-
an active ingredient that
is available not just in
FIRST
ment of intractable childhood epilepsy. cannabis dispensaries TIME EVER
in legal states, but in WILL HAVE
Last year the Food and Drug Administration health food stores, TO CONVINCE
(FDA) made the anecdotes official by grocery stores and CONSUMERS AND
approving the sale of GW Pharmaceutical’s every kind of general
CBD-based Epidiolex for just that purpose. retail outlet in the US, REGULATORS THAT
Meanwhile, the case studies and clinical at a lower cost. Even THEIR PROTOCOLS,
outcomes overwhelmingly demonstrate if retailers decide not TRIALS, COMPOUND
that cannabidiol (CBD), tetrahydrocannab- to defy federal laws ISOLATION AND
inol (THC), and likely other cannabinoids by explicitly marketing PURITY PROCESSES
derived from cannabis sativa plants, have products claiming to ARE REALLY WORTH
efficacy in the treatment of many other treat seizures, there’s
health problems. nothing to stop con- THE EXPENSE VERSUS
sumers from emulating A MUCH CHEAPER
By the time Epidiolex went on sale in phar- the proven dosages OPTION READILY
macies in 4Q 2018, the number of states either in stores or through AVAILABLE JUST DOWN
allowing the sale of CBD and THC-containing home-grown hemp. THE STREET.
products at US dispensaries had grown to
33. In December, Congress legalized the But the first approval of a
growing of hemp, defined as low-THC (but naturally-derived pharmaceuti-
potentially very high-CBD) sativa plants. In cal cannabinoid cuts both ways:
theory, at least, as long as marketers don’t Medical cannabis retailers, after 22
make specific health claims, companies can years of flying under the radar, now
sell products with amounts of CBD similar to face pharmaceutical-grade competition.
Epidiolex in United States retail outlets.
The stakes for the practice of medicine could
not be much larger. What if it turns out, as
Dr. Kevin Spelman sug-
gested at the February
7, 2019 Arcview Market
Research Investor
Summit in Santa
Monica that “Cannabis
is not a gateway drug,
it is a gateway plant
that shows health-
care providers that
medicinal plants may
provide efficacy at a
fraction of the cost
of pharmaceuticals.”

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 PHARMACIES VS. DISPENSARIES: THE FUTURE OF CANNABINOIDS AS MEDICINE
To date, medical cannabis has primarily
been sold at dispensaries in the United
States and via mail order in Canada to
consumers who have obtained govern-
ment permission to buy it legally. That
is changing as more entities explore
and study cannabinoids and the other
chemicals found in cannabis for use in
pharmaceutical drugs.
While the pharmaceutical industry is
one of the largest economic sectors by
spending, at an estimated $1.2 trillion
worldwide in 2018, pharmaceutical
cannabis drugs are in their infancy.
Current revenue from existing drugs
is estimated in the tens of millions.
As drug trials and approvals happen
that number will grow, but in the time
frame of our forecast the market will
remain small, less than 10% of legal
cannabis product sales in 2022.
Cannabinoid receptors are present
in the nervous systems of mammals
where they interact with neurotrans-
mitters to either amplify or inhibit
The leader in cannabis business intelligence
and market share tracking
their actions. The endocannabinoid
system is a fairly recent discovery that
most physicians do not learn about
in medical school. Only a relative
handful of medical professionals MEDICAL CANNABIS IS
are comfortable even discussing HELPING PATIENTS, AND
the subject, much less recom-
mending using cannabis as an THAT HAS
adjunct to medical treatment. PROMPTED
However, medical cannabis is DEVELOPMENT
helping patients, and that has
prompted development efforts EFFORTS
at dozens of pharmaceutical AT DOZENS OF
companies. How far and how PHARMACEUTICAL
fast the existing medical cannabis COMPANIES.
market can go in treating those
conditions before the pharma-
ceutical industry can get products
through the regulatory hoops and to
patients will be a key determinant of
the relative success of the two related,
but very different industries.
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 PHARMACIES VS. DISPENSARIES: THE FUTURE OF CANNABINOIDS AS MEDICINE

