Cannabis stocks were mostly lower Thursday, with Curaleaf Holdings Inc. a standout after announcing a partnership with drugstore chain CVS Health Corp. on a line of CBD products.
Curaleaf shares CURLF, +16.77% rose 3.3%, after the company said CVS CVS, +1.57% is already selling products including creams, sprays, roll-ons, lotions and salves in eight states.
But CBD, the non-psychoactive ingredient in the cannabis plant, is not actually legal yet. While hemp was fully legalized in the 2018 Farm Bill passed in December, CBD was not included but instead was put under the purview of the U.S. Food and Drug Administration. The FDA has promised to hold talks on CBD legalization in April and is aiming to come up with pathways that would allow companies to add it to food, drinks or health products.
But for now, it is viewed as a medical drug, because it is the key ingredient in GW Pharmaceuticals PLC’s GWPH, +2.90% Epidiolex, the first cannabis-based drug to win FDA approval as a treatment for severe forms of childhood epilepsy. The FDA cannot allow a drug to be added to products without the clinical tests and trials required of drug developers that can take years to complete. Companies, keen to take advantage of the perceived health benefits of CBD, are hoping the regulator will act sooner, rather than later.
CVS said that it is selling CBD products in Alabama, California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee. Recreational marijuana is legal in California and Colorado, medical marijuana is legal in Illinois and Maryland, but marijuana has not been made legal for recreational nor medicinal uses in the other states.
Read now: Hemp is now legal in the U.S., so what does that mean for pot companies?
Representatives for the Attorney’s General of Kentucky, Alabama, Indiana and Tennessee were not immediately available for comment.
Korey Bauer, Portfolio Manager of the Cannabis Growth Fund CANNX, -0.67% a mutual fund recently launched by Foothill Capital Management, agreed that CBD is a gray area for now.
“This is why there needs to be legislation, because right now it’s a little messy,” he said. “We need clarity on whether companies can at least add low dosages of CBD to products. Right now, it’s definitely risky for a company like CVS. But as soon as we have legalization, I’m sure all these companies will be participating.”
A research report from consumer data company MRI-Simmons published on Wednesday found that of the 36 million Americans that are cannabis consumers, 10% use CBD products, mostly for medicinal purposes.
For more, see: Cannabis stocks lower after Green Organic Dutchman’s earnings disappoint
Curaleaf, which is backed by Russian billionaires, as MarketWatch sister publication Barron’s has reported, also reported widening net losses, while growing revenue more than 400%. The company reported fourth-quarter net losses of $16.5 million, or 4 cents a share, compared with profits of $624,000, or zero cents a share in the year-ago quarter. Revenue rose to $32 million from $6.3 million in the year-ago period, excluding revenue from managed entities.
For more, read: CBD is being sold at the largest drugstore chain in the U.S.
In New York, Gov. Andrew Cuomo told CNN that he has dropped revenue from cannabis legalization from his budget for the coming fiscal year after facing pushback from lawmakers. Cuomo, who announced his plan to fully legalize the substance for adult recreational use in January, said he doesn’t expect the state legislature to come up with a bill by June and will now aim to get it done in the ensuing legislative session.
A group of lawmakers are seeking to ensure legislation will guarantee access to the new market for communities of color who have suffered disproportionate penalties and rates of incarceration for possession in the past.
Read now: Why New York’s plan to legalize cannabis for adult recreational use is a big deal
Shares of Canada’s Plus Products Inc. PLPRF, -2.10% were down 3%, a day after Canaccord initiated coverage of the stock with a speculative buy rating.
“Through its popular line of gummies, PLUS has attained leading share of the legal edibles market in California (10% in 2H 2018), arguably the world’s most competitive,” analyst Bobby Burleson wrote in a note. “We believe PLUS will be able to leverage this leadership into continued strong growth for existing SKUs (shopkeeping units) and gains in additional edibles categories, where the company is poised to convert shelf space, brand awareness, and operational excellence into penetration of baked goods and mints.”
Elsewhere in the sector, Canopy Growth Corp. stock CGC, -1.92% WEED, -1.30% was down 2.0% and Cronos Group Inc. CRON, -2.75% was down 2.0%. Aleafia health Inc. ALEF, -0.44% ALEF, -0.44% was down 3.5% and CannTrust Holdings Inc. was up 0.7%.
OrganiGram Holdings Inc. OGRMF, -0.69% was down 1.5%. Tilray TLRY, -1.19% was down 0.8%. Hexo Corp. HEXO, -1.34% was down 1.9% and Aphria Inc. APHA, -1.30% APHA, -0.75% was down 1.6%.
Read: Tilray stock rises after the company shows it can sell recreational pot
See also: Cannabis stocks climb after Tilray’s earnings, as New Jersey moves closer to legal weed
Aurora Cannabis Inc. ACB, -1.94% ACB, -1.00% was down 0.8%.
The Horizons Marijuana Life Sciences ETF HMMJ, +0.04% was flat and the ETFMG Alternative Harvest ETF MJ, -0.29% was down 0.6%.
See also: In California’s Weed Country, wildfires burn both cash and crops
The S&P 500 SPX, +0.68% was up 0.5% and the Dow Jones Industrial Average DJIA, +0.68% was up 0.4%.
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