The stock market performance of the companies selling cannabis products on March 1, 2019, varied as both companies executives and investors tried to understand how the latest comments of the Head of the Food and Drug Administration (FDA) in the USA on CBD regulation was likely to affect the business plans of these companies. Scott Gottlieb, the FDA commissioner had earlier in February mentioned that he was planning to hold a series of public meetings in April this year to discuss the issue. He also provided some insights into his attitude towards CBD regulation.
A large number of companies had announced their plans to make food, beverage and cosmetic products which are infused with CBD. Though extensive research has only been carried on the psychoactive ingredient THC found in cannabis, comparatively less research is carried out on the CBD in cannabis. However, it is widely believed that CBD has wellness properties. In December FDA had released guidelines which indicated that companies cannot sell CBD products in the USA without getting FDA approval, which is usually a lengthy and expensive process.
Yet Gottlieb recently announced that there may be changes in the approval model, pharmaceutical companies which use a higher concentration of CBD in their products may have to get approval, while other companies which use lower amounts of CBD may not require approval. The law firm Cole Schotz has a specialized Cannabis Law Group, and its co-chair Rob DiPisa indicated that this appeared to be a more viable and reasonable option. DiPisa indicated that low levels of CBD may be allowed in food, beverages, and supplements, while higher levels may be only allowed for pharma companies so that they have the incentive to invest in research.
However, Gottlieb also mentioned that it may take up to two years to finalize the regulation of CBD and this has upset the plans of the companies which were planning to sell CBD infused products. DiPisa indicated that there will be a lot of uncertainty for a period of one year, and many companies are halting their research. In Vermont, the Senate formally approved a law which would create a market for recreational use of cannabis. The state had earlier passed a bill which allowed restricted cultivation of cannabis at home, and also possession of a limited amount of cannabis. In Canada, there are reports that many cannabis companies are recalling products over labeling errors and mold, indicating that CBD infused products are in a preliminary stage of development.
