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FDA Going After Delta-8 Companies

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It was coming. We knew it by Shopify. And whatever happened is probably just the beginning of the story. We know the government isn’t thrilled about the cannabinoid industry, and now its making its first big, direct move, by using the FDA to go after delta-8 THC companies.

The FDA going after delta-8 companies is a predictable move, but who knows how this will end. We specialize in cannabis and psychedelics reporting, which you can follow along with by signing up for the THC Weekly Newsletter. You’ll also get prime access to deals on an array of cannabis products like vapes, edibles, and smoking paraphernalia. Plus, we’ve got tons of cannabinoid compounds like delta-8 THC as well. Please remember, *cannabinoid compounds are not preferred by everyone. We only support people buy products they are comfortable with.


What’s the news?

The CBD industry is already aware of how much the FDA doesn’t like it. The FDA has sent out letters to tons of companies over the years, reminding them about federal laws, and to stop producing and selling products that go against them. For the most part, this hasn’t had the biggest impact, and CBD, which is now cleared for medical use by the UN via updates to the Single Convention, is found pretty much everywhere.

On May 4th, 2022, the FDA made its first big, direct move in the cannabinoid space, by sending out warning letters to delta-8 companies, warning them that the products they are producing and selling, violate federal law. Five companies were targeted thus far, but perhaps more will receive letters in the future. After all, Shopify had to remove a lot of products, and the very same vendors are the targets of such letters.

The companies targeted by the FDA for their delta-8 products, are ATLRx Inc., BioMD Plus LLC, Delta 8 Hemp, Kingdom Harvest LLC, and M Six Labs Inc. These warning letters don’t leave CBD out, making mention of the company violations on that front too. According to Jonathan Havens, co-chair of Saul Ewing Arnstein & Lehr’s Cannabis Law Practice and the Food and Beverage Practice, “the five warning letters represent the first enforcement actions taken by FDA against delta-8 marketers.”

delta-8 thc

Part of the issue has to do with medical claims. According to the government agency, there are no approved drugs that contain delta-8, and so using delta-8 to make any claim for a medication, means making an unapproved claim, for a drug which is also unapproved. The FDA also attacked the idea of the mis-branding of products, with the complaints of not giving good enough instructions, as well as putting delta-8 in food products.

Said FDA Principal Deputy Commissioner, Janet Woodcock, “The FDA is very concerned about the growing popularity of delta-8 THC products being sold online and in stores nationwide… These products often include claims that they treat or alleviate the side effects related to a wide variety of diseases or medical disorders, such as cancer, multiple sclerosis, chronic pain, nausea and anxiety. It is extremely troubling that some of the food products are packaged and labeled in ways that may appeal to children. We will continue to safeguard Americans’ health and safety by monitoring the marketplace and taking action when companies illegally sell products that pose a risk to public health.”

Of course, delta-8 THC has, indeed, been found useful for all the conditions mentioned, which does beg the question of why the government is trying so hard to protect its population from these compounds, especially in light of the no-death count attached. It has repeatedly been shown that additive products are the real main issue, and that cannabis compounds have yet to be associated with death. This is important because another government agency, the CDC, just requested to lower prescribing guidelines for opioids, which already kill as many as 70,000+ a year, even as other non-addictive, no death-toll measures like ketamine and cannabis, exist.

How did this come about?

This newer issue is a counterpart to the CBD issue, which has been going on for awhile now. The cannabinoid industry, led by delta-8 THC, is based on the idea of extracting cannabinoids from the hemp plant for use in products. But there’s a problem with this. Though some of the compounds can technically be extracted from hemp, like delta-8, they can only be extracted in tiny amounts, so that for product production, synthetic processes must be used. This takes these products out from under the definition of hemp, making them federally illegal.

