Pot to Treat Pets? It Could Be a Reality

Canopy Growth Corp (TSX:WEED)(NYSE:CGC) plans to do research on how cannabidiol could help animals.

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The cannabis industry has enormous growth potential, and while smoking marijuana might be the most popular way to consume cannabis, it’s just one of many ways that the industry will be able to grow. The medicinal market could have even more potential, and one segment specifically might surprise investors is using cannabis to treat pets.

Although it is not an option for veterinarians to prescribe today, with more research on cannabis, that could soon change. One company that is helping with that is industry leader Canopy Growth Corp. (TSX:WEED)(NYSE:CGC), which on Wednesday announced that it received approval from Health Canada to research the impact that cannabidiol has on treating animals with anxiety.

This is a big development for the medical marijuana segment, as the recurring theme we’ve seen with cannabis is that there are simply not enough studies out there to confirm the effectiveness of pot, which is a key reason why doctors are still hesitant to prescribe it to patients.

While many people have sought to demonize the drug, many have hailed it for its pain relief, and the truth of the matter is that we simply don’t know enough about it.

Regardless of which side of cannabis you fall on, it’s important for consumers, patients, and investors to have the necessary information on the drug before making a decision. Research is key to helping in the industry grow in ways that it makes sense to do so, which can lead to better and more cost-effective treatment options for the healthcare industry.

Growth is the big wildcard when it comes to cannabis

Investing in pot stocks is a big challenge because the growth potential is at best a shot in the dark. Depending on who you ask, you could get a very different estimate based on very different assumptions as to how big the industry will be. That potential will have a big impact on investor expectations, and as a result, share price as well.

That’s the biggest danger when it comes to pot stocks today – knowing what their value should be today. Growth in the medicinal and recreational markets should create many opportunities for sales to climb, but there’s also the uncertainty of how big of a role the black market will play, what hurdles will arise during testing and clinical trials, and whether a new government that is anti-pot could impede these opportunities with more red tape.

The industry is full of uncertainty, and while it could be a nightmare for risk-averse investors, it could also lead to significant returns for risk takers.

Takeaway for investors

There’s a lot of potential in the industry, as it seems cannabis is finding its way into everything. However, the industry is very new and undergoing rapid changes, and investors who want to hold pot stocks should try to balance their portfolio out with safer stocks as well in order to help minimize overall risk.

While it can be exciting to think about all these opportunities for growth, investors need to be aware of the risks as well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski has no position in any of the stocks mentioned.

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