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Brace For Stricter FDA Regulation Of CBD Consumer Products, Analysts Say

Brace For Stricter FDA Regulation Of CBD Consumer Products, Analysts Say

Cannabis stocks headed lower Tuesday after a Monday communication from the FDA, which sent warning letters to 13 companies for illegally selling products containing containing cannabidiol (CBD), violating the Federal Food, Drug, and Cosmetic Act.

The 15 companies were warned for marketing CBD products for therapeutic uses in humans and/or animals as well as as dietary supplements.

The regulatory agency also issued an amended Consumer Update about products containing cannabis or cannabis-derived compounds, including CBD.

BofA: FDA Firm On Regulating Consumer CBD  

The FDA continues to maintain a strict stance on regulating the consumer CBD market, Bank of America Merrill Lynch analyst Christopher Carey said in his review of the dual communications from the FDA.

The FDA is planning to "provide an update on its progress regarding the agency's approach to these products in the coming weeks," the analyst said. 

The regulatory body highlighted safety concerns around CBD such as potential liver injury, interactions with other drugs, drowsiness, diarrhea and changes in mood, he said. 

Had the FDA granted a generally recognized as safe, or GRAS, designation to CBD, it would have put the onus of proving safety on the manufacturers of CBD products, Carey said. 

"It is unclear how long it could take for FDA to issue a favorable ruling on GRAS for CBD, or how long it could take to establish its own safety standards around appropriate dosing." 

The FDA's opposition to consumer CBD products stems from the fact that GW Pharmaceuticals PLC's (NASDAQ: GWPH) epilepsy drug Epidiolex has hemp-derived non-psychoactive cannabinoid CBD as its active ingredient, according to BofA. 

Cantor: FDA Guidelines Could Be Sterner Than Expected

The FDA's communication is likely to further deter the food/drug/mass, or FDM, channel from embracing consumer CBD products, Cantor Fitzgerald analyst Pablo Zuanic said in a note.

The FDA said it is exploring potential pathways for legally marketing CBD product as its works to answer outstanding questions related to the safety of CBD products even as it strives to maintain its "rigorous public health standards," the analyst said. 

"While the eventual FDA guidelines may weed out smaller players, at this stage we think the said guidelines may be sterner than expected and will limit the market's growth potential (unless we can see breakthroughs in the efficacy of topicals vs. ingestibles)."

Latest Ratings for GWPH

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