FDA 2020: What you need to know

​As 2019 is coming to an end, we reflect on the vast amount of changes within the industry. 

The year started with quite an impact, President Trump signing the farm bill into law. The measure affected the industry in a whole new way. It allowed general stores, such as pharmacies and grocers, the opportunity to carry hemp-derived CBD products. 

CBD products could move beyond the medium of cannabis dispensaries. This more encompassing retail presence not only provided a boost to industry sales but allowed products of lesser value into the realm of sales.

According to stock projections, U.S. CBD product sales are expected to increase from where they were in 2018, at $600 million, to $23.7 billion by 2023. The math comes out to an annual growth rate of more than 100% per year over a five-year stretch. 

CBD is a much faster-growing niche than cannabis as a whole. Likely due to legality and the lack of stigma behind the products. CBD has a broad appeal. 

A consumer update in November from the U.S. Food and Drug Administration (FDA) raised much concern among industry folks:

• Noted that CBD has the potential to harm consumers.
• Pointed out that CBD has the potential to cause side effects that might not immediately be noticed by consumers.
• It has been admitted that there are numerous vital aspects of CBD that the agency doesn't know.

In particular, the FDA alluded to the only cannabis-derived drug, as evidence of these bullet points. Despite GW Pharmaceuticals' lead drug being approved as a treatment for two rare forms of childhood-onset epilepsy in June 2018.

Still, the FDA says that CBD isn't without issues.

This FDA consumer update comes as the agency has been reviewing the compound as an additive to food, beverages, and dietary supplements. 

Based on the update, suggest that the agency is not going to grant companies the ability to add CBD to food, beverages, or dietary supplements at this time. 

The FDA has been cracking down on misleading health claims when it comes to CBD. 

In July, some of the most significant CBD operations in the U.S. received warning letters regarding unsubstantiated claims for a variety of CBD products. Even though Curaleaf was quick to respond to these deficiencies, it still wound up costing the company a potentially lucrative distribution deal with CVS Health.
It's important to realize that developing an official game plan for CBD as an additive to food or beverages is going to take time.
It typically takes the FDA two to three years to develop the regulatory framework to add a new substance into the food supply. CBD is slightly more complicated than traditional additives; thus, a longer wait time might be in store. 

Third, investors should understand that while the near- and intermediate-term opportunity for infused food and beverage items has been seriously compromised in the U.S., the FDA's consumer update is unlikely to have much (or any) impact on other CBD-containing products. This means that CBD-infused topicals and oils should continue to be popular items for consumers as long as manufacturers avoid unsubstantiated medical claims.

"Investors should realize that the precautions being taken by the FDA in the U.S. regarding CBD won't have one iota of impact on Canada's launch of CBD-infused foods and beverages." As a reminder, derivatives in Canada will be available in dispensaries any time.

This year's FDA consumer update isn't the bad sign that we all think it is. This has been a year of many changes and much progress, even if slow. Look out for new updates on the horizon.