Here's Why Hopeful Marijuana Stock Cara Therapeutics Surged 15% in March

Positive clinical data is almost always a recipe for success.

What happened

Shares of Cara Therapeutics (NASDAQ:CARA), a clinical-stage biopharmaceutical company focused on treating pain and pruritus (itching), surged an impressive 15% in March, according to data from S&P Global Market Intelligence. Two factors appear to have played a key role in pushing shares of Cara noticeably higher.

So what

Without question, the biggest catalyst last month was the release of positive top-line data from Part A of its phase 2/3 trial for IV CR845 in patients with chronic kidney disease-associated pruritus (known officially as uremic pruritus). Cara reported that all three doses tested met the primary endpoint of a statistically significant change from base in the mean worst itching score after eight weeks. It specifically led to a 68% reduction from baseline in worst itch scores compared with the placebo. IV CR845 also met the secondary endpoint which measured quality of life using the Skindex-10 score. The drug was also well tolerated across all doses. The next step is to meet with the Food and Drug Administration to discuss Part B of the study. 

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Secondly, and to a lesser extent, Cara continues to thrive as a so-called "marijuana stock." Even though CR845 is its only clinical-stage product (albeit for a couple of different indications), the company has also successfully tested CR701 in preclinical trials in animals. CR701 is designed to activate the natural cannabinoid receptor system found in our bodies, and the hope is it could one day replace opioid-based therapies as a pain treatment option. As the public's opinion of marijuana grows more favorable, just about any company associated with marijuana sales or medical research has benefited.

It's possible Cara's month could have been even better had it not announced a common stock offering just one day after releasing its IV CR845 Part A results. The company announced its intention to sell $80 million worth of common stock, with underwriters having the option to purchase up to $12 million more. While this capital is much needed for Cara's ongoing work and its Part B trial, it nonetheless is dilutive to existing shareholders.



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Now what

On one hand, investors have to be careful not to get too sucked into the hype surrounding Cara Therapeutics. Yes, it may have the potential to develop a CB-receptor-targeting drug in the future, but it's far more of a traditional drug developer than a marijuana stock at this point.

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On the other hand, this recently released Part A data suggests that Cara could have a winner on its hands. The key question that remains is whether the company can translate this win into success in its pain trials, because there's a much larger patient pool in the offing if CR845 is successful at treating pain. Within the next couple of months, we'll have data from a phase 3 trials of IV CR845 for post-operative pain, as well as a mid stage study using an oral formulation of CR845 for arthritic pain.

Acknowledgement:https://goo.gl/eNwbsR

With cash no longer an immediate concern, I would suggest investors add Cara to their watchlist, but remain safely on the sidelines until we have this late-stage data on post-operative pain in hand. By Sean Williams

Source:https://goo.gl/QNXygL

3 Revolutionary Drugs for Chronic Pain

Flexion Therapeutics, Cara Therapeutics, and Nektar Therapeutics have entirely new ideas for how to treat chronic pain, and those ideas may reshape the market.

Flexion Therapeutics (NASDAQ:FLXN), Cara Therapeutics (NASDAQ:CARA), and Nektar Therapeutics (NASDAQ:NKTR) may soon offer patients suffering from chronic pain a better option than opioids. Here's how these companies plan to reshape the way doctors treat the 39 million Americans with chronic pain.

Tackling knee pain

Flexion Therapeutics' Zilretta is under review by the Food and Drug Administration (FDA) as a new approach to treating knee pain caused by osteoarthtritis, and positive results from trials suggest it could eventually replace corticosteroid injections for millions of patients.

IMAGE SOURCE: GETTY IMAGES.

The FDA will issue a go/no-go decision on Zilretta on Oct. 6, and data from studies may be compelling enough for a green light. In trials, Zilretta patients enjoyed a median 50% reduction in knee pain, and, more importantly, that pain relief was maintained throughout a three-month period. If Zilretta's effectiveness holds up in the real world, there's a good chance it will win support with doctors and patients because pain relief from corticosteroids typically wears off within weeks -- long before the next scheduled quarterly injection.

