The medical cannabis market has been on a recovery lane over the last couple of years following 2015-2016 plunge that saw stocks in the industry lose as much as 70% of their market value. Between 2013 and 2015, the medical cannabis market was one of the most hyped. This period alone saw popular cannabinoid stocks like GW Pharma (GWPH) gain more than 1,200% in market value—in turn triggering the launch of several new cannabinoid biotech startups.

However, in the following year, the appetite for cannabinoid stocks appeared to wane with a majority of those interested seemingly already tapped in the market and looking to cash out. Furthermore, prices for listed stocks both in the main exchanges and OTC had soared massively making them relatively expensive compared to rivals in the market.

Subsequently, as the early investors moved to take profits, this triggered a massive plunge that saw the likes of GWPH lose more than 70% in market value after declining from a high of $126 per share to bottom at about $35 per share. For some, that was about it as the hype around medical cannabis continued to evaporate.

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However, it appears that the medical cannabis industry has recovered from that period of a selloff and now seems set to reach new heights. The reason for this is that more states in the U.S. have now legalized medical cannabis whereas, in countries like Canada, federal legalization is imminent.

While the story of medicinal cannabis may have gained popularity over the last decade, it goes far back than most would imagine. Research shows that historically, people have used cannabis for medicinal purposes in many ways. At the beginning of the 20^th century, chemists sold special corn plasters with cannabis as one of the main ingredients. It is suggested that cannabis had anti-bacterial properties and given the general attachment to green medicine at the time, this helped to build up the concept of using cannabis for medicinal purposes.

That concept has evolved over the years and is now a popular segment of the biotech industry. This is why when the U.S. regulators for Food and Drug Administration (FDA) on June 25, 2018, announced the approval of GW Pharma’s Epidiolex, analysts including Cantor’s Elemer Piros reiterated their overweight rating on the shares of the company and raised their price target to imply a potential upside of over 60%.

The company’s new cannabinoid product Epidiolex has been approved for the treatment of two rare and severe forms of epilepsy, Lennox-Gastaut syndrome (LGS) and Dravet syndrome, for patients from the age of two.

This makes Epidiolex the first prescription pharmaceutical formulation of highly-purified, plant-derived cannabidiol (CBD), a cannabinoid lacking the high associated with marijuana, and the first in a new category of anti-epileptic drugs.

Therefore, the approval of Epidiolex is not only a win for GWPH, but also for the rest of the medical cannabis industry. Many followers of cannabis stocks have been advocating for a federal legalization of medical cannabis in the U.S. but so far, it is only legal in 27 states. So, there is still a long way to go.

From an international perspective, most countries in Europe and Asia have had no issues regarding medical cannabis, which makes global legalization also possible in the next few years. But lack of federal legalization in the U.S. is a major obstacle. Therefore, only companies headquartered outside of the U.S. have been able to capitalize the most on medical cannabis.

In summary, medicinal cannabis has come a long way dating back centuries ago. And while companies explored the potential applications of cannabinoid products under the radar for several years, they have sprung into the limelight over the last decade. The early adopters rallied stocks to historical highs, but as the wrath of speculation kicked in, most of those gains were drained.

The recovery over the last couple of years has been gradual, but stocks like GWPH have since hit new historical highs, which implies that with new products like Epidiolex gaining FDA approval, the future of medical cannabis in the U.S. and the rest of the world continues to get interesting for growth investors.