Investment in CBD Industry on the Rise as Venture Capitalists and Brokers Demand Increases

The growth of the CBD industry has also led to a surge in investment. According to data shared in Investment Opportunity Assessment: U.S. Hemp, over $230 million was raised by hemp first in the first five months of last year. Further, Hemp Industry Daily market projections indicate that the hemp-derived CBD industry may grow to $7 billion by 2023.

A recent article by Market Watch discusses a big issues in the industry when it comes to investment, which is that many cannabis companies are dealing with legal risks. A few or those risks, as the article indicates, are confusion about health risks, no clear guidelines on how to warn, safety warnings may not be sufficient, companies may be tempted to cross the line, cannabis liability is largely unclear, and federal prosecutors can enforce federal marijuana laws based on their discretion. As the Market Watch article explains, “While states charge ahead with legalization, weed is still illegal at the federal level.”

Further, it appears that statements by the FDA can and have impacted marijuana . For example, FDA Commissioner Ned Sharpless prepared remarks shared by CNBC on May 31, 2019.

He stated,

“There are real risks associated with (THC and CBD), and critical questions remain about the safety of their widespread use in foods and dietary supplements, as well as other consumer products — including cosmetics, which are subject to a separate regulatory framework. Given the new interest in marketing cannabis products across the range of areas FDA regulates, we will need to carefully evaluate how all these pieces fit together in terms of how consumers might access cannabis products.”

He added,

“And given the new interest in marketing cannabis products across the range of areas FDA regulates, we will need to carefully evaluate how all these pieces fit together in terms of how consumers might access cannabis products. Nowhere is this truer than with CBD. While we have seen an explosion of interest in products containing CBD, there is still much that we don’t know.”

Investor’s Business Daily reported that as a result of these statements, on the same day they were made, Aurora Cannabis sank 5% on the stock market, along with other stocks, such as Tilray, Cronos Group, and Canopy Growth, which fell 2.8%, 5.5%, and 4.6% respectively. In addition, it reports that Innovative Industrial Properties, ended flat.  Tilray, Cronos Group, and Canopy Growth are Canadian companies and operate on the Toronto Stock Exchange.

If the FDA does become more involved in CBD regulation, it could create a more turbulent investment market. This consideration, among those discussed above, are just a few that individuals may want to consider.

All information is for general informational and educational purposes only. Nothing should be interpreted as legal, investment, or wellness advice.