By Ciara Linnane, MarketWatch
Cannabis stocks were mostly higher on Monday, after the U.S. Food and Drug Administration said it is expediting its effort to create a regulatory framework for CBD with plans to publish a report on its progress by early fall.
Amy Abernathy, acting chief information officer, said in a series of tweets sent on Friday that the agency is “expediting its work to address the many questions about cannabidiol. This is an important national issue with public health impact, and an important topic for American hemp farmers and many other stakeholders.”
The FDA is still working its way through the public comments posted after more than 100 speakers presented at a May 31 public hearing on the subject, she said, urging anyone who still plans to submit information to do so by Tuesday.
CBD, a non-psychoactive ingredient in cannabis, is widely held to have wellness properties and to help treat a range of complaints, from pain management to inflammation to anxiety. But the FDA cannot allow companies to add it to food and beverages, because it’s the main ingredient in the only FDA-approved cannabis-based drug, GW Pharmaceuticals PLC’s /zigman2/quotes/209686240/composite GWPH -17.21% Epidiolex, a treatment for severe childhood epilepsy. That makes it a drug in the FDA’s eyes, and means it would require research and trials to determine its efficacy and safety.
But with many companies anxious to launch products containing CBD, the FDA has come under pressure to devise rules sooner, rather than later. Clinical trials typically take several years to complete. Former FDA Commissioner Scott Gottlieb proposed congressional action to speed things up, based on using very low doses of the substance.
Companies are selling topicals and oils containing CBD, which the FDA is tolerating, as long as they don’t make exaggerated health claims.
In company news, Organigram Holdings became the first big weed company to report earnings for its fiscal third quarter. The company surprised with a loss and revenue miss, which it said was related to how Ontario, Canada’s most populous province orders pot and the dearth of retail stores there, as MarketWatch’s Max A. Cherney reported.
Organigram Chief Executive said on the earnings call that the increased costs were due to an ultimately unsuccessful experiment it conducted with how it planted new harvests.
The company posted a net loss of C$10.2 million ($7.8 million), or 7 cents a share, after a profit of C$2.8 million, or 3 cents a share, in the year-ago period. Gross revenue increased nearly ninefold to C$30.4 million, while net revenue excluding excise taxes rose to C$24.75 million ($19.0 million) from C$3.4 million. The FactSet consensus was for a profit of 3 cents and revenue of C$29.7 million. Organigram’s fiscal third quarter ended May 31.
The disappointing numbers sent the stock lower early in the day, but it rebounded in official trade and was last up 3.1%.
Jefferies analyst Ryan Tomkins said the headwinds the company faced in the quarter were temporary and reiterated his confidence in a “very well run company.” However, “we think consensus has gotten ahead” for 2020, he wrote in a note to clients, as Wall Street is not factoring in competition in beverages, where some rivals have a head start, and are overestimating returns from edibles and overlooking other factors. The analyst rates the stock at hold with a C$10.50 price target that is about 31% above its current trading level.
CannTrust Holdings shares edged higher, putting them on track for their first gain in seven sessions. The stock has been clobbered since the Canadian regulator seized more than five metric tons of the company’s cannabis after discovering it had been growing in unlicensed rooms.
The company’s Danish partner, Stenocare A/S SE:STENO +13.21% said it received and sold some of the illegal pot. Exporting unlicensed cannabis is an indictable offense, according to Canadian laws.