Roughly 5 million people currently receive corticosteroid shots because of their pain, and management thinks Zilretta could fetch $2,000 per patient per year. If this estimate is on target, it won't take a lot of market share for Zilretta to be a top seller. 

Recently, rumors have surfaced that acquisition-hungry Sanofi SA (NYSE:SNY) is kicking Flexion Therapeutics' tires. It wouldn't shock me if those rumors are true. Sanofi has attempted to buy Medivation and Actelion in the past year, so it's clearly on the hunt for acquisitions. Importantly, Sanofi already markets Synvisc-One -- a hyaluronan injection used to treat knee pain -- which generates $400 million per year, so it's already got the sales force in place to turn Zilretta into a winner. 

Outperforming opioids

Cara Therapeutics thinks CR845's ability to relieve pain with less risk of addiction could allow it to capture a big share of the 24 million pain prescriptions written for opioids every year.

Instead of targeting mu-opioid receptors in the nervous system like opioids, CR845 relieves pain at the source by targeting kappa-opioid receptors in the periphery of the body. Because CR845 is designed not to pass easily through the blood-brain barrier, it delivers less of a euphoric high than opioids.

CR845 is being studied in hip and knee pain in osteoarthritis patients, and management just reported data showing that it can help reduce chronic itch in dialysis patients.

The potential to elbow market share away from opioids and deliver greater relief to dialysis patients is exciting, but more trials are required before Cara Therapeutics can file for FDA approval of CR845. Because more work needs to be done, it may be a while before this drug makes it to market. Nevertheless, this company's opportunity is big, and that makes tracking its progress worthwhile.

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Improving the standard

Like CR845, Nektar Therapeutics' NKTR-181 may eventually reduce pain patients' need for opioids. But, unlike CR845, NKTR-181 still targets mu-opioid receptors in the nervous system to deliver pain relief.

However, it does so selectively. And it's specifically designed to cross the blood-brain barrier slowly to reduce euphoria. By more precisely targeting the receptors and limiting euphoria, it may deliver similar relief to opioids with less of a risk of abuse.

Last week, the company announced results from a trial testing NKTR-181 for chronic back pain, and that trial's data didn't disappoint. NKTR-181 reduced pain relative to a placebo, and it did so without causing opioid-like levels of euphoria.

Those findings sent Nektar Therapeutics shares soaring, but the company hasn't announced its plans to file for FDA approval yet. Instead, management is searching for a bigger peer to partner with on the drug. Assuming it secures a deal, an FDA filing should come shortly thereafter, with an official regulatory decision coming 10 months later.

Todd Campbell

Source: https://www.fool.com/investing/2017/03/30/3-revolutionary-drugs-for-chronic-pain.aspx?yptr=yahoo

3 Growth Stocks That Could Soar More Than Nvidia

These three growth stocks could outperform even Nvidia's jaw-dropping performance.

Over the past five years, shares of the visual computing company Nvidia Corporation (NASDAQ:NVDA) have blasted northward, gaining a staggering 575%. While this type of return on capital is exceedingly rare in the stock market, there are a number of companies working on disruptive new technologies and products that could eventually produce similar -- or perhaps even better -- growth trajectories at the end of the day.

Our contributors, for example, think that Cara Therapeutics (NASDAQ:CARA), Argan Inc. (NYSE:AGX), and Sony (NYSE:SNE)all have what it takes to outperform Nvidia's impressive track record. Read on to find out why. 

IMAGE SOURCE: GETTY IMAGES.

This small-cap biotech is starting to heat up in a big way

George Budwell (Cara Therapeutics): Even though 2017 is only about two months old, shares of the small-cap biotech are already up a whopping 74%. The crazy part is that literally nothing has happened to spark this jaw-dropping rally -- at least not yet. 

CARA DATA BY YCHARTS

Having said that, the market apparently is starting to take notice of the commercial potential of Cara's experimental pain med CR845, which is on track to produce a pivotal-stage readout in the acute post-operative pain setting in the first half of the year. If successful, CR845 would be one step closer toward displacing standard opioids like morphine and fentanyl in acute pain situations. 

