4 Things to Note About the FDA’s Guidance on CBD

December 18, 2019 16:00:11

Cannabidiol (CBD) has come a long way for something that was barely on anyone’s radar five years ago. The hemp extract is an extremely potent natural medicine, and for the past few years, demand has been steadily on the rise. It all began when the 2018 Farm Bill legalized industrial hemp and all its extracts.

Farmers were given the green light to grow hemp under state and tribal programs, and apparently, tons of farmers were willing to do so.

Soon, the CBD market was worth hundreds of millions in sales, and according to estimates, it’s expected to hit at least $20 billion by 2026. However, the sector’s rapid growth proved to be a thorn in its side. Regulatory authorities were stuck playing catch up to a runaway industry filled with thousands of unregulated products.

The FDA recently released its updated CBD consumer guidelines simply fell short of saying that no one should be using CBD products, especially as a supplement, cosmetic or food additive. However, there have been complaints that the regulations aren’t the Hail Mary many thought they would be. Nonetheless, there are four main takeaways:

It’s not exactly a surprise. The FDA has been adamant against companies selling CBD as a food additive and supplement. The agency has sent several warning letters to companies doing so, ordering them to desist. In July, for instance, Curaleaf Holdings, the largest multi-state operator in the U.S. was warmed by the FDA against making unsubstantiated medical claims for a variety of their products.

A comprehensive regulatory framework will take time. Way back in March, Scott Gottlieb, former FDA Commissioner, said that typically, it takes the agency two to three years to develop the regulatory framework to add a new substance into the food supply.

He added that because of marijuana’s illicit classification at the federal level, on top of the fact that CBD is a lot more complex than traditional additives, it could take even longer than normal for the agency to establish official guidelines for CBD use.

CBD products outside food and beverages won’t be affected. Although the CBD infused beverage and food industry has definitely taken a hit from the new FDA consumer guidance, players outside of that have little to worry about. As long as the manufacturers avoid making any unsubstantiated medical claims, CBD-infused topicals and oils should keep on selling without interference from the authorities.

Canada’s CBD-infused food and beverage industry won’t be affected at all. Canadian players will be happy to know that the new FDA guidelines have no effect on them whatsoever. In fact, derivatives are hitting Canadian dispensaries pretty soon.

It will take a while for the effects of the FDA guidelines to fully sink in, and analysts are waiting to see how CBD sector players like Sugarmade Inc. (OTCQB: SGMD) and Canopy Rivers Inc. (TSX: RIV) (OTC: CNPOF) will adjust their plans in light of this new development.

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