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Will Walgreens Make Legal Cannabis Investors Rich?

Walgreens Just Got Into the Marijuana Business!

Written by Jeff Siegel
Posted May 3, 2016

Last year, it did $103.4 billion in net sales.

With more than 8,000 stores in all 50 states, it's actually the largest drug retail chain in the nation. And last week it did something that even I didn't see coming.

On one of its social networking blogs, Walgreens (NASDAQ: WBA) made a bold move...

It came out in support of medical marijuana.

Well, kind of.

walgreenspost

In a blog that was posted on Walgreens' Tumblr account, entitled “Clarifying Clinical Cannabis,” you can find this:

Research has also shown marijuana provides pain relief in ways traditional pain medicines don’t. Medical marijuana can improve appetite and relieve nausea in those who have cancer and it may help relieve symptoms such as muscle stiffness in people who have multiple sclerosis.

For a company that makes billions by selling conventional pharmaceuticals, this is a bit of a break from the Big Pharma machine that relies on companies like Walgreens to fill prescriptions.

The Walgreens piece even goes as far as listing some of the common uses for medical marijuana, including:

  • Cancer pain management
  • Parkinson's disease
  • Tourette's syndrome
  • Alzheimer's disease
  • Schizophrenia
  • Cardiovascular disorders
  • Palliative care
  • Glaucoma

Although subtle in manner, the blog actually has a pretty positive tone. So the question is, why would Walgreens do this? Why would it even bring up the benefits of medical marijuana? Does it know something we don't?

Truth be told, it looks to me like Walgreens just got into the medical marijuana business.

$10 Billion Up for Grabs

Last month, GW Pharmaceuticals (NASDAQ: GWPH) soared 130% in one day after announcing positive phase III trial results for its cannabis-based epilepsy drug. Check it out:

gwphboomchart

It's entirely possible that GW's epilepsy drug will be the first cannabis-derived medicine to ever be approved by the FDA, thereby opening the door for dozens of other pharmaceutical and biotech companies actively seeking FDA approval for their own cannabis-based medications.

Walgreens is not a licensed medical marijuana provider. However, if more FDA approvals come for cannabis-based medications, drug retailers would be in a position to provide medical marijuana to their customers.

And let's face it: there's a lot of money at stake here.

In California alone, medical marijuana pulled in more than $2.7 billion last year. And there are now 24 states, plus the District of Columbia, that have legalized medical marijuana.

And remember, we're just talking about medical marijuana — which is actually going to end up pulling in less than recreational marijuana.

By 2020, the medical marijuana market could be generating in excess of $10 billion a year.

So the “less profitable” segment of the legal cannabis industry will still be worth more than the entire GDP of Armenia.

Now name me one drug retail chain that doesn't want to corner that market.

First in Line

Although medical marijuana can only be purchased in licensed dispensaries, I don't buy for a second that drug retail giant Walgreens isn't looking to stake its claim early. And by posting that recent blog, the company essentially unveiled the platform on which it can take full advantage of new FDA approvals for medical marijuana.

Mark my words: By 2020, Walgreens is going to be in the medical marijuana business — not because management particularly cares about cannabis, but because it cares about making money. Just like the rest of us.

To a new way of life and a new generation of wealth...

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Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor's page.

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