The June 2018 US FDA approval the Epidiolex formulation on the

of Epidiolex from UK-based GW Controlled Substances Act (CSA)
Pharmaceuticals was a turning point; scheduling from I to V. This does MOVING FORWARD,
it is the first approved pharmaceutical not mean the floodgates will AS ADDITIONAL
drug naturally derived from cannabis open to a blanket approval for LEGAL CANNABIS
plants in the US. Previous pharma- plant-based cannabis products. MARKETS LAUNCH IN
ceutical cannabinoid drugs have been Any other drug from the phar- THE US AND ABROAD,
synthetic or semi-synthetic. maceutical channel will have
to go through the same rigor- PHARMACEUTICAL
Equally important, the FDA’s action ous process. COMPANIES
forced the Drug Enforcement
Administration (DEA) to reschedule WILL NEED TO
PROACTIVELY
PLAN
(PRODUCT
DEVELOPMENT,
MARKETING, ETC.)
AGAINST THE
BURGEONING MARKET
SHARE THREAT.

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 PHARMACIES VS. DISPENSARIES: THE FUTURE OF CANNABINOIDS AS MEDICINE

This event brought light to a very seri- by insurance companies,

ous battle that has been going on so the expense would be
in state legislatures as pharmaceu- borne by the patient.
tical cannabinoid makers push local GAINING FDA APPROVAL
authorities to write laws requiring Most of the already-ap- FOR CBD PRODUCTS IS
FDA approval for CBD products. It is proved cannabis-related ONE
SHAPING UP TO BE
shaping up to be one of the most con-
sequential battles in the legal cannabis
products are in current
clinical trials for multiple OF THE MOST
industry’s short history. other indications. Proper CONSEQUENTIAL
Now that Epidolex has FDA approval,
pharmaceutical life-cy-
cle planning to include BATTLES IN THE LEGAL
however, doctors will have more free- those future uses can CANNABIS INDUSTRY’S
dom. Off-label use, the practice of help expedite paths that SHORT HISTORY.
doctors prescribing a drug for con- would decrease time to
ditions other than those explicitly market for pharmaceuti-
approved, is one area of freedom. Off- cal cannabis drugs for those
label uses are typically not reimbursed potential uses.

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 PHARMACIES VS. DISPENSARIES: THE FUTURE OF CANNABINOIDS AS MEDICINE
The legal cannabis market has been
characterized by two main channels:
medical and adult use. Medical can-
nabis is typically available via retail or
mail order in 30-plus countries with
the recommendation of a medical
professional. Laws requiring payers
to cover cannabis exist in some mar-
kets and this will be a key factor in the
battle to come between pharmacies
and dispensaries. The adult-use mar-
ket consists of highly regulated, heavily
taxed retail sales to adult consumers
in four countries and 10 US states plus
the District of Columbia.
The pharmaceutical cannabis market,
in contrast, is disease-specific, clinically
trialed, government approved
and payer eligible (e.g. covered by
insurance) use of pharmaceutical can-
nabinoid products. It is the wild card
in the already complicated canna-
bis market.
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and market share tracking
There are a host of outright facts
we just don’t know yet about can-
nabis science that will profoundly
affect the medical, pharma-
ceutical and even adult-use PROPER PHARMACEUTICAL
markets. But the approval
of Epidolex for distribution LIFE-CYCLE PLANNING TO
through the pharmaceutical INCLUDE THOSE FUTURE
channel has opened many USES CAN HELP EXPEDITE
patients (and pharma brands
and investors) eyes to the PATHS THAT WOULD
effectiveness of the cannabis
plant providing life-altering, DECREASE
therapeutic health benefits. TIME TO MARKET
These insights and more are FOR PHARMACEUTICAL
featured in the Pharmacies CANNABIS DRUGS FOR
vs. Dispensaries: The Future .
THOSE POTENTIAL USES
of Cannabinoids as Medicine
report, co-produced by Arcview
Market Research and BDS
Analytics. Purchase this canna-
bis industry intelligence report and
others at shop.bdsanalytics.com.
©2019 BDS Analytics
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