FDA warnings about CBD may spill over into Canadian cannabis market
- Bennett Swan
- 09 Dec 2019
A recent warning from the U.S. Food and Drug Administration (FDA) on the effects of cannabinol (CBD) could mean trouble for the local and national cannabis markets in Canada.
The FDA said, “it cannot conclude that CBD is generally recognized as safe among qualified experts for its use in human or animal food.”
Precautionary warnings like this from the FDA typically have impacts on industries that are much greater than the blanket statement. The cannabis industry is not an outlier in this case.
Even though the FDA merely warned that they are uncertain of the absence of negative effects – essentially implying they have not completed sufficient research yet – the cannabis markets nonetheless took a huge hit following the statement.
FDA took several actions today on CBD including issuing 15 warning letters, updating on safety concerns, and given the lack of scientific information, that FDA cannot conclude CBD is generally recognized as safe for use in human or animal food https://t.co/aJSmlxhHlX pic.twitter.com/mZcOfE2wGv
— U.S. FDA (@US_FDA) November 25, 2019
Canada is home to several massive cannabis companies, including Canopy Growth Corp., the largest cannabis company in the world.
With forthcoming goals of expansion in the U.S. as the legalization of marijuana comes closer and closer, further caution and delay from the FDA hurts their company growth immensely.
However, as much as it hurts Canopy as a massive player in the market, it hurts the ‘little-guys’ even more. With the current cannabis industry made up of many small and independent companies who rely heavily on the rapid growth of the industry to stay alive, this warning from the FDA may be the one that leaves them without a company in the near future.
The legalization project has not been perfect in Canada. The lack of stores that were available on the day of legalization was not nearly enough to meet the demand of the people. It was also not enough to incentivize people to purchase their products legally as opposed to the black market, as the project was intended.
Surely, as more stores become available in Canada and the supply begins to meet the demand of the market, the revenue of these smaller companies will increase. For the time being, this FDA warning is an off-putting omen for the market’s potential future.
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