In these anxious times of the Covid-19 pandemic, sleep may prove to be elusive for many. But there might be some good news for cannabis investors and users: A large number of people who consume the drug do so not to get high, but to get a good night's sleep. That could be significant for the estimated 70 million Americans who have insomnia -- and the market for prescription and over-the-counter sleep medications that's forecast to be worth over $4 billion in annual revenue by 2022.

How does cannabis fit in?

Recently, a team of investigators from the Albert Einstein College of Medicine in New York and the University of Miami assessed marijuana use trends among 1,000 adult customers in Colorado.

Nearly three out of four of those surveyed said that they consumed cannabis to promote sleep, while 65% reported using cannabis to alleviate pain. Among those respondents with a history of taking prescription sleep aids, more than four in five reported either reducing or ceasing their use of those medicines. Among those respondents with a history of consuming prescription opioids, 88% reported mitigating or stopping their use.

"Our findings suggest that de facto medical use may be highly prevalent among adult use customers, and that access to an adult use cannabis market may influence individuals' use of other medications," the authors concluded. "Our findings ... suggest that adult use customers may be similar to medical cannabis patients in their use of cannabis as a substitute for prescription analgesics and sleep aids. ... While adult use laws are frequently called 'recreational,' ... our findings suggest that many customers use cannabis for symptom relief."

At least two companies have identified sleep as a target market:

Finding Comfort in Data: Plus Products

Data from cannabis-data cruncher Headset during March looked at the increase in cannabis sales. The data compared Monday's from this year to last year. Looking at Adult Use cannabis sales data in California, Headset confirmed that Californians rushed to stock up on cannabis products. One of the most stocked up on products was Plus Products (PLPRF) Gummies, which saw a sales boost of 157% compared to a normal Monday. The Unwind Gummy (4.5mg THC + .5mg CBD per serving) performed the best of their products during this time.

By "did the best," they mean saw the largest sales lift. The company's description of the product read, "When night falls and it's time to unwind, a relaxing blend of THC and CBD means peace of mind is only a bite away."

Is the dreamy strategy working?

"We continue to forecast solid Q1 results for PLUS reflecting both top-line growth on enhanced volumes through the first half of this month from the company's new distributor relationship and margin improvements on cost controls," Canaccord Genuity analyst Bobby Burleson wrote. "Currently, PLUS generates approximately 20% of its business through delivery and has established relationships with the leading California operators. We believe an increase in delivery volumes could offset some lost sales in the market if California transitions to a delivery-only model in the near term. Even without a sizable offset in delivery volumes, we believe PLUS is poised to weather a significant slowdown in sales for an extended period with the company operating at a current cash burn rate of roughly $1M per month. PLUS ended Q3/19 with roughly $22M in cash on the balance sheet."

Zzzz: Zelira Therapeutics

Last week, Zelira Therapeutics Ltd. (ZLDAF) received the final report for its ZTL-101 medicinal cannabis trial for insomnia. According to the company, the trial conducted at the University of Western Australia (UWA) Centre for Sleep Science and was led by principal investigator Professor Peter Eastwood, and used a randomized, double-blind, cross-over design to evaluate the efficacy of Zelira's proprietary drug ZLT-101. The company said that the analysis showed treated patients slept significantly longer, went to sleep faster and went back to sleep sooner after waking. Patients also reported significant improvement in quality of life measures including feeling rested after sleep, feeling less stressed, less fatigued and improved overall functioning. 

"We are pleased with the results of the study. This trial has yielded a comprehensive data-pack that supports our plans to launch the world's first clinically validated cannabinoid-based insomnia medicine into global markets this year," said Dr. Oludare Odumosu, Managing Director Zelira USA. 

 Zelira owns a portfolio of revenue generating products and a pipeline of candidates are undergoing clinical development that are positioned to hit the market this year. The company is focused on developing branded cannabis products for the treatment of a variety of medical conditions but sleep is its key focus at this time.

Professor Peter Eastwood, Principal Investigator for the study, and director at the Centre for Sleep Science at the University of Western Australia said, "This study represents the most rigorous clinical trial ever undertaken to assess the therapeutic potential of medicinal cannabis to treat the symptoms of chronic insomnia. The fact that ZLT-101 treatment achieved statistically significant, dose responsive improvements across a broad range of key insomnia indices is impressive, particularly given the relatively short two-week dosing window." 

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