It was only a matter of time: Wall Street heavyweight Merrill Lynch, the wealth management division of Bank of America, has apparently already started thinking about its role in the marijuana industry.
A 45-page equity report leaked to Philly Inquirer columnist Chris Goldstein suggests that Merrill Lynch is paying close attention to the budding industry. The company says that it's particularly "bullish on the cannabis testing market."
A prospective investor who received the report last week recently shared it with Goldstein. It included information about various components of cannabis such as THC and CBD, state medical marijuana laws, medical conditions that marijuana has been shown to treat, public polling, and details about "publicly traded companies already operating in the sphere."
"The Merrill Lynch report did not in any way touch upon investing in any company that was directly in the business of growing, processing, or selling marijuana products for medical or personal use under state laws," Goldstein reports. "However, they did note that the cannabis market could be more than $7 billion annually already and could grow exponentially if legalization happened nationwide."
So far, Bank of America (and every other major financial institution in the U.S.) has refused to accept accounts from marijuana businesses in states where pot has been legalized for medical or recreational purposes. But if marijuana is legalized on a federal level, that could quickly change. The industry could grow to be worth $13 billion by 2020, and Wall Street is taking notice.
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Rather than investing in the federally illegal industry directly, Merrill Lynch says it's looking at "Life Science Tools" associated with cannabis. That includes equipment used to test cannabis potency and quality, and the market for that equipment is expected to grow to between $50 million and $100 million by 2020.
One of the companies cited in the report is GW Pharmaceuticals, which is currently conducting FDA-approved clinical trials on the CBD drug Epidiolex. (CBD is a component of cannabis that is non-psychoactive and has been shown to have a range of health benefits, including pain management and the treatment of epilepsy.)
"GW made headlines this week when they presented the most recent data from the trial to the American Epilepsy Society Annual meeting in Philadelphia," Philly.com reports. "They reported that the drug was well tolerated and showed promise. Further testing will continue in 2016."
"In order to tell how much THC is in a given bud or if it contains any adulterants requires some expensive and specialized devices. Gas chromatographs, mass spectrometers and liquid chromatography equipment were exclusively in academic research laboratories or in the pharmaceutical industry. Now, labs exist specifically to only test cannabis plants and products."
"Medical cannabis has high POTential," the report notes (yes, Merrill Lynch made a marijuana joke).
A Bank of America representative declined to comment on the report, but told ATTN: that Merrill Lynch has equity reports on a wide range of markets and that the cannabis testing market report does not necessarily reflect changes in the company's stance on the marijuana industry.
Learn more about the real history of why marijuana is illegal in the U.S. and check out this ATTN: video.