CBD Stocks Soar as U.S. Makes Big Step Toward Legalizing CBD Products

CBD Stocks Soar as U.S. Makes Big Step Toward Legalizing CBD ProductsCBD Stocks Jump as U.S. Moves Toward Legalizing CBD Products

The U.S. took another big step forward in the march toward federal marijuana legalization.

On January 13, House Agriculture Committee Chairman Collin Peterson, along with co-sponsors from both the Democrats and the Republicans, filed Bill 5587. (Source: “H.R.5587 – To amend the Federal Food, Drug, and Cosmetic Act with respect to the regulation of hemp-derived cannabidiol and hemp-derived cannabidiol containing substances,” U.S. Congress, January 13, 2020.)

The bill would amend the Federal Food, Drug and Cosmetic Act to allow cannabidiol (CBD) in foods and supplements.

That’s incredible news for CBD stocks. The bill is still in the very early stages, but it could go a long way in resolving much of the chaos that has clouded the legal status of certain CBD products.

That chaos started back in November 2019, after the Food and Drug Administration (FDA) said it could not guarantee the safety of CBD.

The agency said it had not approved any CBD products, save for a prescription drug used to treat rare forms of epilepsy. (Source: “FDA warns 15 companies for illegally selling various products containing cannabidiol as agency details safety concerns,” U.S. Food & Drug Administration, November 25, 2019.)

That announcement basically meant virtually anyone selling CBD in a food or supplement was breaking the law. As a result, big retailers were more than just a little gun-shy of putting CBD-infused products on their shelves.

The FDA announcement was a disaster for American farmers too.

The Agriculture Improvement Act of 2018 legalized the cultivation of hemp across the United States. Hemp and marijuana are both species of cannabis, but hemp is not psychoactive, meaning it won’t get you high. It can be used to make CBD though.

Farmers, hoping to cash in on this environmentally friendly, billion-dollar crop, planted acres and acres of hemp. The FDA’s announcement means that the demand for those hemp crops is now uncertain.

There’s a good chance, however, that Bill 5587 will eventually be passed in the U.S. House of Representatives.

Senate Majority Leader Mitch McConnell, who spearheaded the Agriculture Improvement Act of 2018, represents Kentucky, which has a massive hemp farming sector.

Analyst Take

A large number of CBD stocks should benefit from the momentum that is coming from the introduction of Bill 5587.

Left to its own devices, the FDA could drag its feet and take years to clarify its policies on CBD. But the introduction of Bill 5587 could speed up the process.

This could give marijuana stocks involved in the CBD industry a big boost.