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Cannabis Stocks on the Rise Following Announcement by the FDA

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Cannabis Stocks on the Rise Following Announcement by the FDA

October 24
02:02 2019
Cannabis Stocks on the Rise Following Announcement by the FDA

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Despite spiking consumer demand and pressure to move quickly, the FDA is facing clear challenges when it comes to speeding up regulation of CBD in the area of food and beverages

The FDA recently announced its plan to speed up creating a framework for the regulation of CBD. This caused excitement in the stock market, with a sharp rise in cannabis stocks. This market jump is due largely to those cannabis companies that also manufacture CBD or that grow the hemp necessary for its extraction.

For example, vertically integrated Next Green Wave, Inc. ranks among those companies having earned a clear foothold in the cannabis and CBD market, aiming to capitalize on its exponential growth into what many consider to be a $20 plus billion-dollar industry in the coming years.

Investing in Cannabis

Cannabis stocks are an intriguing, exciting investment, with a high (pun intended) potential upside, but they are also an uncertain one. That said, industry analysts and companies remain hopeful. With even more states slated to approve the use of cannabis for medical and/or recreational purposes, the future looks incredibly bright, even with the uncertainty of a path towards compliance with CBD.

The Background of the Issue

CBD has been touted by companies and users alike for its many purported, yet not all substantiated, health benefits. Although initial research looks promising, there is a lot more work to be done before CBD can be signed off on as a “treatment” for the many ailments people claim it helps with.

That said, CBD certainly has shown clear promise, with even the FDA themselves jumping on board to clear the first-ever CBD derived pharmaceutical drug Epidiolex, to treat a rare form of epilepsy.

However, with this approval by the FDA comes new challenges. CBD is now officially classified as a drug, meaning that the FDA cannot easily include it as an approved compound for use in food and beverages. It would take intervention from Congress to speed the process up in this area. The FDA also has concerns about regulating CBD too hastily, wanting to ensure a measured and appropriate response versus a knee jerk reaction that might stifle research and innovation that could benefit consumers. 

Questions Regarding CBD

The FDA has many questions that it is seeking to answer as it attempts to regulate the CBD industry:

  1. If someone ingests CBD and uses it topically in the same day, does this produce any negative results?

  2. How much CBD can be safely applied topically?

  3. Do people react to CBD differently?

  4. How much CBD can safely be ingested?

  5. What types of dosing are appropriate when used for different types of conditions or ailments.

  6. Does age, gender, body weight or other factors impact the needed or safe dosing?

  7. Does CBD interact with other drugs?

  8. Does the mode of delivery (i.e. oral, sublingual. Vape, edible, etc.) matter?

By asking these questions and more, the FDA can begin to discern if there is an amount of CBD that would be considered safe to use for various purposes. Currently, there is also no way to regulate how much CBD is actually contained in a product or where the CBD was sourced.

The Liver and CBD

CBD offers a variety of health benefits, but it does come with some drawbacks. One of these is that long-term use of high levels of concentrated CBD may be associated with increased liver damage. Because of this, companies are only currently allowed to sell CBD products that contain less than 0.3 percent dry weight CBD.

Companies are also not allowed to sell CBD as a “cure-all” product or to make specific medical claims even if those claims are backed by research. In order to gain more ground in this area, clinical trials would need to. These, however, can be costly and often come with high rates of failure.

Proceeding with Caution

The FDA is trying everything possible to speed up regulating CBD. Being able to regulate CBD would bring an economic boom as more business owners would become able to take advantage of marketing CBD products. The main point of the FDA, however, has always been consumer safety.

CBD products can be questionable in a number of ways:

  • Fillers or preservatives may be used in certain products

  • CBD that is sourced internationally may be grown in bad soil

  • Companies may lie about how much CBD is in a product

  • Companies that are unwilling to provide third-party testing may be using unsafe extraction methods or participating in other harmful practices that damage the end product

There are many considerations to weigh when attempting to regulate the CBD industry. The FDA may face numerous obstacles during this process.

Despite Obstacles, the FDA Presses On

Both the FDA and some members of Congress are exploring different avenues that may help speed up CBD regulation while keeping consumers safe. The main obstacle is allowing CBD in food and beverage products since it has already been classified as a drug.

The stigma surrounding cannabis is disappearing as it becomes more widely used for medicinal reasons. Some states have experimented with full legalization of cannabis, even concerning THC, and are seeing positive results. The economy is also benefitting, with money going towards schools and underprivileged housing.

CBD in Food and Beverages

CBD oils and balms exist already for helping with various ailments, but it is quickly becoming popular to consume CBD in food or drink, as well.

There are many products that can be made with CBD infusions, such as:

  • Coffee

  • Jelly beans

  • Cocktails

  • Beer

  • Water

  • Tea

  • And more…

Although it is illegal on the federal level, some states allow for the production and consumption of these types of products. CBD-infused food and drink products are very popular, and this would be a booming industry if fully legalized.

Regulating Labels and Claims

Currently, there is no way to prohibit companies from making certain claims on their labels. If CBD was regulated by the FDA, the FDA would be able to send letters to companies making unsupported claims to force them to make changes to their labels.

The FDA would also be able to test products to make sure they meet standards, and there would be requirements regarding how CBD is sourced, extracted, and used. Clinical trials could begin supporting and debunking certain claims surrounding CBD, as well. This would also help companies who currently have to state that claims are not supported by the FDA. Once a claim is proven, that statement would not be necessary.

The Bottom Line

CBD is a popular substance to use as an oil, balm, pill, or in other forms. Even pet products are manufactured that contain CBD aimed to help calm anxious pets. As more CBD products begin to hit the market, the FDA is looking to regulate CBD for the safety of consumers.

Businesses would be able to launch more products, and consumers would have easier access to the type of product they desired. There would also be a positive effect on the economy, as this market is predicted to grow 700% by the year 2020.

The FDA would help hold companies accountable so that unsubstantiated claims are not made. Regulating CBD will provide high standards for safety and quality.

When it comes to investing in cannabis stocks, do so with caution. Although stocks saw a rise after the FDA announced its intention to speed up creating a regulatory framework for CBD, there are still obstacles in the way.

Many cannabis stocks are tied to particular outcomes and are still very risky. The market may see many volatile highs and lows, so all investments must be made with caution. Never invest anything that cannot be lost, as a good rule. There is a lot of potential with cannabis stocks, but the future is uncertain.

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