The cannabis industry is in the limelight again! On August 15, a Forbes article discussed that the FBI announced corruption in the cannabis industry. The FBI actively seeks tips on public corruption related to the marijuana industry. Notably, the FBI discussed the situation on its podcast.
FBI tightens the screws on the cannabis industry
FBI Public Affairs Specialist Mollie Halpern said that since states require licenses to grow and sell the drug, there could be corruption. Public officials might be inclined to accept bribes in exchange for the licenses.
Supervisory Special Agent Regino Chavez said during the podcast that “We’ve seen in some states the prices go as high as $500,000 for a license to sell marijuana. So, we see people willing to pay large amounts of money to get into the industry.” Regulations play a vital role in the booming cannabis industry. Will the FBI’s investigations threaten the US cannabis industry?
FDA issued warning letters
As we discussed in Investing in the Cannabis Industry, cannabis has two components that impact humans differently. The first component is CBD (cannabidiol). The other component is THC (tetrahydrocannabinol). If CBD is mixed in a higher proportion, it reduces the effects of THC. In contrast, THC has more psychoactive effects if it’s consumed in high quantities. The FDA issues warning letters to firms every year. The FDA sends letters to firms that market unapproved new drugs that contain CBD. The organization sent warning letters to Curaleaf, Advanced Spine and Pain, Nutra Pure, and PotNetwork Holdings in 2019.
The FDA tested the chemical content of CBD compounds in some of the companies’ products. Notably, the tests showed that the CBD levels were lower than claimed. Regulation violations impact companies’ reputations. Violations take a toll on their revenues, earnings, and stock performance. Read Why Is the US CBD Market So Attractive? to learn more about the CBD market.
Cannabis companies face regulatory challenges. Recently, CannTrust (CTST) didn’t comply with Health Canada’s regulations. Read Why Is CannTrust Falling on Friday? to learn more.
Curaleaf (CURLF) received a warning from the FDA about its promotion practices. To learn more, read Curaleaf Stock: Latest Updates for Investors. HEXO (HEXO) got caught up in the scandal news. As a result, most cannabis players suffered in July. Curaleaf rose 11% in July, while CannTrust fell 53.1%. Likewise, HEXO fell 21% in July.
US cannabis industry
Currently, the US cannabis industry is in the limelight. The 2020 presidential election is heating up. The candidates took initiatives to help the cannabis industry boom. Many of the 2020 election candidates want to push for marijuana legalization.
Recently, Joe Biden discussed his opinion about passing the SAFE Justice Act immediately and decriminalizing cannabis. Biden also wants to change the criminal justice system. Read Joe Biden Wants to Reform Cannabis Laws to learn more.
President Trump’s stance
According to a CNBC article, a Gallup Poll said that two-thirds of Americans support legalizing marijuana. The article also discussed how more states are legalizing marijuana. Recreational marijuana is already legal in ten states and Washington, DC. Meanwhile, 14 states decriminalized marijuana. Currently, 33 states allow medicinal marijuana use.
Will President Trump legalize marijuana? He hasn’t expressed his views on marijuana legalization yet. Last month, a Growth Op article discussed the topic. Piper Jaffray analysts think that President Trump might make marijuana legalization one of his key issues in the 2020 election. The platform could help him gain support from younger voters.
Cannabis players bounced back on Friday
After a disastrous performance on August 15, cannabis stocks bounced back on August 16. The performance on August 15 was led by Canopy Growth’s unimpressive results for the first quarter of 2020. Tilray fell 10.0%, while CannTrust fell 6.6%. Aurora Cannabis (ACB), Cronos Group (CRON), HEXO, and Aphria (APHA) fell 5.7%, 8.8%, 6.5%, and 7.6%, respectively. Read Canopy Growth Earnings Impacted the Cannabis Sector and Canopy Growth: Analysts’ Views after Its Earnings to learn more.
Canopy Growth (CGC) rose 2.3% on August 15. Aurora Cannabis, HEXO, and Aphria rose 3.9%, 3.8%, and 3.8%, respectively. Meanwhile, Tilray and Cronos Group fell 10.8% and 0.06%.
Read Which Are the Best Cannabis Stocks in August? for more industry updates in August.