What Does It Take To Be An Executive In The Legal Cannabis Industry?

It is no secret that there are enormous sums of money to be made in the legal cannabis business. Not surprisingly, compensation packages for the executives who run profitable cannabis-based business are also likely to be large. That said, because cannabis and its products are illegal in the US, the talent pool is relatively shallow for executives with previous cannabis experience. Consequently, most new cannabis executives are likely to be recruited from other industries including pharmaceuticals, agribusiness, consumer healthcare and tobacco.  This is because, like the cannabis industry, these industries are highly regulated and will be under intense scrutiny from state and even federal agencies.

Gilbert J. Carrara Jr, MD, who oversees retain recruiting services at Battalia Winston International, recently described the skills sets and characteristics that he believes will be required for successful cannabis industry executive. They include:

Tough Mindedness

Because of the state-to-state complexity of cannabis legislation and negative perceptions surrounding cannabis use, executives in this industry cannot be thin-skinned or easily discouraged. If a person cannot accept repeatedly being told “no” or “go away” then he/she is not likely to be executive material in the legal cannabis industry.

Flexibility

The legal cannabis industry is in its infancy and it will continue to evolve and grow in wildly unpredictable and unanticipated ways. At present, change is the norm in the cannabis industry executive who are flexible, can pivot on a dime and remain open to sometimes new unconventional ideas on a regular basis will do just fine.

Adaptability

Like executives in other industries, cannabis industry executives must be adaptable because they will be required to communicate with a diverse group of stakeholders. That said, cannabis executives must be comfortable discussing scientific and medical topics with government and healthcare officials and equally as comfortable addressing business concerns with consumers.

Passion & Drive

Unlike other industries, simply having a resume with the requisite college degree and executive skill sets may not be sufficient for success in the cannabis industry. Because cannabis and its products are not legal at the Federal level in the US, the road ahead for cannabis executives is likely to be a long and very rocky one. To that point, the success of the industry will likely depend upon executives who have the desire and passion to continue to push things forward even when the likelihood of success is not certain.

As a former professional recruiter, I can tell you that finding a qualified “right fit” candidate at the technical or executive levels is never an easy task. And a limited talent pool does not make things any easier.  But, even though the existing executive talent pool may not be a great one, cannabis industry executives are needed; so choose wisely!

 

 

Who’s Who In the World of Publicly Traded Cannabis Stocks

While the number of publicly traded Cannabis companies is relatively small, the so-called  US Marijuana Index has been created so that people who invest in the stock market know which companies are worth investing in.  The US Marijuana index is complied by the Marijuana International Corporation.

Unlike high flying biotechnology, tech and healthcare company stocks that trade on major stock indices like NASDAQ and the New York Stock exchange, most of the stock issued by companies that comprise the Marijuana Index is traded on the over-the-counter or OTC market.

At present, the marijuana index has a market cap over $5 billion and is equally weight among 20 companies that have at least 50% of their revenues generated from the cannabis or hemp industries.  A list of the companies and their market caps that comprise the US Marijuana Index can be found here.

As of April 2017, the US Marijuana Index delivered an annual return of 35.6% as compared with the 12.47% returns of the S&P 500 index.  This suggests that investment in Cannabis company stocks may be a good bet.  That said, the uncertainty of the Trump administration’s stand on the legal US recreation and medical Cannabis industries should also be considered (at least for long term investing strategies).

Given the chaos of the Trump administration and Jeff Sessions tenuous job security, many people remain high (pun intended) on investing in the Cannabis industry.  However, like any other stock investment, investment in companies that comprise the US Marijuana Index can be risky and not for the feint of heart!

Editorial: Are Cannabis-derived Pharmaceuticals a Possibility in the US?

Surveys conducted in the 1990s (1) and 2000s (2) found that between 30% and 54% of internists and oncologists were in offering cannabis as a therapeutic option for their patients. Yet, despite this, the willingness of many physicians to prescribe medical cannabis for their patients has been less than enthusiastic. Many physicians are concerned about the legality of making medical cannabis recommendations or writing prescriptions regardless of state laws that make medical cannabis legal (3).

Because cannabis and its products are illegal at the Federal level, many physicians believe that they may find themselves in legal jeopardy even though medical cannabis is legal in the states where they practice medicine.  Further, because medical cannabis has not be test or evaluated like other medicinal products, physicians have little or no scientific data to convince them that anecdotal claims about the there therapeutic benefits of cannabis are true. Finally, physicians make recommendations to patients about specific prescription drugs because they are educated about the safety and efficacy of those products.  In the absence of this vital information, physicians will not write prescriptions.

