The cannabis company that’s about to become the largest of them all is facing some serious allegations over what the FDA is calling illegal and false health claims on the company’s CBD based products.
Curaleaf Holdings (CSE: CURA) (OTCQX: CURLF) broke the bad news to investors on Tuesday morning via a very short press release. The company let its shareholders know about the FDA warning letter and that Curaleaf would have 15 days to respond. Included in the news release was a brief statement from the company that read as follows:
“Curaleaf is committed to the highest standards of quality and compliance and will work collaboratively with the FDA to resolve all issues addressed in the agency’s letter. The Company will respond to the FDA letter within the required 15 working days. Compliance is a top priority for Curaleaf and the Company is fully committed to complying with FDA requirements for all of the products that it markets. We can affirm that nothing in the letter raises any issues concerning the quality and consistency of any Curaleaf product or calls into question the high safety standards of the Company’s cultivation and manufacturing processes. Curaleaf CBD products are all derived from hemp and meet the requirements of the Farm Bill.”
The U.S. Food and Drug Administration (FDA) has determined that Curaleaf had several products for sale on its website that the FDA deemed “unapproved new drugs.” Curaleaf was also promoting these products on social media.
The FDA further elaborated by stating Curaleaf’s products were also considered “misbranded drugs” and the company may be in violation of the FD&C Act due to interstate commerce.
The FDA specifically centred out Curaleaf’s “CBD Disposable Vape Pens, CBD Tincture, CBD Pain-Relief Patch, and CBD lotion” as being the products they did not consider a safe and effective tool for the conditions Curaleaf was claiming in its promotions.
There was a specific post on the Curaleaf Facebook page that the FDA referenced, this post claimed, “CBD can be a powerful ally if you’re suffering from chronic inflammation and pain.”
The Federal agency also had an issue with Curaleaf’s CBD pet line ‘Bido CBD for Pets.’ They stated in the warning letter that these products have not been approved as new animal drugs and are considered unsafe.
Source: Shutterstock
Here is a quote from the Curaleaf FDA warning letter:
“New drugs may not be legally introduced or delivered for introduction into interstate commerce without prior approval from the FDA, as described in sections 301(d) and 505(a) of the FD&C Act, 21 U.S.C. 331(d) and 355(a). FDA approves a new drug on the basis of scientific data and information demonstrating that the drug is safe and effective,” – The FDA.
View the FDA’s warning letter to Curaleaf in its entirety here.
CNBC reached out directly to the FDA’s commissioner Ned Sharpless and obtained the following statements from him:
“The regulatory body is making Curaleaf aware it is making unfounded claims about more than a dozen different CBD products.”
“As we examine potential regulatory pathways for the lawful marketing of products containing cannabis and cannabis-derived compounds like CBD, protecting and promoting public health remains our top priority.”
“Selling unapproved products with unsubstantiated therapeutic claims — such as claims that CBD products can treat serious diseases and conditions — can put patients and consumers at risk by leading them to put off important medical care.”
As mentioned previously, Curaleaf has 15 days to respond and correct their actions or face legal action from the FDA.
Curaleaf spokesperson confirmed that the company’s legal counsel is reviewing the warning letter and has plans to respond accordingly within the FDA-mandated time frame.
“We intend to work collaboratively with the FDA to address the issues in the letter. Curaleaf is fully committed to complying with FDA requirements for all of the products that it markets,” stated the Curaleaf spokeswoman.
Shares of Curaleaf, as expected, drop substantially on Tuesday in response to the news. The company’s stocks closed trading Tuesday at $9.75, down 7.1% on the day. Curaleaf’s stock dropped another 5% this morning but was able to fight back to close the day near even at $9.73, down 0.2% on the day.
Source: Barchart.com
We’ll be monitoring the Curaleaf situation closely to see if the company can fully satisfy the FDA’s request. We’ll report back our findings as they become available.
This news will ultimately force the rest of the U.S. cannabis industry to take a hard look at their current marking strategies as it pertains to CBD based health claims. U.S. companies need to ensure they are not on the wrong side of the FDA’s CBD guidelines or they could face a similar predicament.
Stay tuned for follow up articles on this developing story.
2019’s #1 Stock Pick | New Cannabis IPO Coming Soon
Move over Canopy. The world’s largest cannabis company is set to IPO in less than 30 days.
Get the full details here so you don’t miss out on the next potential 10 bagger.
Get your FREE copy of our Ultimate Investing Guide to Cannabis Stocks
Read More:
Featured ArticlesCannabis Stock NewsCannabis Industry ArticlesTechnical Analysis ArticlesWatch Cannabis Stock Videos
