Cannabis stocks were mixed on Thursday after the Canadian government released statistics that showed the number of users of weed has barely changed since full legalization last October.
About 4.6 million, or 15% of Canadians aged 15 and older, reported using cannabis in the last three months, according to Statistics Canada , the exact same number as reported in the third quarter and throughout 2018. A higher 19% of Canadians said they expect to use the substance in the next three months. Users of both legal and illegal weed were counted in the survey. The numbers will likely disappoint those analysts who expected legalization for adult recreational use to lead to a spike in consumption.
The news comes as investors in the U.S. digest a widening crackdown on CBD, the non-psychoactive ingredient in cannabis that is widely held to have wellness benefits. CBD has been a popular additive in drinks, food and even cosmetics thanks to claims it can alleviate disorders such as anxiety and depression.
But with little scientific research to back those claims, states and cities are moving to comply with U.S. Food and Drug Administration guidelines that do not allow CBD to be sold without prior approval. The recently passed Farm Bill legalized commercial hemp and there were hopes it would also legalize CBD, but instead, regulation of the substance was passed to the Food and Drug Administration from the Drug Enforcement Administration. Companies that were planning to launch products infused with CBD are now awaiting greater clarity on how it will be regulated.
How California's 'Weed Nuns' turned CBD into a million-dollar business
California's 'Weed Nuns' are in battle with law enforcement, big banks and right-wing pastors for a place in the lucrative CBD market. Meanwhile, the FDA has deemed CBD a drug, banning its use in food and health products without official approval.
Smoke Wallin, president of cannabis company Vertical and chief executive of hemp and CBD company Vertical Wellness, said there is a lack of education on hemp and CBD products that is hampering the development of the industry.
“There’s a learning process that both the industry, law enforcement and regulatory authorities are going through as industry matures,” he said. “Congress and the president didn’t sign a Farm Bill including hemp only to be held up by agencies not allowing the No. 1 most popular use of hemp – CBD.”
Among individual stocks, Ascent Industries Corp. shares /zigman2/quotes/203437706/delayed PGTMF -43.86% were trading at 21 cents, after the Vancouver-based company said its license has been suspended and may be revoked by Health Canada. The government agency said it is still concerned that unauthorized activities with cannabis took place after the Canadian producer’s license and dealer’s license were granted to Agrima Botanicals Corp., a fully owned unit of the company.
“Should the company not be successful in its attempt to have the licenses reinstated so that it may commence operations and generate revenue and cash flow in Canada, the company’s ability to continue as a going-concern may be in doubt,” the company said in a statement.
The company is moving ahead with a strategic review with the aim of stabilizing its financial position.
Canopy Growth Corp. shares /zigman2/quotes/200603886/composite CGC +1.12% /zigman2/quotes/202205609/delayed CA:WEED -0.05% were flat in midmorning trade. Chief Executive Bruce Linton told Yahoo Finance that the company is expanding its planned investment in hemp production in the U.S. to $500 million from an original $100 million to $150 million.
Canopy, which is viewed as one of the stronger companies in the sector thanks to a $4 billion investment from Corona beer maker Constellation Brands Inc. /zigman2/quotes/207737284/composite STZ +5.15% , is planning to make and process hemp in New York after receiving a license to do so in January. it is now planing to also add hemp production in Rhode Island and two to three other states in the U.S. That will keep it from moving product across state lines and help it comply with the current regulations.