The US Food and Drug Administration (FDA) held a public hearing last week to obtain scientific data about the safety, manufacturing, product quality, labeling, marketing, and sale of products containing cannabis or cannabis-derived compounds. However, despite lasting 10 hours and featuring over 100 speakers, the FDA public hearing left a number of questions unanswered.
Unsurprisingly, the lack of clarity caused hemp stocks to tumble Monday morning as investors digested early news from the event. It also left market watchers wondering what will happen next.
Let’s take a look at what went on during the public hearing and what it could mean for hemp stocks moving forward.
FDA Holds First-Ever Public Hearing for Cannabis and CBD
When the 2018 Farm Bill was signed last December, the FDA was given authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act and section 351 of the Public Health Service Act. After being passed this responsibility, the FDA quickly became aware of the number of hemp stocks already marketing products that contain cannabis and CBD and had critical questions about the safety of these products.
Although the FDA approved the first-ever CBD-based drug, GW Pharmaceuticals’ (NASDAQ:GWPH) Epidiolex for severe forms of epilepsy, last year, the administration hasn’t approved any other CBD products. In fact, the agency clearly prohibited adding CBD as an ingredient to any food, beverage, or dietary supplement, although it hasn’t taken any specific action besides issuing the occasional warning letter.
Luckily for hemp stocks operating in the space, the FDA felt the pressure to act due to “substantial interest in this topic and Congressional interest in fostering the development of appropriate hemp products under the 2018 Farm Bill.”
The first-ever cannabis public hearing drew in over 400 applicants, 120 of which were given a chance to speak. The administration saw presentations from government officials, patients, retailers, consumers, cannabis companies, and individuals from academia, agriculture, public safety, manufacturing, and healthcare.
Some of the big hemp stocks on the agenda included Acreage Holdings (CSE:ACRG.U) (OTCQX:ACRGF), Wildflower Brands Inc. (CSE:SUN) (OTCQB:WLDFF), Medical Marijuana Inc. (OTCPK:MJNA), and CV Sciences Inc. (OTCQB:CVSI).
There were also three biotech companies focused on CBD drugs that presented: Corbus Pharmaceuticals (NASDAQ:CRBP), Zynerba Pharmaceuticals, Inc. (NASDAQ:ZYNE), and GW Pharmaceuticals’ subsidiary, Greenwich Biosciences.
CBD Regulation Would Filter Out Bad Products
The laundry list of speakers had varying views on the benefits of CBD, some of which praised the compound while others raised concerns about dosage, quality assurance, and side effects. Still, most of the speakers agreed that the FDA needed to establish some sort of regulatory framework for legally adding CBD to foods and drinks.
Others like US Hemp Roundtable’s Jonathan Miller applauded the FDA for stepping in to weed out bad products and cannabis companies making false claims.
Should new regulations with quality assurance requirements come into play, those hemp stocks that are producing high-quality pure CBD in top-shelf extraction labs using good manufacturing practices will be the ones that remain in the game. Pharmaceutical and biotech companies in the CBD space will also likely fair well, as the FDA already recognizes the compound’s medical benefits.
Hemp Stocks Unlikely to be Affected in the Short Term
Although the FDA’s public hearing is a step in the right direction, the goal was to obtain additional scientific data and other information related to cannabis and cannabis-derived compounds, and it will likely be a long process to define a legal path to market for CBD products.
What does this mean for hemp stocks and investors interested in the space?
Considering that the public hearing ended without any definitive plan of action on the agency’s part, it is safe to say that any new regulations surrounding CBD won’t be written up anytime soon. What’s more, all the buzz around the topic may create a buying opportunity.
If you are interested in investing in hemp stocks, you may want to consider shying away from companies that are solely invested in producing CBD food and beverages, as this area are could be hit with the tightest regulations.
Although the cannabis market dipped Monday morning, hemp stocks went back up on Tuesday with many companies closing in the green.
Featured Image: Pixabay