Canadian cannabis stocks are going through a rough patch, as investors are frustrated by the slowdown in pot sales growth, and the companies have largely blamed a slower-than-necessary retail store rollout to directly compete with the well-established underground marijuana market for customers.
That said, the passing of the U.S. Farm Bill of 2018 opened a new market and growth opportunity for Canadian cannabis firms who were constrained by federal regulation from conducting any marijuana-related business down south.
But the U.S. Food and Drug Administration (FDA), an agency seized with the safety and protection of consumers from potential harm from food staffs and drugs, came out all guns blazing on November 15 to make stern warnings while descending heavily on 15 identified CBD marketers for violations of some legal provisions.
The agency claims that studies in animals have shown that CBD could impair sexual potency in males and the cannabinoid could cause some liver damage, among other negative side effects. These are serious issues, even if marijuana has been illegally used for centuries without public reports of these things actually happening.
That said, the most worrying enforcement issues in the FDA statement were compliance issues where marketers are accused of illegally marketing the cannabis extract for treatment of diseases of for other therapeutic uses for humans and animals without regulatory approvals.
Other violations included the marketing of CBD as a dietary supplement and adding the product to human and animal foods before conclusive research is done to support such activities. This could make it very complex for hemp operators to generate revenue, as it’s not clear how the cannabinoid should be extensively marketed as a health and wellness product with all these restrictions.
Hopefully, the decades of cannabinoid research from Israel and other parts of the world could help fast track regulatory approvals, but until that day, the legal mass marketing of the product could face legal challenges and the rate of market growth in America could be slowed down by regulation, just as in Canada.
Canopy Growth and peers have to find ways of marketing the hemp extract without attracting the FDA’s all watching eye, but as it appears, options are limited,
Brian Paradza has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Village Farms International, Inc. The Motley Fool recommends OrganiGram Holdings.” data-reactid=”42″>Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Village Farms International, Inc. The Motley Fool recommends OrganiGram Holdings.
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