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Nov. 26, 2019, 11:10 a.m. EST

Here’s how investors should think about the FDA’s warning on CBD

Money flows are mostly negative or neutral in marijuana stocks, and the Food and Drug Administration’s warning is creating an overhang

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By Nigam Arora


Getty Images/iStockphoto

The U.S. Food and Drug Administration has thrown a big impediment in the way of marijuana investors.

Before discussing the FDA’s move, let’s build some background with the help of a chart.

Please click here for a chart showing segmented money flows in 16 popular marijuana stocks.

Note the following:

• Smart money flows are neutral in Aphria /zigman2/quotes/207425803/composite APHA -0.41% , Canopy Growth /zigman2/quotes/200603886/composite CGC +1.36% , Cronos /zigman2/quotes/206842762/composite CRON +4.27% and New Age Beverages /zigman2/quotes/200595917/composite NBEV +0.90% .

• Smart money flows are mildly negative in Aurora Cannabis /zigman2/quotes/210559470/composite ACB +2.98% .

• Smart money flows are negative in marijuana ETF /zigman2/quotes/204332491/composite MJ +1.87% .

• Smart money flows are negative in Curaleaf /zigman2/quotes/205334348/composite CURLF +0.67% , Liberty Health /zigman2/quotes/204270480/composite LHSIF -1.32% , MedMen /zigman2/quotes/201940908/composite MMNFF -3.59% and Tilray /zigman2/quotes/209129655/composite TLRY +17.09% .

• Smart money flows are mildly positive in Green Thumb Industries /zigman2/quotes/200716694/composite GTBIF -0.34% .

• Among marijuana-related stocks, smart money flows are mildly positive in Corbus Pharmaceuticals /zigman2/quotes/201549545/composite CRBP +1.03% and KushCo Holdings /zigman2/quotes/209165034/composite KSHB -3.85% .

• Among marijuana-related stocks, smart money flows are negative in GW Pharmaceuticals /zigman2/quotes/209686240/composite GWPH +1.88% , Scotts Miracle-Gro /zigman2/quotes/200553749/composite SMG -0.11%  and Constellation Brands /zigman2/quotes/207737284/composite STZ -0.92% .

Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.

FDA news

It is important for investors to go directly to the source and read the FDA news release carefully. The FDA warned 15 companies for illegally selling various products containing cannabidiol on safety concerns. Here are the important points:

• Before forming an opinion of the FDA, keep in mind that the FDA’s intention is to protect the public from harm. The FDA is well-intentioned. The key is to expedite the research.

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US : U.S.: Nasdaq
$ 4.89
-0.02 -0.41%
Volume: 8.87M
Aug. 4, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.37 billion
Rev. per Employee
$147,410
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/zigman2/quotes/200603886/composite
US : U.S.: NYSE
$ 19.32
+0.26 +1.36%
Volume: 5.69M
Aug. 4, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.74 billion
Rev. per Employee
$115,039
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/zigman2/quotes/206842762/composite
US : U.S.: Nasdaq
$ 7.08
+0.29 +4.27%
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Aug. 4, 2020 4:00p
P/E Ratio
7.61
Dividend Yield
N/A
Market Cap
$2.28 billion
Rev. per Employee
$55,248
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/zigman2/quotes/200595917/composite
US : U.S.: Nasdaq
$ 2.25
+0.02 +0.90%
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Aug. 4, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$206.48 million
Rev. per Employee
$304,998
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/zigman2/quotes/210559470/composite
US : U.S.: NYSE
$ 10.73
+0.31 +2.98%
Volume: 2.38M
Aug. 4, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.15 billion
Rev. per Employee
$94,401
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/zigman2/quotes/204332491/composite
US : U.S.: NYSE Arca
$ 13.59
+0.25 +1.87%
Volume: 598,602
Aug. 4, 2020 4:00p
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/zigman2/quotes/205334348/composite
US : U.S.: OTC
$ 9.04
+0.06 +0.67%
Volume: 552,355
Aug. 4, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.42 billion
Rev. per Employee
N/A
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/zigman2/quotes/204270480/composite
US : U.S.: OTC
$ 0.38
-0.0050 -1.32%
Volume: 1.14M
Aug. 4, 2020 3:59p
P/E Ratio
5.81
Dividend Yield
N/A
Market Cap
$127.61 million
Rev. per Employee
$71,336
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/zigman2/quotes/201940908/composite
US : U.S.: OTC
$ 0.17
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Volume: 1.71M
Aug. 4, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$106.26 million
Rev. per Employee
$49,729
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/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 8.70
+1.27 +17.09%
Volume: 20.13M
Aug. 4, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$927.72 million
Rev. per Employee
$62,689
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/zigman2/quotes/200716694/composite
US : U.S.: OTC
$ 13.88
-0.05 -0.34%
Volume: 312,731
Aug. 4, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.79 billion
Rev. per Employee
N/A
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/zigman2/quotes/201549545/composite
US : U.S.: Nasdaq
$ 6.86
+0.07 +1.03%
Volume: 1.28M
Aug. 4, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$492.21 million
Rev. per Employee
$62,627
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/zigman2/quotes/209165034/composite
US : U.S.: OTC
$ 0.66
-0.03 -3.85%
Volume: 647,050
Aug. 4, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$86.20 million
Rev. per Employee
$339,343
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/zigman2/quotes/209686240/composite
US : U.S.: Nasdaq
$ 135.37
+2.50 +1.88%
Volume: 260,200
Aug. 4, 2020 4:00p
P/E Ratio
133.80
Dividend Yield
N/A
Market Cap
$4.13 billion
Rev. per Employee
$20,686
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/zigman2/quotes/200553749/composite
US : U.S.: NYSE
$ 157.92
-0.17 -0.11%
Volume: 362,002
Aug. 4, 2020 4:00p
P/E Ratio
27.69
Dividend Yield
1.57%
Market Cap
$8.77 billion
Rev. per Employee
$532,058
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/zigman2/quotes/207737284/composite
US : U.S.: NYSE
$ 171.69
-1.60 -0.92%
Volume: 1.21M
Aug. 4, 2020 4:03p
P/E Ratio
N/A
Dividend Yield
1.75%
Market Cap
$33.45 billion
Rev. per Employee
$842,260
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