Unless you've been living under a rock over the past decade, you're probably well aware that the U.S. is experiencing a severe opioid epidemic that's reportedly affecting over 20 million Americans at present. The point is that the highly addictive nature of opioids -- combined with their severe side effects, which can even be life-threatening -- is driving a rigorous search for alternative pain relievers within the pharmaceutical industry. And that's where Cara's CR845 comes into the story.

Unlike morphine, which targets the mu-opioid receptor, CR845 is a kappa opioid receptor agonist. As such, it should theoretically provide comparable levels of pain relief but without the problematic side effects. And if this hypothesis is borne out by the clinical data, this drug could easily transform into a megablockbuster product given that over 60 million patients per year in the U.S. undergo procedures that require prescription pain meds.   

The flip side of the coin is that CR845 is far from the first experimental pain med to target this huge unmet medical need. This need still exists because no single drug candidate has produced an overall clinical profile (efficacy plus safety) that's superior to morphine.

Summing up, Cara's stock could probably outperform even Nvidia's monstrous track record if CR845 does strike gold in its ongoing late-stage trial, but this ideal scenario is far from a sure thing given that replacing morphine has proven to be a tough nut to crack.

This little-known power services company is growing at a rapid clip

Neha Chamaria (Argan Inc.): Have you ever heard of Argan, an engineering, procurement and construction services company that's worth about $1.1 billion today? Well, if you'd bought shares of Argan this same day back in 2011 and forgot all about it, you'd be holding an 8-bagger today. That beats NVIDIA's returns during the period.

Past performance doesn't guarantee future returns, but I believe Argan remains a potential multibagger even at current prices. Argan may not belong to a fast-growing industry like NVIDIA, but its mind-boggling track record of profits and return on equity, a pristine balance sheet, and strong foothold in an essential industry count among the key qualities of a multibagger stock. 

AGX RETURN ON EQUITY (TTM) DATA BY YCHARTS

Argan is a holding company that provides products, services, and solutions to key industries like power and telecommunications through its four subsidiaries, the largest being Gemma Power Systems (GPS), which designs, builds, and commissions natural-gas and renewable energy power projects. GPS, which contributes

nearly 83% of Argan's revenues, has installed more than 14,000 megawatts of capacity, including 435 MW of wind, 12 MW of solar, and 370 million gallons per year of alternative fuels capacity. With the power industry gradually shifting from coal to natural gas and renewable energy gaining momentum, Argan's project bookings could soar in coming years. There's no reason why its profits and stock price shouldn't follow suit.

In fact, Argan appears to have already stepped on the gas, with its backlog hitting record highs of $1.2 billion as of Dec. 31, 2016, growing at a compounded average clip of 23% since 2012. That's incredible, and reflects the growth potential in Argan's business. What's more, Argan is a debt-free company, which makes its average five-year ROE of 20% look all the more solid. Argan is neither as popular nor as large as NVIDIA, but such little-known rapidly growing companies often turn out to be megawinners for shareholders in the long run. 

See Sony soar!

Rich Smith (Sony): They used to make TVs, right? And, like, the Walkman? And this is a stock that's supposed to soar more than NVIDIA?

Well yes, it is. Now let me tell you why.

Sony is more than just televisions. It's also one of the biggest names in gaming -- a business that generated $13.8 billion in sales for Sony last year, and was its biggest revenue producer (even bigger than TVs).

According to data from Statista.com, Sony has definitively won the console wars against Microsoft (NASDAQ:MSFT) (and Nintendo for that matter). Last year, Sony unloaded 12.3 million units of the Playstation 4 -- more than twice the 5.8 million Xbox Ones that Microsoft moved, and nine times Nintendo's 1.4 million sales of the Wii U. This opens up a huge lead for Sony over Microsoft and Nintendo for follow-on sales of games and accessories -- and virtual reality headsets, which may become the next big thing for gamers. Yet despite this success, Sony stock remains remarkably cheap, giving investors more opportunity to profit as it runs up.

