Among all the topics in cannabis, one of the most popular is the progression of the rules and regulations around CBD. The pot is coming to a boil, as this Friday the FDA will finally hold their hearing to decide what limitations CBD food and beverages will have moving forward. CBD has taken the world by storm, however with the loosely defined regulations, and lack of medical evidence, the FDA has been bottlenecking the industry. Companies are concerned that all of their product, which contains certain amounts of CBD, may become useless after regulation, while others have been trudging ahead manufacturing with force, ignoring the FDA’s warnings.
As we’ve seen in the past couple weeks, big-box retailers such as Target Corporation (NYSE: TGT) have reported looking to CBD products, although deny their levels of interest. From CVS Health Corp. (NYSE: CVS) to Walgreens Boots Alliance Inc. (NASDAQ: WBA), who has already publicly planned to stock their shelves, all the way to Walmart Inc. (NYSE: WMT), who continues to watch from the sidelines. Unlike THC, CBD has no psychoactive effects, and it is popular among a larger market of, non-regular users of cannabis. Coffee shops and restaurants have also been jumping on the bandwagon, as a lot of walk-ins have been requesting CBD in their food or beverages, such as CBD coffee.
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“From the CBD companies’ perspective, if they don’t keep pushing forward they’re going to miss their window of opportunity to gain market control,” said Robert DiPisa, co-chair of the cannabis law group at New Jersey-based firm Cole Schotz. It seems that everyone is running headless since the FDA still hasn’t laid out the ground rules around CBD. What worries the FDA is that if they allow too large of a CBD mg limit in recreational foods and beverages, then what incentives do pharmaceutical companies have to produce new clinical research. Since research takes funding, what source would fund the medical trials around CBD? It seems fairly obvious however that this concern isn’t fully justified since as a start, many of the large Canadian LP’s such as Aurora Cannabis (TSX: ACB) (NYSE: ACB) have already publically stated their own CBD and hemp research efforts.
After announcing the May 31st hearing, the FDA Commissioner Scott Gottlieb said: “We are open to questions about whether some threshold level of CBD could be allowed in foods without undermining the drug approval process or diminishing commercial incentives for further clinical study of the relevant drug substance.”
This obviously indicates that the FDA might be setting the limits on how many milligrams of CBD can be incorporated into food and drink that are not pharmaceuticals. Regulating CBD is in the best interest of companies and consumers, said Bruce Linton, CEO of Canopy Growth Corp (TSX: WEED) (NYSE: CGC), which is in the process of building a 308,000 square foot CBD extraction and manufacturing facility in Kirkwood, New York.
Overall the industry is estimated by many analysts to be worth as much as $15 billion in less than 5 years, and although smaller companies are resentful of the regulations, without such regulations it will be hard for everyone to deliver the data and product the FDA is looking for.
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