Why Jazz Pharmaceuticals May Be a Stealth Cannabis Winner

Though JAZZ Pharmaceuticals JAZZ is not your typical marijuana stock, it is an unconventional player in this field.

The company entered the cannabis space after acquiring GW Pharmaceuticals in 2021, which added the cannabidiol (CBD) drug Epidiolex to its portfolio. This makes Jazz the only company to market an FDA-approved drug, which contains a purified drug substance derived from marijuana.

As the market for medical cannabis evolves and regulatory clarity improves, Jazz's early entry and growing footprint in this niche will position it as a serious contender for long-term gains.

Let's take a closer look at JAZZ’s fundamentals from an investor's standpoint.

Epidiolex — JAZZ’s Quiet Cannabis Success

Ever since Epidiolex was added to Jazz’s portfolio, the drug has become a significant contributor to its topline. This CBD-derived oral solution — approved to treat seizures associated with Lennox-Gastaut syndrome, Dravet syndrome and tuberous sclerosis complex — currently accounts for a quarter of the company’s total revenues.

In the first nine months of 2025, Epidiolex has generated over $772 million in product sales. The figure rose 11% year over year, driven by expanding global launches and increasing adoption among prescribers. With this sales momentum expected to continue in future quarters, Epidiolex is on track to achieve blockbuster status in 2025.

This growth is also backed by a rapidly expanding market. Analysts have projected the global medical cannabis industry to cross the $130 billion mark by 2032, primarily driven by the increasing acceptance of cannabis for therapeutic purposes. As one of the few established pharmaceutical firms with an FDA-approved cannabis-based product, Jazz holds a distinctive edge in capturing this opportunity.

Jazz Isn’t Just Riding the Cannabis Wave

While Epidiolex may be a focal point, Jazz has also built a diverse product lineup that spans neuroscience and oncology.

Xywav is approved to treat three conditions, including cataplexy and excessive daytime sleepiness (EDS) in patients with narcolepsy. While Jazz also markets Xyrem, which is approved for the same indications, Xywav offers a significant advantage as a low-sodium formulation. Unlike Xyrem, it does not carry the warnings and precautions associated with high sodium intake. This makes Xywav the only approved oxybate therapy without such precautions. Xywav is also the only FDA-approved treatment for the full spectrum of idiopathic hypersomnia (IH).

Jazz markets six drugs in the oncology space — Defitelio, Vyxeos, Zepzelca, Rylaze, Ziihera and Modeyso. While these products initially brought incremental revenues, their contributions to topline have increased significantly over the years. Sales of these drugs now generate over 26% of Jazz’s topline, driven by new product launches and rising market share of existing drugs.

The company is also focused on expanding the labels of its oncology drugs. Last week, Jazz reported positive results from a late-stage study that highlight Ziihera’s potential to become the next standard of care treatment in first-line HER2+ gastroesophageal adenocarcinoma (GEA) — an area with significant commercial potential. A likely label expansion for the drug in GEA could significantly boost the company’s topline growth.

Pipeline Setbacks

Like other biotech companies, Jazz has had its share of pipeline setbacks. Earlier this year, it decided to stop developing suvecaltamide across both essential tremors and Parkinson's disease tremors after the drug failed to achieve the primary and key secondary endpoints in separate mid-stage studies. It is currently exploring options for the drug’s future.

Jazz also reported underwhelming results for its FAAH inhibitor, JPZ150, in adults with PTSD. Data from a mid-stage study, released in 2023, showed that the study failed to achieve both its primary and secondary endpoints, marking another setback for Jazz’s innovation efforts.

JAZZ’s Stock Price Performance & Estimates

Shares of Jazz have surged 46% year to date compared to the industry’s 20% growth, as shown in the chart below.

EPS estimates for 2025 and 2026 have trended upward over the past 30 days — a stronger trajectory than that of pure-play cannabis names Tilray Brands TLRY and Verano Holdings VRNO, whose estimates have either remained constant or moved lower during the same period.

How to Play the Stock?

Though pipeline setbacks remain a concern, JAZZ offers a diversified revenue base supported by its neuroscience and oncology franchises. Through Epidiolex, the company has access to meaningful exposure in the medical cannabis space.

While recent comments from President Trump have reignited hopes for cannabis reform in the country, rescheduling appears unlikely in the near term. For now, this Zacks Rank #3 (Hold) company may suit investors seeking balanced biotech exposure rather than a direct cannabis play, with consistently rising estimates highlighting analysts’ optimistic outlook for the stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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