The existing confusion about the legality/criminality of cannabis-derived products has also had an effect on the behavior of insurers and third party payers. To that point, medical cannabis is not on the formularies of almost all insurers in states where medical cannabis is legal and, because of this, they do not reimburse patients for out-of-pocket medical cannabis costs.  While payers currently do not reimburse patients for the use of medical cannabis, it is possible that insurers may reimburse patients who use US Food and Drug administration (FDA)-approved cannabis products but continue to not reimburse patients who use unapproved medical cannabis treatments. Regardless of the outcome, medical cannabis costs continue to rise and its access and use by patients who might benefit from it may be in jeopardy unless payers place it on their formularies.

Because of the legal patchwork for Cannabis that has evolved over time in the US, it is likely that cannabis-derived pharmaceuticals may only be available in the states that have legalized their use. This would force companies developing cannabis-derived pharmaceuticals to duplicate commercial operations in states where medical cannabis is legal and underwrite multiple product launches in individual states because interstate transport of these products is currently illegal. This would be extremely costly (driving up product price) and also decrease patient access to these products to address unmet medical needs. To that point, most companies developing cannabis-derived pharmaceuticals believe that rescheduling of these products from Schedule I drugs to Schedule 2 or 3 would obviate most of these concerns and allow the US Cannabis market to grow to its full potential.  Alternatively, FDA may reschedule cannabis-derived pharmaceuticals on a case-by-case basis upon approval of individual products.

Finally, because Cannabis-derived pharmaceuticals represent a new class of therapeutics, patient and healthcare provider education will be vital to successfully commercialize these products. Put simply, if physicians don’t understand cannabis-derived pharmaceuticals, and they are not convinced they are safe and effective, then, they are not   going to write prescriptions for their patients. Therefore medical cannabis and cannabis-derived pharmaceutical companies must invest in public outreach activities as well as continuing medical education workshops and courses for healthcare professionals to ensure product success.

Despite all of these challenges, there is growing popular demand for cannabis-derived pharmaceuticals in the US. And, it is likely that inclusion of these products in the American pharmacopoeia will begin to address growing unmet medical needs in the US healthcare system and improve patient access to possibly life-changing therapeutic treatments.

References

  1. Doblin RE, Kleiman MA. Marijuana as antiemetic medicine: a survey of oncologists’ experiences and attitudes. Journal of clinical oncology: official journal of the American Society of Clinical Oncology 1991; 9:1314-1319. 
  2. Charuvastra A, Friedmann PD, Stein MD. Physician attitudes regarding the prescription of medical marijuana. Journal of Addictive Diseases 2005; 24: 87-93.
  3. Bowles DW, O’Bryant CL, Camidge DR, Jimeno A. The intersection between cannabis and cancer in the United States. Critical Reviews in Oncology/Hematology 2012l; 83:1-10.

Commercializing Cannabis-Derived Pharmaceuticals: Legal and Regulatory Challenges

The current regulatory and legal landscape for cannabis and cannabis-derived products is extremely difficult and fraught with numerous challenges. For example, in the US, cannabis and products derived from it (including hemp) are federally classified as Schedule I drugs according to the US Controlled Substances Act (1). This means that cannabis and its products have been deemed to have “no currently accepted medical use in treatment in the US” (heroin and LSD are also schedule I drugs), are harmful and consequently, are illegal (2).

Not surprisingly, its Schedule 1 classification has seriously hindered cannabis research in the US and made it extremely challenging for drug companies developing cannabis-derived pharmaceutical products (3). However, over the past decade or so, 29 states including the District of Columbia have enacted legislation that permits some form of cannabis consumption for medical purposes (4). Yet, despite this, cannabis and products derived from it remain illegal at the federal level and during interstate transport (even between states where medical marijuana has been legalized) is illegal and criminally punishable (2).

The confusion regarding cannabis use at the state and federal levels has given rise to two distinct types of companies that are attempting to commercialize cannabis (and products derived from it) for medicinal purposes. The first of these are commonly referred to as medical marijuana or medical cannabis companies. Typically, products from these companies are botanical extracts or actual plant materials derived from specific cannabis strains with anecdotally-reported medicinal properties that can be topically applied, ingested, smoked or vaporized. Patients require a “prescription” (card) from a state-licensed physician to obtain medical marijuana and it can only be used in states that permit consumption of cannabis for medical purposes. It is important to note, that while a prescription is required for medical cannabis use, these products do not require human clinical testing for safety, tolerability and efficacy (like other prescription drugs) prior to their sale in states where medical marijuana is legal.