CBD on the other hand, can be extracted in large enough quantities that the same issue of synthetics isn’t relevant. However, neither is cleared by the US federal government for internal use, and the only reason there’s a conversation, is as a result of the 2018 US Farm Bill. The bill instituted a new definition for hemp, in order to promote the industrial hemp industry. In so doing, it separated high-THC cannabis from low-THC cannabis, and defined ‘hemp’ as only certain parts of the actual plant, without including synthetics. It should be noted, however, that even though the US government says CBD is not legal in this way, it did approve epidiolex, a big-pharma synthetic version of CBD. It has also approved synthetic versions of THC (dronabinol).

Synthetics of any Schedule I substance (which are not big-pharma made and approved), are also Schedule I under the Federal Analogue Act. When compounds are made using synthetic processes, or that don’t exist in nature (delta-10), they are not covered under the definition of hemp. Nor is anything (plant or product) that has over .3% delta-9 THC.

hemp

Two of the many issues with the cannabinoid market, are that large amounts of delta-9 THC are often found in products, and that synthetic processing is used to make them. Though the industry uses the term ‘hemp-derived’, this only means that some aspect of it came from the hemp plant, although in reality, even this isn’t necessarily true. As the industry is not regulated, we simply don’t know what we’re buying, and that presents its own problem.

Though regulating the market could settle much of this, the federal government doesn’t want to do that. But it also doesn’t want to lose tax revenue, and that creates a conundrum. The government tends to take money from big pharma, not little mom-and-pop, so anything that can’t be transformed into pharmaceutical profits easily, isn’t desired by the government. It’s just like with Quaaludes, which were too easily made outside of pharma companies, making for a black market that the US couldn’t control.

What else has been done?

The FDA sending warning letters to delta-8 companies is the first big, above-board move by a government agency to try to stop this industry, but it wasn’t the first move made. A couple months ago, the biggest shopping sales platform, Shopify, started sending out its own similar letters, telling vendors they could not sell products with more than .3% delta-9 THC, and that they had to be in general compliance with federal law, which also rules out synthetics. Thus, tons of companies were affected.

Shopify didn’t stop with letters, and immediately forced companies to drop products from their online catalogues, that don’t meet regulation. This most certainly was a hit to the industry, though the lack of overall sales figures in general, makes it hard to know how much. Cannabinoid products are sold all over the place, and show up in a lot of small roadside stores. How much the industry relied on on-line sales, particularly from Shopify, is not clear.

Shopify didn’t make a statement about the US government making it do this. Nor did the US government make a statement about being involved in the Shopify issue. But most companies won’t shoot themselves in the foot if they don’t have to, and it’s hard to believe that Shopify would all of a sudden care about something it never cared about before. This was not an ongoing fight, but a directive that came out of nowhere. It suffices to say there was likely pressure from higher up, and that Shopify itself could have been shut down if it didn’t comply.

Are these products dangerous?

The US government hasn’t legalized cannabis yet, but we already know that that specific legalization is not what determines the safety of the plant. So regardless of whether something is federally illegal or not, whether it’s dangerous or not is an entirely different question. It’s almost joke level funny that Ms. Woodcock would speak about the dangers of compounds with no death toll, while close to 100,000 people die a year from government sanctioned opioids.

opioids

On top of that idea, the US government is getting close to passing a bill to legalize cannabis, whether it wants to call it a ‘legalization’, or a ‘decriminalization’. The MORE Act already passed the House and is now up for the Senate. And if that doesn’t make it, Senate Majority leader Chuck Schumer has his own baby, the Cannabis Administration and Opportunity Act, which he’s carefully shopping around for support, and which hasn’t been officially offered, so as not to run out the clock prematurely.

Though a lot of reasons could be given for why the federal government is working hard now to pass something, one of the biggest reasons is that it must play catch-up with its states, so as not to seem powerless. Legalization measures are moving in only one direction, and its away from federal mandate. Soon enough, more and bigger publications, will point out how few people actually live under federal law concerning cannabis at this point. And as the government can no longer stop this train, it must now get on it, and pretend that was always the goal.

