Cannabis Stocks

FDA to Hold Public Hearing on CBD Products

CBD market comes under FDA scrutiny

Friday, May 31st is a big one for the cannabis and CBD market. The entire space is bracing for what could be its next catalyst or letdown.

The U.S. Food and Drug Administration is set to hold a public hearing on how to regulate CBD products. A key topic will be how much CBD is allowed in food and beverages moving forward. We are urging investors to be cautious. In all likelihood, the FDA will ultimately limit how many milligrams of CBD can be infused into food and drinks.

Cannabis stocks continue to trade sideways in recent months, with the Canadian Marijuana Index back above 600 to 614.30 in Tuesday trading.

The Canadian Marijuana Index traded up 1.3% Tuesday to 614.
The Canadian Marijuana Index traded up 1.3% Tuesday to 614.

Because CBD’s rise to wellness royalty occurred so quickly, the FDA is playing catch up. According to the GrowthOp,

“In the U.S., there’s no limit to how much CBD can be added to food.”

Appropriate Threshold Level of CBD

After announcing the May 31 hearings, then-FDA Commissioner Scott Gottlieb released a statement saying, that there are,

“…open questions about whether some threshold level of CBD could be allowed in foods without undermining the drug approval process or diminishing commercial incentives for further clinical study of the relevant drug substance.”

Up until now, the rollout of CBD products continues to be relentless. Even burger chain Carl’s Jr. is selling CBD-infused food, according to GrowthOp. People love it.

According to Bloomberg,

“Mainstream retailers like CVS Health Corp. already sell CBD creams, sprays and lotions but the substance hasn’t yet been approved for use in food and drinks by the FDA.”

Many robust CBD market CAGR projections aren’t factoring in FDA-imposed limits on infused-CBD products.

CBD Market Heading to USD16.32 Billion by 2026

For the CBD market, the FDA’s ultimate ruling and support of CBD in beverages and food is huge. According to data from Reports and Data,

“The Cannabidiol (CBD) Market is forecast to grow from USD 1.04 Billion in 2018 to USD 16.32 Billion by 2026, at a CAGR of 27.7%…”

Noting,

“The market is primarily driven by the increase in the usage of cannabidiol (CBD) in medical application, supplements, beverages and skin care.”

While it is hard to know how much growth is tied to the beverage market, surely it is a large segment. Kristine Owram made an interesting point in an article from May 27, 2019, concerning the reasoning behind a potential FDA ruling to limit the number of milligrams of CBD in various products:

“…the agency has expressed concern that allowing the substance in food, beverages and supplements will lessen the incentive for pharmaceutical companies to conduct clinical research into the health benefits of CBD.”

FDA Discussion on Friday is a Preview

The FDA is in reaction mode and dealing with a product that has immense momentum. Federal legalization for cannabis is more a matter of when not if; so, the FDA would be wise to get ahead of not only CBD but cannabis-infused products as well. Also, with the 2020 US elections creeping into view, the Republicans would be wise to give the Democrats one less talking point, by remaining mute on CBD and cannabis restrictions. Instead, continue to allow states to approve or disapprove of various forms of the drug.

The FDA is a federal agency of the United States Department of Health and Human Services. Any ruling it makes will transcend borders and impact how much CBD ultimately ends up in the food we eat and the beverages we drink.

Still, the lines are slowly beginning to blur as CBD becomes accepted and policy shifts to accommodate the previously banned substance.

TSA Policy Shifts Effect CBD

Kyle Jaeger published a piece on Marijuana Moment titled TSA Updates Marijuana Rules To Allow Hemp-Derived CBD On Flights which highlighted new policy,

“Products/medications that contain hemp-derived CBD or are approved by the FDA are legal as long as it is produced within the regulations defined by the law under the Agriculture Improvement Act 2018.”

Finally, the FDA must consider that CBD is becoming more accepted by the day. Millions of people use it as part of their health regimes and consume it daily. The FDA beginning discussions about limiting the number of milligrams in CBD may have short term ramifications but is nevertheless a step in the right direction.


Alexander Smith

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