DEA Clears Pot Imports for Medical Research

Source: Investopedia : By Shoshanna Delventhal | September 18, 2018 — 12:23 PM EDT SHARE  

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The Drug Enforcement Administration (DEA), which historically has not been the greatest champion of the marijuana industry, gave pot stocks a boost on Tuesday after it announced approval for a major cannabis company to import marijuana to the United States for medical research. 

Shares of Canadian cannabis producer Tilray Inc. (TLRY) surged on the news, trading up 13.5% on Tuesday morning to new highs at $136.38. The British Columbia-based weed producer has seen its shares skyrocket close to 700% since its initial public offering (IPO) on the U.S. exchange in July 2018. 

Medical Applications and Gov't Support Add Domino to U.S. Weed Legalization

Tilray will supply medical marijuana in capsule form for a clinical trial at the University of California San Diego, exploring its uses for treating essential tremor (ET), a neurological disorder that causes involuntary and uncontrollable shaking that can hinder a patient's ability to perform every day tasks like eating, drinking, writing and driving. The trial is slated to start in early 2019. 

"If this study can identify cannabinoids as a potential treatment for patients suffering from essential tremor, we can conduct further research and potentially provide alternative effective methods of relief for the high numbers of patients with ET," stated Catherine Jacobson, Tilray's director of clinical research in a press release. 


The DEA announcement boosted shares of other marijuana stocks including Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON) and Aurora Cannabis Inc. 

Many on the Street are taking the DEA go-ahead as a sign that the broader cannabis industry is gaining support from the government. Analysts at Cowen look at today's new as a positive for Tilray and its marijuana industry peers, given "additional medical applications and improved government support add another domino to future legalization in the U.S." Cowen's Vivien Azer added that the new clinical trial supports Tilray's medical cannabis prospects both in the U.S. and globally and it competes with Canopy Growth "in an intellectual property arms race."


Nonetheless, Tilray and its weed peers still have their skeptics. Analysts give the Canadian producer and average price target of $58, according to Nasdaq data, roughly 57% lower than current levels. 

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