CBD is expected to grow from a $5 billion industry in 2019 to nearly $28 billion by 2023.
Topline: The Food and Drug Administration (FDA) on Monday released a consumer update citing potential risks of using CBD products, causing major cannabis-related stocks to drop.
- The FDA also cautioned consumers that CBD could cause liver damage, and issued warning letters to 15 companies for illegally selling CBD products.
- Three of the biggest cannabis companies with CBD interests—Cronos Group, Aurora Cannabis and Tilray—were trading down nearly 3% Tuesday.
- Meanwhile, three CBD-focused companies—Charlotte’s Web, Medical Marijuana, Inc. and CV Sciences—were trading down as much as 8% (GW Pharmaceuticals, which sells the only FDA-approved CBD drug, was up over 1%).
- A Tilray spokesperson said the company welcomes more FDA guidance and stands by the quality of its products; a Medical Marijuana, Inc. spokesperson said no evidence exists that the “natural form” of CBD causes “toxic liver effects,” while a CV Sciences spokesperson expressed disappointment with the FDA’s warning for having “an inappropriately alarmist tone.”
Chief critic: Former FDA chief Scott Gottlieb. He’s previously stated that “CBD is not safe” and the benefits of taking it are “largely unproven.” After the FDA issued the CBD warning, he said “extensive studies and industry data” is needed to address “serious safety concerns.”
Key background: CBD is a non-psychoactive chemical derived from hemp, which was declassified as marijuana under the 2018 Farm Bill—since then, a proliferation of CBD products, including tinctures, lotions and gummies, have entered the market. According to market research firm The Brightfield Group, CBD is expected to grow from a $5 billion industry in 2019 to nearly $28 billion by 2023.
What to watch for: Additional guidance from the FDA. The agency said it would release more information in the coming weeks. Publicly traded companies with CBD interests will “probably end up reaping the rewards of more FDA clarity because people will come to responsible, legitimate producers of CBD products,” according to Matt Markiewicz, managing director of the Cannabis ETF, which tracks CBD and THC companies.
Companies that received FDA warnings:
- Koi CBD LLC, of Norwalk, California
- Pink Collections Inc., of Beverly Hills, California
- Noli Oil, of Southlake, Texas
- Natural Native LLC, of Norman, Oklahoma
- Whole Leaf Organics LLC, of Sherman Oaks, California
- Infinite Product Company LLLP, doing business as Infinite CBD, of Lakewood, Colorado
- Apex Hemp Oil LLC, of Redmond, Oregon
- Bella Rose Labs, of Brooklyn, New York
- Sunflora Inc., of Tampa, Florida/Your CBD Store, of Bradenton, Florida
- Healthy Hemp Strategies LLC, doing business as Curapure, of Concord, California
- Private I Salon LLC, of Charlotte, North Carolina
- Organix Industries Inc., doing business as Plant Organix, of San Bernardino, California
- Red Pill Medical Inc., of Phoenix, Arizona
- Sabai Ventures Ltd., of Los Angeles, California
- Daddy Burt LLC, doing business as Daddy Burt Hemp Co., of Lexington, Kentucky