Currently, Sony boasts a market capitalization of only $39.1 billion (and an enterprise value that's even cheaper -- Sony has $4.8 billion more cash than debt on its balance sheet). And while the company technically has no "profits" (as GAAP accounts for such things), it's not quite correct to call Sony "unprofitable." In fact, Sony generated positive free cash flow of $3.1 billion last year, which, when weighed against the company's market cap, yields a price-to-free cash flow ratio of only 12.6.

Analysts who follow the stock believe Sony will grow its profits at about 18% annually over the next five years, which results in a price-to-free cash flow-to-growth ratio of 0.7 -- cheap by any measure. And again, this is all before accounting for the cash already on its balance sheet, which makes the stock even cheaper. For my money, despite the famous name, Sony stock remains a gem of an investment, and one that could soar more than NVIDIA once investors recognize its true worth. 

By George Budwell, Rich Smith, And Neha Chamaria

Source: https://www.fool.com/investing/2017/03/01/3-growth-stocks-that-could-soar-more-than-nvidia.aspx?yptr=yahoo

How High Can Cara Therapeutics Stock Go?

Cara Therapeutics stock is soaring. Can the biotech's huge momentum continue -- and, if so, for how long?


IMAGE SOURCE: GETTY IMAGES.

In just six weeks, Cara Therapeutics' (NASDAQ:CARA) shares have skyrocketed by roughly 80%. The stock has more than doubled since the beginning of November. Did Cara report great results from a clinical trial? Nope. Investors simply seem to have gained an intense interest in the clinical-stage biotech.

There are several potential catalysts coming up this year that could give investors solid reasons to like Cara Therapeutics even more. The real question, though is this: How high can this biotech's stock really go?

What's intriguing investors

Cannabinoid Receptor Agonists

There have been plenty of news stories about the opioid epidemic sweeping the United States. Opioid drugs are great at helping reduce pain, but they're also very addictive. At least most of them are. But not all. That's where Cara Therapeutics comes into play.

Cara's lead product, CR845, is a kappa opioid agonist. Most of the opioid drugs you're probably familiar with, like morphine, oxycodone, and hydrocodine, bind to mu opioid receptors in the body's central nervous system. CR845, however, targets kappa opioid receptors in peripheral nerve cells outside of the central nervous system. Because the drug doesn't enter the brain, it has the potential to relieve pain without causing the negative side effects associated with many existing opioid drugs.

The biotech is targeting three indications with CR845: post-operative pain, chronic pain, and pruritus (itching). Phase 2 clinical results for the experimental drug in treating post-operative pain after hysterectomies were very encouraging. Patients taking CR845 experienced significantly lower post-op pain levels and reduced post-op use of narcotics.

Cara also reported great results from a phase 2 study of CR845 in treating chronic pain. Patients taking a 5 mg dose of the drug experienced significantly less pain and required less rescue medications (drugs needed for immediate pain relief) than those on placebo.

It was a similar story for Cara's phase 2 study targeting uremic pruritis, an internal itching that is caused by chronic kidney failure. Patients taking CR845 reported significantly reduced itch intensity than did patients on placebo. The patient receiving CR845 also reported significantly better quality of life scores. 

Coming catalysts

More good news could be on the way for Cara Therapeutics. The biotech has three key data readouts scheduled for 2017.

Cara expects to announce top-line results from its late-stage study evaluating CR845 administered intravenously in treating acute post-op pain in the first half of this year. These results will be enormously important for the company. If things go well, Cara could file for regulatory approval based on the study.

Top-line results from the company's phase 2/3 clinical study of intravenous CR845 in treating uremic pruritus are expected by the end of the first quarter. This phase involved 160 patients treated for eight weeks. The next phase of the study will include 240 patients with a treatment period of 12 weeks.

Another key announcement is also expected in the first half of 2017. Cara should report top-line results from its phase 2 study evaluating an oral form of CR845 in treating patients with chronic osteoarthritis pain. 

