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Cannabis inventories were generally down on Monday, as investors likened Friday's regulatory hearing to cannabis and its ingredients, and news that Illinois legalized cannabis herb for recreation.
The US Food and Drug Administration held its first hearing on cannabis and its non-intoxicant ingredient, CBD, all day Friday, with more than 100 speakers, including researchers, health professionals, lawyers, manufacturers and opponents.
The hearing took place after hemp legalization in the 2018 Farm Bill, which led to the online and in-store sale of hemp products, including Mom-and-Pop stores. But CBD, which is widely recognized for its wellbeing properties, particularly in the treatment of pain, inflammation and anxiety, was not included in the lifting of the federal ban but was rather placed under the control of the FDA. It is the key ingredient of the only cannabis-based drug to gain FDA approval, GW Pharmaceuctical's PLC software.
GWPH, + 2.00%
Epidiolex, a treatment of severe forms of infantile epilepsy.
The FDA has warned companies that because it considers CBD as a medicine, it can not be added to food or drink, nor put on the market as a dietary supplement in interstate commerce. But he also said that, given the strong public interest in the CBD as a welfare aid, he would strive to help pave the way for regulatory approval.
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The audience "highlighted the messy state of the industry, the widespread use of DBC products with minimal standardization, evidence of benefits, and an understanding of the security profile," analyst analysts told ISC's Evercore analysts by Josh Schimmer, addressed to customers.
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The discussion was "sometimes quite absurd with extravagant claims, inconsistent messages and an undercurrent of potential security problems," said the analyst. He was, however, very supportive of GW Pharma, as the FDA had made it clear that she wanted the substance to continue to be subject to clinical research, he wrote. GW Pharma shares offered a rare glimpse of the green in the cannabis sector on Monday, gaining 1.1%.
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"Given the fact that the CBD cat is out of the bag, it remains to be seen how the FDA will regulate this industry; it may not have enough resources to monitor and control it, "Schimmer said.
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At CIBC, analysts have noted that a World Health Organization report stated that the DBC was safe and non-addictive, although they acknowledged that most experts are safe. 39, were concerned about insufficient data from the trials. What is clear is the strong demand for CBD, they wrote in a note to customers, quoting a Consumer Reports speaker at the hearing, who said that about 65 million Americans had tried the CBD and that 63% found it effective.
"In addition, the main concern of Americans was pricing rather than security," says the note.
On Friday, many speakers emphasized the need for quality testing and safety standards, as much of the CBD currently available is substandard or mislabeled with incorrect amounts of CBD or even THC, the intoxicating ingredient cannabis, as well as impurities, including pesticides and bacteria. CIBC expects more clarity from the FDA over the next year.
In addition, Illinois will become the 11th state to fully legalize cannabis, after the House of State passed a bill Friday that will now be passed on to the governor, J. B. Pritzker, who has announced his intention to sign it. Sales are expected to begin in January 2020.
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Aaron Gray, an analyst at Alliance Global Partners, said that the state was the first to legalize retail stores through the legislative process and that it could serve as a model for other states. who wish to do the same. New York, New Jersey, Connecticut, Maine and New Hampshire are all trying to agree on legislation without using the voting procedure.
Illinois sales could reach $ 2.9 billion in five years, Gray added, and would have another significant effect.
"We believe that the move of retail sales to adults in Illinois could serve as a catalyst for other states to evaluate similar bills and lobby for the gap between federal and US laws to gap between 29% of the US population now lives in a state where the use of cannabis by adults is legal (nearly 70% of them live in a state where cannabis for medical purposes is legal ", He wrote in a note.
Among the individual shares, he expects KushCo Holdings Inc.
KSHB, -0.72%
to take advantage of the news, "the increased demand for cannabis provided by the MSO (multi-state operators) and other manufacturers and dispensary operators. He also expects Canadian player Canopy Growth Corp.
CANNABIS, -2.86%
GSC -3.01%
to benefit from Acreage Holdings Inc., which Canopy plans to acquire, has a medical license for Illinois, "providing the company with a benefit as a forerunner in sales to the United States. detail for adults ".
KushCo shares were down 2.4%, while Canopy shares were down 2%.
Across the industry, Tilray Inc. shares
TLRY, -6.18%
fell 4.5%, Aurora Cannabis Inc.
CBA -2.92%
CBA -2.92%
was down 2.7% and Cronos Group Inc.
CRON, -3.05%
CRON, -3.30%
was down 2.3%.
Valens GroWorks Corp.
VGWCF, -2.06%
down 4.7%, Organigram Holdings Inc.
US: OGRMF
was down 2.1% and Aleafia Health Inc.
ALEF, -2.07%
ALEF, -2.07%
was down 2.8%.
Green Growth Brands Inc.
GGBXF, -3.60%
was down 6.9%. Aphria Inc.
APHA -3.34%
APHA -3.36%
down 2.9% and Green Organic Dutchman Holdings Inc.
tgod, -2.28%
tgod, -2.28%
was down 1.2%.
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Horizons Marijuana Life Sciences ETF
HMMJ, -1.83%
down 1.9%, and ETFMG Alternative Harvest ETF
MJ -1.81%
was down 1.7%.
The Dow Jones Industrial Average
DJIA, + 0.02%
was up 0.4% and the S & P 500
SPX, -0.09%
was up 0.3%.
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