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The world’s most valuable cannabis business is growing in a sleepy corner of England

The medieval city of Salisbury in England’s southwest is dripping with history. Its majestic cathedral, completed in 1258, contains what is believed to be the world’s oldest functioning clock and one of just four original copies of the Magna Carta. The prehistoric ruins of Stonehenge are just eight miles to the north.

But this ancient town is also home to a very modern corporation. In a complex on the outskirts of the city are the headquarters of GW Pharmaceuticals, which is no ordinary biotech business. It’s probably the world’s most valuable cannabis company.

big cannabis marijuana business england uk britishGW Pharmaceuticals doesn’t sell weed, per se, but rather prescription cannabinoid medicines. The company, which has garnered some media attention, is listed on both the London Stock Exchange and on the Nasdaq. Its US listing has surged by 75% in 2014, and by 713% since last May, pushing its market value to above $1 billion. All this for a company that generated just $44 million in sales last year. This optimistic valuation is partly a function of the seemingly inexorable shift toward the legalization of cannabis in the United States.

This year so far, two US states—Colorado and Washington—effectively declared cannabis legal. The drug has also been approved for medicinal purposes in another 18 states plus Washington DC, which together have a cumulative population of about 117 million people, or more than a third of all Americans. At least 14 other states, including Maryland and Florida, are considering laws that would approve marijuana for medical use this year, the New York Times reported.

While this is delighting potheads and upsetting some drug advocacy groups, it is also creating a unique headache for the country’s pharmaceutical regulator, the Food and Drug Administration, which has never approved marijuana as a legitimate treatment. Part of the reason for the surge in GW Pharmaceuticals’ share price this year is the belief among some investors that the company could provide the FDA with an elegant way out of this predicament.

Last year, GW’s cannabinoid spray, Sativex, which is used to treat spasticity caused by multiple sclerosis, was approved for sale in eleven European countries. It is currently in the third and final phase of testing by the FDA in separate trials for multiple sclerosis treatment, as well as for use as relief from cancer pain. If it gets through this Phase III testing, it could become the first FDA-approved cannabis-based product to hit the market in the US, and provide an alternative way to consume weed for medical purposes besides smoking or eating it. (There are other products that contain synthetic versions of cannabis chemicals, but Sativex is the only one to contain actual extracts from marijuana plants.)

“The FDA is in a bit of a bind because some states are approving medicinal marijuana, and this is an absolute nightmare because it’s very difficult to control the manufacturing of it,” Samir Devani, a biotech analyst at WG Partners in London tells Quartz. “You can imagine that the FDA … [is saying] hang on a minute, this might be a saving grace for us. If there’s an FDA-approved product on the market, then why do you need medicinal cannabis?”

By By John McDuling @jmcduling
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