Lots of opportunity

There's certainly a large potential market for CR845 if it wins approval. Take the post-op pain indication, for example. Around 46 million inpatient and 53 million outpatient surgeries are performed each year in the U.S. Over 200 million prescriptions are filled annually for drugs to manage pain outside of the hospital setting.

The chronic pain market is also a big opportunity. More than 100 million prescriptions are dispensed each year in the U.S. for drugs to treat patients with chronic pain.What about the potential uremic pruritus market? Over 20 million Americans take prescription drugs for treating the condition. 

Of course, Cara won't capture all of the potential market even assuming CR845 wins regulatory approval. Dislodging existing drugs won't be an easy task even with some of the advantages offered by the kappa opioid agonist.

Cara could also face stiff competition from another new entrant to the market -- Trevena (NASDAQ:TRVN). Although Trevena's lead candidate, oliceridine, targets the mu opioid receptors like most opioids available today, there's a twist. Oliceridine selectively activates pain-relieving pathways while avoiding the pathway associated with the adverse effects typically experienced with opioid drugs.

Trevena could get a slight head start on Cara as well. The biotech expects to announce results from its late-stage study of oliceridine as a treatment for moderate-to-severe acute post-op pain in the first quarter of 2017. If those results are positive, Trevena plans to submit for U.S. regulatory approval in the second half of this year.

How high?

Cara Therapeutics' market cap soared to over $450 million thanks to the huge stock run-up in recent months. Although there are always risks, I think the potential for CR845 to ultimately win approval for all three indications the biotech is targeting looks pretty good. 

I wouldn't be surprised if Cara becomes an acquisition target by a larger company with an established sales force in the pain market. Even without the buyout possibility, though, my view is that the coming catalysts this year should spur Cara's shares to go even higher. Another jump of 30% or perhaps more by the end of 2017 doesn't seem unrealistic.  

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Nasdaq Cannabis Stocks Rally After Recreational and Medical Use Passes

Cannabis stocks listed on the Nasdaq continued to rally after voters ended prohibition and approved the recreational use of marijuana in California, Massachusetts, Maine and Nevada.

Cannabis stocks listed on the Nasdaq continued to rally on Wednesday after voters ended prohibition and approved the recreational use of marijuana in California, Massachusetts, Maine and Nevada while Arkansas, Florida and North Dakota adopted medical marijuana laws.

Arizona rejected its measure for recreational use while Montana voters approved a measure to improve access to medical marijuana providers.

"Whether they live in blue or red states, voters have spoken in an overwhelming majority that they want media and recreational marijuana," said Jason Spatafora, co-founder of Marijuanastocks.com and a Miami-based trader and investor known as @WolfofWeedST on Twitter. "One election night we witnessed not just a political shift, but a paradigm shift for cannabis where prohibition has become untenable."

Interest in cannabis-related stocks continues to increase from micro cap to Nasdaq-listed equities and will only continue its upward trend as investors should be poised for several decades of additional expansion as more states legalize either recreational or medical use and could emerge as acquisition targets.

"The legal cannabis movement scored its most significant victory yet," said Michael Berger, a former Raymond James energy analyst and founder of Technical420, a Miami-based company that conducts research on cannabis stocks. "Although the results of the election will be a turning point for the legal cannabis industry, we are only in the first inning of what will be a multi-decade growth cycle. As legalization measures continue to go into effect, market sentiment will improve for cannabis stocks and this should serve as a catalyst for many companies."

The economic impact for these states is immense - California is estimated to increase to $10 billion market by 2020, while Florida's medical market should be a $1 billion industry by 2020, he said.

"I expect the cannabis industry to be a $75 billion dollar industry by 2020," Berger said. "Although many people's estimates are below this, I take into account more than just the sale legal cannabis because the ancillary business will benefit significantly."

