3 Marijuana Stocks That Could Go Up in Smoke

DISTRICT OF COLUMBIA:  The potential to use marijuana as a treatment for various diseases has captured the attention of doctors, patients, and investors, but that doesn’t guarantee marijuana stocks will keep going higher. In fact, there are plenty of reasons why marijuana stocks could stumble. Read on to learn why our Motley Fool experts think that these marijuana stocks could see their plans go up in smoke.

Dan Caplinger: Among marijuana stocks, GW Pharmaceuticals  (NASDAQ: GWPH  ) has gotten a huge amount of publicity, in large part because of its 63% rise in 2014 on the heels of having nearly quintupled during 2013 after its initial debut. The company specializes in developing therapies based on cannabinoid compounds derived from marijuana plants, and GW Pharma has long believed that these compounds can bring positive effects in treating cancer, epilepsy, and other serious conditions.

So far, GW Pharma hasn’t had the sales success that investors will want to see from the company in the long run. That’s not surprising for a biopharmaceutical company with a healthy pipeline of promising drugs, but it does mean that GW Pharma is as yet an unproven prospect for investors. The company has ample cash to survive for a long time, so further capital raises aren’t likely to dilute shareholders in the near future. Yet until GW Pharma can verify its promising early findings — and more importantly, convince regulators that any harmful effects from compounds derived from a substance that is still classified as a Schedule 1 drug by the Drug Enforcement Agency are worth the potential benefit — the stock will have some risk of going up in smoke.

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