TUE. JUNE 4 – Cannabis stocks sold off yesterday after an FDA hearing highlighted the regulatory hurdles facing the CBD industry. The report sparked a cannabis stock sell-off after stoking Wall Street fears of pending regulatory headwinds.
The news sent some traders running towards the exits, and most major companies closed in the red. Cronos Group (CRON) was down over 3.5%, Canopy Growth (CGC) fell 3.8%, and Aurora (ACB) lost over 5.6%. Tilray (TLRY) closed the day with a decline of over 8.8%.
The FDA took a strong stance on two types of CBD products: infused beverages and edibles. Therefore, it’s wise to avoid companies operating in this space. Look for these stocks to be extremely volatile until a ruling is reached.
“There are important reasons to generally prohibit putting drugs in the food supply.”
-Acting FDA Commissioner Ned Sharpless
Friday’s hearing was the first step towards establishing a regulatory framework for the industry, and the FDA will remain open to public comments on the matter until July 2, 2019.
The uncertainty facing the industry could cause increased volatility in cannabis stocks over the next few months. However, it could serve as a buying opportunity for investors looking for long-term value.