Several stocks have been undervalued as investors were skittish and the use of drugs produced by major cannabis-focused biopharmaceutical companies have not been widely adopted. The current options for mainstream investors in this budding sector are limited to a handful of companies listed on the Nasdaq, including GW Pharmaceuticals (GWPH) , a U.K.-based biotech company with a cannabis-based epilepsy drug; Insys Therapeutics (INSY) , a Phoenix company known for its cancer pain management drug but is developing a cannabis-based drug for the treatment of epilepsy; Cara Therapeutics (CARA) , a Shelton, Conn.-based clinical state biopharmaceutical company that develops and commercializes pain relief drugs and Zynerba Pharmaceuticals (ZYNE) , a Devon, Pa.-based company focused on developing and commercializing synthetic cannabinoid therapeutics.

Being undervalued means many of these companies such as Cara, Zynerba and GW Pharmaceuticals are also attractive acquisition targets, said Spatafora. All three companies are appealing candidates because of their intellectual property and their pipeline of current and upcoming drugs.

"The intellectual property for GW Pharmaceuticals is based on having cannabis plant-based drugs rather than synthetic alternatives and in my estimate is worth $6 billion or roughly $190 per share if bought out," he said.

Since GW Pharmaceuticals is the bellwether company of the cannabis industry and tends to benefit from positive developments in the sector, the stock could be poised for headwinds as a result from the increased market volatility.

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"We continue to view GW Pharmaceutical as the best long-term cannabis investment due to its deep pipeline of products, its successful FDA testing results, its Wall Street coverage and its valuation as its shares are trading well below the average Wall Street price target," said Berger. "We continue to view GWPH as a buy opportunity on weakness from today."

While there is less research available from analysts, some cannabis stocks listed on the OTC are also worth consideration, because they will benefit from the laws that passed in Florida, Nevada and California, Spatafora said.

Florida's adoption of medical marijuana use could be advantageous for Arcturus Growthstar Technologies (AGSTF) , which entered into a letter of intent to purchase a Florida farm that is zoned for cannabis. The state currently has six licensed producers and expansion will be needed to meet "massive demand," he said.

"They hedged on the LOI to wait and see if the law passed," Spatafora said. "The company was pretty wise in this potential acquisition because the farm already produces $2.6 million in revenue annually."

With Nevada voters approving adult use of cannabis, mCig Inc. (MCIG) , which used to specialize in lifestyle brands in the vaping and cannabinoid markets, could benefit. The company founded a construction division called Scalable Solutions geared toward the Nevada cannabis cultivation market.

Nasdaq Cannabis Stocks Spike in Volume Ahead of Election for Recreational and Medical Use

The volume of cannabis stocks listed on the Nasdaq have spiked ahead of the election as voters decide tomorrow on recreational and medical use of marijuana.

 

The volume of cannabis stocks listed on the Nasdaq have spiked ahead of the election with some stocks rising as much as 12% on Monday as voters decide tomorrow whether five states will allow recreational use of marijuana while four other states could approve medical use.

Interest in cannabis-related stocks has risen from micro cap to Nasdaq-listed equities, said Jason Spatafora, co-founder of Marijuanastocks.com and a Miami-based trader and investor known as @WolfofWeedST on Twitter. The market is predicting that voters in California and Nevada will approve legislation for recreational use and anticipates that Florida will legalize medical use.

"Should more states adopt laws to legalize either recreational or medicine use of marijuana, we can see a continued run going into the new year," he said.

Some of the stocks have been undervalued as investors were skittish and the use of drugs produced by major cannabis-focused biopharmaceutical companies have not been widely adopted. The current options for mainstream investors in this budding sector are limited to a handful of companies listed on the Nasdaq, including GW Pharmaceuticals (GWPH) , a U.K.-based biotech company with a cannabis-based epilepsy drug; Insys Therapeutics (INSY) , a Phoenix company known for its cancer pain management drug but is developing a cannabis-based drug for the treatment of epilepsy; Cara Therapeutics (CARA) , a Shelton, Conn.-based clinical state biopharmaceutical company that develops and commercializes pain relief drugs; and Zynerba Pharmaceuticals (ZYNE) , a Devon, Pa.-based company focused on developing and commercializing synthetic cannabinoid therapeutics.

