There’s a lot of overlap between CBD stocks and pot stocks. Which, of course, makes perfect sense. The cannabis plant has scores of active chemical compounds in it. One of them is delta-9-tetrahydrocannabinol (THC). This is the compound that gets stoners… stoned.
The other big one is cannabidiol (CBD). This one has no psychoactive properties. But there are a whole lot of potential health benefits. Now, marijuana producers have no need to weed out the CBD. However, companies focusing on CBD do have to keep out the THC if they want to sell their products over-the-counter. But it’s not terribly difficult if the CBD is derived from industrial hemp – which unlike marijuana is not a controlled substance.
To complicate matters even further, the Food & Drug Administration hasn’t compiled a whole lot on information on CBD. So, it lingers in a state of near limbo… If nothing else, due to its close proximity to THC. It’s not quite legal. But based on how easy it is to find CBD products at the local pharmacy, grocery store and coffee shops, it’s obviously not illegal either. However, its legal status can depend on what state you live in.
Here’s how that works…
In 2018, President Trump signed the Agriculture Improvement Act. This is better known as the 2018 farm bill. In that act, there was a section that removed hemp from the Controlled Substances Act. Thanks to that bill, CBD – which can be extracted from hemp – was deemed legal on the federal level. The bill actually targeted the agricultural aspect though. Compounds extracted from it – à la CBD – aren’t privy to the same green light. It operates in a mixed jurisdictional realm.
Warning: More Politics & Science Ahead
The federal government won’t arrest folks for growing hemp anymore. Extracting CBD or possessing it isn’t a federal crime anymore either. Well, as long as there’s less than 0.3% THC content. But not all states see eye to eye with the feds. Some states still want to see more evidence of the benefits and lack of detriments. And in some states, it remains black listed.
But here’s a big feather in the cap of CBD. The Food & Drug Administration has approved a CBD product to treat Lennox Gastraut syndrome. It’s also been approved to treat Dravet syndrome. To paraphrase, it’s been proven to help those suffering from certain types of epilepsy.
When Greenwich Biosciences received approval for its epilepsy drug, Epidiolex, it was initially considered a controlled substance… Simply because it was derived from marijuana. But when the company requested it be removed from the controlled substances list, the Drug Enforcement Agency (DEA) agreed. This was a big deal because it was the first time the DEA removed any type of cannabis compound from Schedule 1. And this could prove to be a tipping point.
Regardless of what the FDA says, studies have shown that CBD can help treat insomnia, anxiety, and even act as an anti-depressant. It has also helped those dealing with chemotherapy and can treat acne. Nonetheless, not everyone remains sold on the prospects of CBD. And at least part of the problem is bad actors.
The FDA had to warn folks to stop claiming CBD could cure the coronavirus. Also, it probably can’t fix “dryness and frizz” in hair or prevent it from turning gray. But that’s what the FDA is looking out for. And more importantly, we know at this point it can do some positive things. And here are three companies proving it…
Three CBD Stocks Worth Investing In
- GW Pharmaceuticals (Nasdaq: GWPH)
- Charlotte’s Web Holdings (OTC: CWBHF)
- CV Sciences (OTC: CVSI)
We’ll start with the big one. GW has essentially built its future and reputation on prescription CBD products. It’s the parent company of Greenwich Biosciences – the maker of Epidiolex. It has also received approval of its Sativex therapy in several countries. This treatment is a cannabis-extracted spray containing CBD used to treat those with multiple sclerosis.
Even right now as some of its therapies remain in limbo, GW stock is pricy. But it’s proven to be insulted from the price swings of the marijuana market. The company also has an impressive pipeline of therapies in the works… And approval of any of them could send this CBD stock skyrocketing.
Charlotte’s Web Holdings
Charlotte’s Web Holdings can be viewed as the bellwether of the CBD industry. If CBD sales are on the rise, this CBD stock will be one of the first to indicate it.
The company recently acquired the topical treatment manufacturer Abacus Health Products for the intention of increasing its product line. The plans have already paid off with sales up 17%. And increasing product lines should only help the company’s bottom line. This Colorado-based company has deals with major retailers including Kroger (NYSE: KR), Vitamin Shoppe and CVS (NYSE: CVS). Once the FDA clears up the regulatory uncertainty surrounding CBD food products, you can expect this CBD stock to soar.
This company has two distinct segments: consumer products and drug development. The consumer products one is straightforward. It focuses on manufacturing, marketing and selling its CBD products. On the other hand, the pharmaceutical division is constantly trying to push the needle and develop novel CBD-based therapeutics. But the company already has the top-selling hemp-derived CBD oil on the market.
CV Sciences’ PlusCBD Oil was the first supplement to receive Generally Recognized as Safe (GRAS) status. And it continues to grow its product line. The company is in the midst of developing synthetic CBD-based medicine and is pursuing FDA approval for drugs. But again, once regulations around CBD are relaxed, this CBD stock is expected to see a major bounce.
The Bottom Line on CBD Stocks
Bills have been introduced to amend the Federal Food, Drug and Cosmetic Act and it surrounding regulations of hemp-derived CBD. The best guess is congress got distracted by the pandemic. But it should be picked up again. If the FDA finally gets out of the way, these CBD stocks are going to be major beneficiaries.
Unfortunately, for now the prospects of this budding industry are still tied up in politics. And the FDA’s approval (or lack thereof) can change the trajectory of these stocks quickly.
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