FDA To Hold First Public Hearing On Cannabis: 5 Likely Gainers
Zacks Investment Research | May 31, 2019 07:16AM ET
On May 31, the FDA will hold its first hearing to take a decision on whether companies can add CBD, a non-intoxicating cannabis compound, to food, beverages and dietary supplements. Several CBD manufacturers, researchers, farmers and retailers have urged the regulatory authority to allow the use of cannabis.
The FDA is not likely to take any decision on the first hearing. The regulators will more likely collect data on safety and effectiveness of CBD and see how it can regulate the industry. The process will go a step forward if majority opinion goes in favor of CBD.
Marijuana Industry is Flourishing
The marijuana industry has strong potential especially after its legalization for recreational and medicinal use. Moreover, the industry is enjoying benefits of expansion into other industries like food, beverage, tobacco and cosmetics.
On Mar 28, the House Financial Services Committee voted 45-15 in favor of passing the Secure and Fair Enforcement Banking Act of 2019 or the SAFE Banking Act. The bill seeks to safeguard the process of financial lending to cannabis companies in the United States.
This bill would not only protect the industry’s credit lines but also aid cannabis ancillary industries in the country. The ancillary sector has been suffering from financial uncertainties associated with the legal status of marijuana in the past.
Cannabis is getting approval from many U.S. states for recreational uses, in addition to medical usage. Though pot remains entirely illegal at the federal level, currently 47 U.S. states offer some form of legalized marijuana for sale.
Strong Market Potential
According to Arcview Market Research and BDS Analytics, globally, spending on legal cannabis is expected to reach $31.3 billion in 2022. Out of this, about $23.4 billion will be spent in the United States. Research firm Euromonitor has estimated that the American market for legal marijuana products will reach $20 billion by 2020.
Research firm Cowen projected that the market size of the U.S. legal cannabis industry will reach $75 billion in by 2030. According to Barclays (LON:BARC), the U.S. cannabis market would be $28 billion if legalized today, growing to $41 billion by 2028.
However, the marijuana industry is considered extremely volatile. Most of these companies are in their early stages of development and characterized as risky for investors. Even a minor negative development may cause major stock price fluctuations.
Likely Gainers
Cannabis stocks are solid long-term bets. Of these, stocks with a Zacks Rank #3 (Hold) or better and solid long-term growth potential are worth trying out despite the latent risks. We have narrowed down our search to five such stocks.
The chart below shows price performance of our five picks year to date.
Get The News You Want
GW Pharmaceuticals plc (NASDAQ:GWPH) is a biopharmaceutical company, focusing on discovering, developing, and commercializing cannabinoid prescription medicines using botanical extracts derived from the Cannabis plant. The stock carries a Zacks Rank #2 (Buy). You can see Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.