A key FDA hearing on Friday could clarify CBD regulation and begin to bring progress … and more CBD gains
I’m sure it was a surprising arrest for the onlookers — after all, it’s not every day you see a 69-year-old grandmother being arrested at Disney World.
But that’s exactly what happened last month when Hester Burkhalter was arrested at “The Happiest Place On Earth”.
And why did this happen?
Security found a vial of CBD oil in her purse for arthritis. She even had a doctor’s note.
Last year, it was a different grandmother who was arrested. 71-year-old Lena Bartula was arrested at the Dallas airport for possession of a vial of CBD oil she uses to treat her sciatica pain. Not only did she miss her flight, she spent 22 hours in jail.
Then there was 31-year-old Robert Faulkner. He was arrested in Ohio after police found a small vial of CBD oil he uses to treat his anxiety during a DUI arrest.
At the time of arrest, all three individuals were charged with felonies.
What’s behind these incidents is confusion surrounding CBD, marijuana, and the exploding popularity of CBD-infused products of all kinds.
Given this confusion, on Friday, the U.S. Food and Drug Administration is finally holding its first public hearing on the topic of how to regulate CBD-infused products.
***For any readers who need context, CBD is a compound made from both cannabis and hemp, which has been exploding in popularity, in large part, due to its medicinal benefits
CBD is shorthand for cannabidiol, which is one of more than 400 chemical compounds found in a cannabis plant. Of those 400, over 60 are unique to the cannabis plant, and they are referred to as cannabinoids.
CBD is what’s called a non-psychoactive compound found in both the cannabis and hemp plants. That’s a fancy way of saying CBD will not get you “high.”
It’s actually been used by wellness and medical professionals for years as an alternative to traditional pharmaceuticals to treat everything from anxiety and depression to chronic pain to the reduction of inflammation to childhood epilepsy. If it were a drug, we would call it a wonder drug.
That comes from Matt McCall, our resident marijuana expert and editor of Investment Opportunities. While a great many other analysts are just now jumping on the marijuana bandwagon, Matt has been a leader in the space since 2014.
But if CBD is so beneficial — even a “wonder drug” as Matt calls it — why the arrests?
It boils down to a lack of clarity from our legislators.
You see, CBD made from hemp is now legal thanks to the 2018 Farm Bill. However, CBD made from marijuana is still illegal. That’s because marijuana remains a controlled substance.
This “legal/illegal” issue has led to gray area and confusion when it comes to CBD-infused products. Is it CBD from hemp, or from marijuana? Even if it’s from hemp, does it really contain zero THC?
For example, Hester Burkhalter’s CBD oil tested positive for THC, despite the fact that the bottle reportedly claimed it contained zero milligrams of THC.
Beyond the arrests of grandmothers, the lack of formal guidance from the FDA has led state and local officials around the nation to shut down the sale of certain CBD-infused foods and beverages for fear of violating federal law.
For instance, in February, the New York City Department of Health started cracking down on restaurants selling CBD-infused foods, issuing warnings to stop such sales. Starting this coming October, they’ll officially begin issuing fines — even potentially lowering a restaurant’s health letter grade.
On the other hand, retailers are taking more risks with CBD-infused topicals, like lotions and creams. For example, Walgreens, Rite Aid, and CVS have all announced they’re selling CBD-infused topicals. The idea seems to be there’s less danger of complications if the CBD is applied externally versus ingested.
But given the public demand for CBD-infused foods and beverages, politicians and the public have been pushing the FDA for more formal guidance. The hearing on Friday is the FDA’s step toward this guidance.
***Meanwhile, not all government agencies are waiting for clarification before changing their rules
Over this past Memorial Day weekend, The Transportation Security Administration (TSA) updated its cannabis policy, changing the medical marijuana section of its “What Can I Bring?” webpage from reading “no” to “yes” (with “special instructions”).
The agency has clarified that hemp-derived CBD products can now be taken on planes under certain circumstances. Previously, TSA didn’t make a distinction between marijuana and hemp-based CBD, and warned that cannabis products cannot be taken as carry-on items.
***Regardless of whether or not the FDA offers greater clarity after this Friday’s public hearing, demand for CBD is exploding … and doesn’t appear to be slowing
Last year, retail sales of CBD products in the U.S. were estimated between $600 million and $2 billion, according to the investment research firm Cowen. By 2025, the group conservatively forecasts sales to reach $16 billion, with health and wellness products leading the way.
It’s growth like this that’s leading to massive investment gains from CBD-related stocks. For example, take Elixinol Global Limited.
Matt recommended this small company to his Investment Opportunities subscribers. It makes and distributes supplements and skincare products in the hemp-CBD market. Since Matt’s recommendation on early December, the stock is up 138%.
Now, those returns are great for Matt’s subscribers, but let’s push past it … What’s behind these returns? Is it simply greed and mania? Similar to the “fear of missing out” that pushed Bitcoin to $20,000 (before falling to less than $4,000)? If so, then investors need to be careful for whenever this bubble may burst.
On the flip, if CBD’s popularity is anchored in real, substantiated medical benefits, then what we’re seeing may not be a bubble at all, but rather the beginning of a multi-year bull market for a sector that’s capable of generating major wealth.
In writing this issue, I’ve come across many headlines pointing toward CBD’s health benefits. For example:
• Study finds benefits of CBD for Autism
• The fast-acting and long-acting antidepressant effects of CBD
• CBD protects against the damaging effects of Iron in Aging Brain Diseases
• Effectiveness of managing breast cancer with Cannabis compounds
• CBD deters endometrial cancer cells by activating TRPV1 receptors
• The use of transdermal CBD in preventing non-opioid drug relapses
Looking for the final word on CBD’s health benefits, I went to the Harvard Medical School website, a source which I believe the majority of us would consider an authority.
From its website:
CBD has been touted for a wide variety of health issues, but the strongest scientific evidence is for its effectiveness in treating some of the cruelest childhood epilepsy syndromes, such as Dravet syndrome and Lennox-Gastaut syndrome (LGS), which typically don’t respond to antiseizure medications. In numerous studies, CBD was able to reduce the number of seizures, and in some cases it was able to stop them altogether.
CBD is commonly used to address anxiety, and for patients who suffer through the misery of insomnia, studies suggest that CBD may help with both falling asleep and staying asleep.
So, the literature from Harvard appears to be supportive. But there was one final aspect of Harvard’s write-up which I found ironic …
… because CBD is currently mostly available as an unregulated supplement, it’s difficult to know exactly what you are getting.
That brings us full circle to Hester Burkhalter’s unregulated bottle of CBD that actually contained THC, the FDA, and its public hearing on Friday.
Let’s hope that the FDA finally provides the regulation and clarification needed to enable more scientific study, avoid pointless arrests, and better outline appropriate uses of the CBD.
But similar to marijuana legalization, the time to be invested is before all the gray area is removed. That’s because when that clarity comes, it will likely unleash an avalanche of new investment dollars which could be a massive tailwind, driving your previously-established position higher.
We’ll be watching the outcome of Friday’s FDA public hearing with great interest. We’ll continue to keep you up to speed here in the Digest.
Have a good evening,