In contrast with medical marijuana companies, biopharmaceutical companies including GW Pharma, Zynerba, Insys, Kannalife, Aphios and others (Table 1) are committed to developing cannabis-derived pharmaceuticals using conventional US Food and Drug Administration regulatory approval pathways. UK-based GW Pharma is the clear leader in cannabis-derived pharmaceutical space—its flagship product Sativex®, a plant extract, has been approved as a treatment for cancer-related pain and MS spasticity in 27 countries outside the US (5).

While the business case for developing pharmaceutical cannabis-derived pharmaceuticals is a sound one, the time and cost necessary for regulatory approval will be much greater than that for commercializing medical marijuana. At present, the United State Food and Drug Administration (FDA) has signaled a willingness to review new drug applications for cannabis-based pharmaceuticals (6). However, the agency has yet to issue definitive guidance for regulatory approval of these products and to date has not approved any application for cannabis-based products (6). Nevertheless, garnering FDA regulatory approval for cannabis–derived pharmaceuticals may offer several competitive advantages over numerous medical marijuana products that currently dominate the US market.

First, the average cost per patient of Sativex® to treat MS spasticity in countries where it has been approved has been estimated to be roughly $16,000 (6). Several studies indicate  (7, 8) that the high price of Sativex® will make it unlikely to be considered cost effective by regulators in countries with government-mandated national formularies like the UK, Ireland and Australia. However, this should not be an impediment in the US market because the federal government does not set drug prices and third-party payers dictate formulary placement and set drug reimbursement rates.

Second, unlike medical marijuana (which as previously state is a Schedule 1 drug), FDA approved cannabis-based pharmaceuticals like dronabinol and nabilone have been classified or reclassified as Schedule 2 (opioids) or Schedule 3 (codeine) drugs (5, 9). Federal regulators are likely to apply the same scheduling criteria to the next generation of FDA-approved cannabis-derived pharmaceuticals like Sativex® and others. Rescheduling will effectively allow these products to compete with medical marijuana because unlike medical marijuana—which is legal in only 29 states and cannot be transported across state borders—approved cannabis-derived pharmaceuticals can be legally prescribed, sold and used in all 50 states and US territories.

Finally, and perhaps most importantly, physicians may be inclined to prescribe FDA-approved cannabis drugs as compared with medical marijuana because they have been evaluated in human clinical trials and officially deemed to be safe and effective treatments for specific therapeutic indications.. In marked contrast, medical marijuana can be prescribed and sold in states where it is legal without going through any formal drug review process. While this is unlikely to interfere with possible therapeutic benefits offered by medical cannabis questions concerning product safety, effectiveness and reproducibility about these products are likely to continue to  arise until industry best practices are implemented and standardized.

References

  1. https://www.deadiversion.usdoj.gov/21cfr/21usc/812.htm  Accessed July 17, 2017
  2. https://www.dea.gov/druginfo/ds.shtml  Accessed July 17, 2017
  3. https://www.brookings.edu/wp-content/uploads/2016/06/Ending-the-US-governments-war-on-medical-marijuana-research.pdf  Accessed July 17, 2017
  4. http://medicalmarijuana.procon.org/view.resource.php?resourceID=000881 Accessed July 17, 2017
  5. https://www.gwpharm.com/products-pipeline/sativex  Accessed July 17, 2017
  6. https://www.fda.gov/newsevents/publichealthfocus/ucm421163.htm  Accessed July 17, 2017
  7. Pharmacoeconomic NCF. Cost-effectiveness of Delta-9-tetrahydrocannabinol/cannabidiol (Sativex®) as add-on treatment, for symptom improvement in patients with moderate to severe spasticity due to MS who have not responded adequately to other antispasticity medication and who demonstrate clinically significant improvement in spasticity related symptoms during an initial trial of therapy. 2014. http://www.ncpe.ie/wp-content/uploads/2013/01/Summary-v1.pdf.
  8. Lu L, Pearce H, Roome C, Shearer J, Lang IA, Stein K. Cost effectiveness of oromucosal cannabis-based medicine (Sativex(R)) for spasticity in multiple sclerosis. PharmacoEconomics. Dec 1 2012;30(12):1157-1171.
  9. https://www.deadiversion.usdoj.gov/fed_regs/rules/1998/fr1105.htm  Accessed July 17, 2017