Cannabis stocks were falling on Monday after an FDA hearing on CBD last Friday found conflicting views of the substance.
Last week the U.S. Food and Drug Administration conducted its first-ever hearing on cannabis and its nonintoxicating ingredient CBD. Over 100 speakers offered views at the hearing with many addressing the need for quality testing and safety standards.
Evercore ISI analysts led by Josh Schimmer said that the hearing “highlighted messy state of the industry, with widespread use of CBD products with minimal standardization, evidence for benefit and understanding of safety profile.”
The FDA has said that because it views CBD as a drug, it cannot be added to food or beverages or marketed as a dietary supplement in interstate commerce. The organization also said that it will seek to help provide pathways to regulatory approval.
The discussion was “at times quite absurd with outlandish claims, inconsistent messages and an undercurrent of potential safety concerns,” said the analyst.
“Considering the extent to which the CBD cat is out of the bag, it remains to be seen how the FDA will regulate this industry; it might not have adequate resources to fully monitor and police it,” said Schimmer.
“Furthermore, more Americans’ primary concern was pricing rather than safety,” said the note.
Illinois just recently legalized recreational marijuana. “We believe the passing of adult-use retail sales in Illinois could serve as a catalyst for other states evaluating similar bills to follow suit, and also put further pressure to address the disconnect between state and federal law as 29% of the U.S. population will now live in a state where adult use cannabis is legal (with nearly 70% living in a state where medical cannabis is legal),” he wrote in a note.