Cannabis Industry Awaits FDA’s Approval for CBD Products

The FDA doesn’t allow CBD products to be used as a food derivative. The agency has been hesitant about how some cannabis companies market CBD products.

Sushree Mohanty - Author

Mar. 19 2020, Updated 1:17 p.m. ET

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Cannabis is illegal under federal law in the US. However, CBD or cannabidiol products are legal since the US made hemp and derivatives legal in 2018. The FDA doesn’t allow CBD products to be used as a food derivative. Notably, the FDA has always been hesitant about how some cannabis companies are marketing CBD products. The marketing violates some of the FDA’s laws and puts consumers’ health and safety at risk.

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FDA works on CBD enforcement laws

The FDA is hesitant about CBD products. However, the agency doesn’t want to ban the products. FDA Commissioner Stephen Hahn admitted that it would be “a fool’s game” to attempt to ban and take CBD products off the market. What concerns the FDA is the marketing of CBD products. As a result, the agency is investigating and developing rules that would allow food companies to use CBD as a dietary supplement.

Due to the lack of proper rules and approvals from the FDA, CBD products aren’t readily available. Cannabis and food companies aren’t able to market and sell the products freely in the US. The cannabis industry eagerly awaits for some certainty from the agency. Last year, before his nomination as the FDA chief, Senate Majority Leader Mitch McConnell asked Hahn to establish a regulatory framework for CBD products.

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Cannabis industry awaits the FDA’s approval for CBD products

Last month, the FDA missed the deadline to submit an update on the development of enforcement guidelines for CBD products. However, on March 5, Marijuana Moment reported that the FDA provided an update to Congress. The process of exploring rules to allow marketing of cannabidiol as a dietary supplement is ongoing. The FDA is working to enforce proper guidelines. Meanwhile, the agency has opened a public docket to gather more information and understand the risks and benefits of CBD.

The FDA has issued warning letters to many cannabis and food companies that have made unsubstantiated claims about the therapeutic potential of CBD products. The agency sent a warning letter to Curaleaf (OTCMKTS:CURLF) last year.

The FDA understands that the risk and benefits of CBD products aren’t readily available. Currently, marijuana is still illegal under federal law. Hemp and derivatives became legal two years ago. There isn’t much information or quality research available on these products. The FDA said, “actively evaluating what and how much data would be sufficient to support the conclusion that CBD can safely be allowed in dietary supplements under certain conditions.”

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The agency thinks that allowing CBD as a dietary supplement creates certain concerns. Overall, the FDA is still evaluating and seeking information from individual manufacturers and trade groups to learn how hemp extracts are derived. The agency wants to understand the therapeutic use of the products. The cannabis industry hopes to have a decision from the FDA soon so that CBD expansion plans can happen faster in the US.

What’s happening in the cannabis industry amid coronavirus chaos?

There’s a huge demand for CBD products in the US due to its medicinal benefits. Even if the FDA allows CBD products, the current scenario doesn’t really help the cannabis industry. Cannabis is still a non-essential item. As a result, the coronavirus pandemic has impacted cannabis sales. However, some states have seen a bump in medical marijuana sales. People decided to stock-up on the products. A few states still have restrictions for opening cannabis dispensaries. Many medical cannabis advocates are urging governments to allow patients to have access to marijuana during this difficult time.

Meanwhile, cannabis companies continue to struggle after the market sell-off last week. Hexo (TSE:HEXO) delayed its second-quarter earnings and announced an impairment loss. The stock had a hard fall in the last two days. Hexo and Aurora Cannabis (NYSE:ACB) are both at risk of delisting. Meanwhile, Canopy Growth (NYSE:CGC)(TSE:WEED) temporarily closed its Tokyo Smoke and Tweed retail stores to limit social interactions amid the coronavirus pandemic. The closures will definitely impact the company’s retails sales. After declining in the last two days, Hexo stock rose 31.3% today at 10:33 AM ET. Meanwhile, Aurora Cannabis stock has risen 11.8%, while Canopy Growth has risen 16.6% today.

Read Are Marijuana Stocks a Good Investment in March? to learn more about marijuana stocks.


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