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The Only 4 States That Completely Ban THC and CBD

Sean Williams, The Motley Fool

Despite the federal government's Schedule I classification for cannabis, the illicit drug is flourishing in the United States and North America. Cannabis research firm ArcView found that aggregate North American sales skyrocketed higher by 33% to $9.7 billion in 2017, and they're on track to hit nearly $25 billion by 2021, per estimates. That's a compound annual growth rate of 28% per year.

Part of this growth will come from our neighbor to the north, which is on the verge of becoming the first developed country in the world to legalize recreational marijuana. With sales expected to begin in either August or September, Canada's legal cannabis industry could recognize $5 billion or more in added annual sales, on top of what it's already generating from medical marijuana sales and via exports to countries that have legalized medical pot.

A jar of cannabis lying atop a small pile of cash.

Image source: Getty Images.

The remainder of this growth may very well come from the U.S. and ongoing state-level expansion. To date, 29 states have broad-based medical marijuana laws on their books, with nine states OK'ing the use of recreational marijuana. Vermont became the latest of the nine to do so, albeit it was the first to legalize adult-use weed entirely through the legislative process.

More states allow CBD or low-THC products than you probably realize

What most folks don't realize is that there's a gray area between broad-based medical marijuana legalization and the drug being completely illegal. Of the 21 states that don't have comprehensive medicinal cannabis laws, 17 of these states do have very specific laws on their books allowing cannabidiol (CBD), the non-psychoactive component of the cannabis plant often revered for its medical properties, and low-tetrahydrocannabinol (THC) products -- THC is the psychoactive component that gets you "high" -- to be used for select ailments. 

Mind you, some of the states that have signed CBD and low-THC bills into law are among those that are Republican strongholds. The GOP traditionally has a more negative view on cannabis, and is therefore less likely to advocate for its medical and/or recreational approval or expansion. This includes Mississippi, which legalized cannabis extracts, oils, and resins that contain no more than 15% CB and less than 0.5% THC in April 2014 for debilitating epileptic conditions. It also includes Alabama, the home state of staunch cannabis opponent, and current Attorney General, Jeff Sessions. Also signed into law in April 2014, "Carly's Law" decriminalizes the possession of CBD oil for debilitating epileptic conditions. 

In other words, at least a handful of medical patients in 46 out of 50 U.S. states have some level of access to CBD, low-THC, or THC, within their state.

A drug free zone sign in a quiet neighborhood.

Image source: Getty Images.

Four states that put their feet down on any and all CBD and THC products

On the other hand, that means four states offer no concessions whatsoever with regard to CBD, low-THC, or THC products.

Idaho

Despite having not legalized any form of CBD or THC, Idaho does have an opportunity to put a medical marijuana initiative on the ballot this coming November. Having received a certificate of review from the state's attorney general in September 2016, supporters have until May 1, 2018 to collect 48,793 valid signatures in order to qualify the Idaho Medical Marijuana Initiative for ballot inclusion. Polling data from MSN earlier this year found that 91% of Idahoans support the idea of medical cannabis being prescribed by a doctor, compared to just 6% opposed to the idea, so this initiative may indeed have legs. 

South Dakota

Unlike Idaho, which has a genuine shot of putting a medical cannabis initiative on the ballot this coming November, residents in South Dakota will not have that choice. Despite putting forward the South Dakota Medical Marijuana Initiative, and submitting roughly 15,000 signatures, the secretary of state in South Dakota announced on April 16, 2018 that there were not enough valid signatures collected to put the measure on the ballot. For now, CBD and THC products will remain entirely illegal. 

A tractor spraying nutrients on planted crops.

Image source: Getty Images.

Nebraska

Nebraska actually has two cannabis measures that may find their way to ballot in November. The Nebraska Marijuana Decriminalization Initiative would decriminalize the possession of one ounce or less of cannabis, and it'll require the signatures of 7% of the state's voters prior to early July in order to get on the ballot. Meanwhile, the Nebraska Right to Cannabis Initiative could legalize medical cannabis with the written recommendation of a physician. It'll require the signatures of 10% of the registered voters within the state by early July in order to make it onto the November ballot. 

Kansas

Lastly, we have Kansas, which at no time in recent memory has attempted to pass a medical cannabis initiative. Making matters worse, Kansas is one of two dozen U.S. states that doesn't offer the initiative and referendum process. In other words, even if its residents are overwhelmingly in favor of physicians being able to prescribe medical marijuana -- which is indeed the case, according to the aforementioned MSN poll -- it's up to the state's legislature, not residents, to introduce and pass legislation. In short, CBD and THC look to remain illegal for some time in Kansas. 

This major breakthrough could shake things up for the medical cannabis industry

Interestingly enough, it's not state legislatures that could be a turning point for the cannabis industry in the United States. Instead, it's an overseas drug developer called GW Pharmaceuticals (NASDAQ: GWPH).

Cannabis leaves next to biotech lab equipment.

Image source: GW Pharmaceuticals.

The U.K.-based GW Pharmaceuticals currently has its lead drug, Epidiolex, under review by the U.S. Food and Drug Administration (FDA). Epidiolex, which is a CBD-based compound designed to treat two rare types of childhood-onset epilepsy -- Dravet syndrome and Lennox-Gastaut syndrome -- easily met its primary endpoint in two separate phase 3 trials for each indication (four total late-stage trials). In fact, in one of the Dravet syndrome studies, Epidiolex tripled the reduction in seizure frequency from baseline relative to the placebo (39% vs. 13%). 

As the icing on the cake, this past week the FDA's review panel unanimously voted in favor of recommending the drug for approval. The FDA isn't required to follow the recommendation of its panel, but it often does. If approved, GW Pharmaceuticals will be the first drugmaker to get the green light from the FDA for a cannabinoid-based drug. This approval may have the potential to open the eyes of lawmakers who've held medical cannabis, or cannabinoids, back. It may even result in a rescheduling of CBD at the federal level. 

All told, 2018 looks to be another exciting and change-filled year for the U.S. cannabis industry.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.