This run in stock prices is also boosted by the massive gains that Canadian licensed producers are showing investors, Spatafora said. Canada is also expecting several IPOs such as Emblem Cannabis (TSX: EMC) which is expected to which will go public end of November.

"The Canadian run can prop up the U.S. market well into the spring when their national cannabis law takes effect," he said. "So long as investors are taking profit along the way rather than let greed dominate their accounts, the bubble will not burst."

An approval in Florida means the state's economy would benefit, because "cannabis has a drastic impact on real estate since entrepreneurs need legal means other than cash vaults to store their earnings due to banking restrictions," Spatafora said. "This could inevitably be a residual benefit of cannabis passage that most people are missing."

Recreational passage in California will have a smaller effect on them market since it is already a medical state which currently consists of about 75% of the total U.S. cannabis market, he said. The other states seeking approval are Arizona, Nevada, Massachusetts and Maine.

"Passage in California will only expand those numbers, but the more interesting state is Florida," Spatafora said.

Colorado's passage of both recreational and medical use in 2014 proved to be a groundbreaking test case for entrepreneurs and legislators and has generated hundreds of millions of revenue in taxes.

"The state was a crash test dummy of the industry and for all the doomsayers who said crime would increase as well as drug abuse," he said. "Colorado was a wild success with opioid addiction and overdoses dropping. Two or three states after legalization have shown states that the paradigm shift for legal cannabis has already reached a tipping point and their economies need it."

The economic impact for these states is immense - California is estimated to increase to $10 billion market by 2020, while Florida's medical market should be a $1 billion industry by 2020, said Michael Berger, a former Raymond James energy analyst and founder of Technical420, a Miami-based company that conducts research on cannabis stocks. California's recreational market is not likely to start until 2018 since Colorado voters passed the usage in 2012 and the program did not start until January 1, 2014.

"I expect the cannabis industry to be a $75 billion dollar industry by 2020," he said. "Although many people's estimates are below this, I take into account more than just the sale legal cannabis because the ancillary business will benefit significantly."

The medical marijuana initiatives are being voted on Arkansas, Florida and North Dakota while Montana is voting on an initiative to "fix the medical marijuana program after it was gutted by the legislature several years ago," said Morgan Fox, communications manager for the Marijuana Policy Project, a Washington, D.C.-based marijuana policy reform organization.

In California alone, the state and local revenues are expected to generate over $1 billion annually, according to an analysis from the nonpartisan Legislative Analyst's Office, said the Marijuana Policy Project of California. State and local governments could save $100 million annually from lower costs been allocated for enforcing marijuana-related offenses such as legal and incarceration costs.

Future State Legislation

Ballot initiatives are not likely to occur in 2017, since it is an off-cycle election year, but movement could occur in Rhode Island, Vermont and New Jersey at the statehouse level next year, said Robert Hunt, president of Teewinot Life Sciences, a Tampa, Fla.-based cannabinoid biosynthesis company, and a partner at Tuatara Capital, a New York-based private equity fund dedicated to the legal cannabis industry.

State legislatures who chose to expand a program do not need voter approval and it is likely more legislators will choose this strategy in 2017 and 2018, said Brett Roper, COO of Medicine Man Technologies (OTCQB: MDCL), a Denver-based cannabis consulting services company.

"I predict that in 2017 and 2018 instead of straight ballot initiatives, we will see the first states pass adult use legalization through legislatures," he said. "Vermont and Rhode Island have long been a favorite picks of observers for being the first to legalize through a legislative process and there has been some movement in New Jersey that has also been encouraging."

Well-regulated medical cannabis or adult use state markets can usually generate at least 10% of total sales, Hunt said.

"The total economic impact when accounting for direct and ancillary job creation is often in the billions of dollars in states with a decent sized population," he said. "We are already seeing this in the earliest adopting states with robust markets."

By Ellen Chang

Source: https://www.thestreet.com/story/13883955/1/nasdaq-cannabis-stocks-spike-in-volume-ahead-of-election-for-recreational-and-medical-use.html