Cannabis stocks on the Tel Aviv Stock Exchange continued their decline yesterday, after a hearing held by the US Food and Drug Administration (FDA) on Friday on permitting the use of CBS (cannabidiol), one of the active substances in the cannabis plant.
Contrary to market expectations, it appears that the testimony at the hearing does not for the time being support full approval of CBD as a freely consumable food product or food additive, but rather supports leaving it under restrictive FDA supervision. Nevertheless, this is only the start of the proceeding, and the last word has yet to be said.
The negative news depressed cannabis-related stocks in the US and Canada, and stocks in Israel, among them Intercure, Herodium, Amir Marketing and Investments in Agriculture, Medical Compression System, Whitesmoke, Cannabit, Univo Pharmaceuticals, and Together Pharma.
"It's not certain that the non-approval of CBD for free use is bad news for the Israeli cannabis market," says Dr. Orna Dreazin, CEO of Nexstage Innovation, who monitored the hearing. "The more liberal legislation becomes in the US, the more Israel's advantage is reduced. Legalization in the US could return the cannabis sector in Israel to its true size."
CBD is the non-psychoactive substance in cannabis. The FDA hearing was called because the 2018 farm bill in the US excluded CBD from the schedule of dangerous drugs as long as it is produced from the hemp plant. The market anticipated that CBD would be allowed to be sold freely.
However, the FDA suddenly argued that it now had to examine whether to approve CBD as a new food product. As long as it is not approved as such, CBD cannot be sold legally as far as the US federal government is concerned, not because it is a drug, but because it is a treatment or food ingredient that has not been approved.
The substance continues to be sold illegally in those states of the US in which cannabis has been legalized for recreational or medical use, contrary to federal law. CBD-based treatments that have undergone the full approval track as medicines (including extensive clinical trials) are sold on prescription.
Adv. Meital Stavinsky of the law firm Holland & Knight, who also followed the FDA hearing, explains that the FDA sought answers from experts to questions such as in what circumstances CBD has side-effects, what is known about its efficacy for various conditions, and whether developing it as a food additive is liable to halt parallel development as a drug based on in-depth research.
Testimony at the hearing was received from companies, research institutes, government agencies and consumer groups. Former FDA head Scott Gottlieb, who formed a working group on the matter before recently leaving the agency, argued that two tracks should be created: a free track for a low dosage of the substance, and a restricted track for a high dosage. Only high-dosage products would be able to claim medical efficacy, which they would have to demonstrate like any other drug. Other FDA personnel said that the products currently sold in those states where sales are legal can contain either negligible or excessive dosages of the substance, and also other, synthetic substances, and that consumers do not know what they are getting.
It was further stated that CBD is far from being a magic drug, effective for everything and devoid of side effects, and that at present there is still a lack of precise information about its positive and negative effects.
Published by Globes, Israel business news - en.globes.co.il - on June 3, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019