Cannabis stocks tanked Tuesday after federal officials showed they haven’t chilled out over CBD.
Several publicly traded pot firms saw stocks slide after the US Food and Drug Administration issued a scary new list of health warnings to consumers on Monday.
The FDA warned that the cannabis ingredient — said to relieve pain and anxiety without getting people high — can cause liver damage, “changes in mood,” and “gastrointestinal distress,” among other ailments.
“The FDA is concerned that people may mistakenly believe that trying CBD “can’t hurt,”the consumer alert said.
It was the FDA’s first warning ever about the potential health risks of CBD-infused products like lotions and beverages — raising concerns that the agency could crack down on the substance despite Congress removing the marijuana derivative from a list of illegal substances last year.
“It’s the most stern aggressive language to date,” said Jonathan Eppers, chief executive of Vybes, an LA-based company whose CBD-infused drinks are sold in 3,000 stores at about $8 a pop.
Shares of Canadian pot companies like Aurora Cannabis — which partnered with the Ultimate Fighting Championship this summer — closed down 5 percent to $2.30 a share, while Cronos Group shares fell 2.3 percent to $6.74.
Toronto-based Tilray’s shares sank 3.5 percent to $20.05 a share, while Canopy Growth Corporation’s price was down 1.8 percent to $18.11 a share.
Further killing the industry’s buzz, the agency went after companies in 10 states Monday for selling CBD-infused foods and drinks and for marketing CBD products for babies and animals, among other alleged violations.
The companies that got FDA warnings were marketing their products in a variety of ways that violated federal law, such as claiming that CBD is a dietary supplement or that it can treat diseases, according to the agency.
But industry participants like Eppers said they’re more anxious about the FDA’s health warnings because it suggest the agency is still an eternity away from crafting rules for governing CBD products, like oils to relieve stress or headaches.
“It laid out potential adverse health effects, but they haven’t said for sure whether CBD is safe or not safe. It’s still a state of uncertainty,” Eppers said. “It feels like they are continuing to punt this down the road.”
Further adding to the uncertainty, the FDA said it’s studies into the health effects are on-going. It will be examining, for example, the health impact of eating CBD-infused food while also using CBD-infused skin cream.
“What if you use these products daily for a week or a month?,” the agency said of the questions it is seeking to answer.
“They’re not terribly interested in allowing for a legal pathway but I think they’re going to have to,” complained Jamie Schau, international research manager at Brightfield Group, a research firm for the cannabis industry. “Because it’s got extreme bipartisan support and the market is really, really looking to grow.”