Investors are worried about the future of CBD after FDA Commissioner Scott Gottlieb resigned. However, I want to let you know that everything is going to be fine…
I’m not going to sugarcoat it – the stock market was brutal last week.
The Dow Jones Industrial Average fell mostly thanks to a bleak outlook from the European Central Bank and disappointing U.S. job growth numbers for February, and cannabis stocks followed the overall market into a dip.
However, some believe the resignation of FDA Commissioner Scott Gottlieb also pushed cannabis stock prices down. In the stock market, retail investors hate uncertainty. It causes them to expect the worst and panic sell.
For this particular situation, the FDA’s responsibility for regulating CBD is creating some fear that Gottlieb’s eventual replacement will have a harsher stance on regulations.
But I’m here to tell you that, while this is newsworthy, it’s not worth blowing out of proportion.
There is going to be a fight between the FDA and CBD industry – which I will have more about later this week – but it’s not going to be the one you’re hearing about between New York City and coffee shop owners serving CBD-infused cappuccinos.
The picks in our portfolio are going to be just fine, and I even sent out an alert about buying a new cannabis stock because it was a great time to add a position.
Why We Aren’t Scared of Scott Gottlieb’s Resignation
The most important thing to know is that the 2018 Farm Bill was a game changer for cannabis investors. It legalized the manufacturing, distribution, and sale of hemp-derived products. I’m talking about things like oils, capsules, and tinctures.
Manufacturers like that are going to be just fine.
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The FDA wants CBD out of food products simply because it is a regulated drug – it is the active ingredient in Epidiolex, a cannabis-based medicine from GW Pharmaceutical PLC (Nasdaq: GWPH). It’s similar to the FDA not allowing Little Debbie to put aspirin in brownies.
But at much lower dosages, CBD is also a perfectly harmless additive for foods or anything else.
Now, it’s true the next FDA commissioner could conceivably have an anti-CBD agenda, pushing for health officials in cities across the country to follow New York City’s CBD ban. He could have an intense focus on the CBD market, or he might just leave it alone.
I don’t know who will be Gottlieb’s replacement, but I’m not going to lose sleep while we wait for his successor. I will say this: Even the most anti-cannabis people in the Trump administration have not tried to do anything to slow the growth of cannabis. Former Attorney General Jeff Sessions retracted the Cole Memo, but he didn’t initiate any prosecutions outside the guidance of the memo. And there’s no signs that anyone in the administration is hostile towards CBD. President Trump signed the Farm Bill knowing that there was massive hemp reform in it.
If there is ever a reason to sell any of our positions, I will let you know immediately. But this high-level resignation is not one of them.
And even though I know it was a rocky market last week, our investment thesis on why we like our model portfolio members for long-term gains is still strong.
Thanks for being an integral part of the National Institute for Cannabis Investors,
Executive Director, National Institute for Cannabis Investors
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4 responses to “Scott Gottlieb’s Resignation Won’t Derail the Cannabis Industry”
March 11 2019