Conclusion

How much of an effect these FDA letters will have on the delta-8 industry is not known, and it might take some time to see results. The US government is obviously frustrated, but it’s also not in a position of power considering failed drug wars, and the lack of danger associated with this particular drug.

Maybe the delt-8 market isn’t the most savory. Maybe there are problems associated. But if the government really wanted to protect its people, it would do something substantial about the opioid epidemic, instead of railing against a plant (or its synthetic counterparts) which doesn’t realistically hurt anyone.

Hi to all! Thanks for joining us at CBDtesters.co, the premiere website for independent coverage of the cannabis and psychedelics industries. Give the site a read-thru frequently to stay on-top of this quickly-changing landscape, and sign up for The THC Weekly Newsletter, to keep aware of everything going on.





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Ticker: ‘Borat’ drops suit over pot billboard; Ringling Bros. announces comeback tour, no animals 

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Actor Sacha Baron Cohen has dropped his lawsuit against a Massachusetts cannabis dispensary that used an image of his character Borat on a billboard without his permission.

A document filed in Boston federal court Tuesday said the two sides have agreed to dismiss the case brought last year by the “Borat” star.

The legal filing did not mention any settlement in the case. Emails seeking comment were sent Wednesday to lawyers for Baron Cohen and the dispensary, Somerset-based Solar Therapeutics Inc.

Read the rest of this story on BostonHerald.com.



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Has the Cannabis Bubble Popped? – Cannabis News, Lifestyle

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Has the cannabis bubble popped? Stocks are down, funds are drying up, and balance sheets are messy. Assets managed by cannabis funds are down by 45% in twelve months. They’ve reportedly lost $2.6 billion from $4.6 billion the previous year.

Morningstar, an investment research firm, provided the data.

What Happened?

Investors blame a popped cannabis bubble on several factors. First is the repeated failed attempts to pass federal legalization legislation in the United States. But funds focused on legal cannabis markets have also dropped. Data shows that 23 ETF funds have lost between 44.2% and 72% over 12 months.

Investors are seeing inflows dry up as well. In the first three months of 2022, they invested $95.6 million into cannabis funds, compared to $1.7 billion the year before.

However, last year’s activity may have had to do more with new listings on the London Stock Exchange. In the first five months of 2021, Oxford Cannabinoid Technologies, Kanabo Group, and MGC Pharmaceuticals doubled the size of the cannabis market.

Of course, like the rest of the sector, shares in these groups have dropped by 60% and 80%. Canadian LPs have faired a little better, but they’re still down over the same period. Aurora Cannabis is down 57%, Canopy Growth is down 74%, and Tilray is down 68%.

Putting Their Faith in Joe Biden 

cannabis bubble popped
Photo by: Gayatri Malhotra

Performance for cannabis funds doesn’t seem to follow any fundamentals, however. At the tail-end of 2020, cannabis funds picked up when media conglomerates declared Joe Biden the winner of the US presidential election. Funds rose further toward the inauguration when investors assumed the Democrats would make cannabis legalization a top priority. As well as passing legislation to make it easier for cannabis companies in the US to access the banking sector.

“Everybody is watching that one data point right now,” says Nawan Butt, manager of the Medical Cannabis and Wellness ETF. “Whether or not the Senate can pass the SAFE Act, which is expected to go through the Senate. If the SAFE Act gets passed, that will allow financial institutions to start helping the industry. This essentially means that industry participants will get better access to financing and better access to financial services. As well as, we’ll finally have investors in this space who aren’t afraid to be persecuted under federal laws for holding cannabis stocks.”

Blaming Consumers for A Popped Cannabis Bubble?

According to Morningstar figures, Global X is the worst performing cannabis ETF. Alec Lucas, research analyst at Global X, blamed consumers for pursuing “cheaper cannabis options sourced from illicit markets, which has contributed to slowing sales in markets such as Colorado, Illinois, Massachusetts, and Pennsylvania.” Adding, “Canadian companies have been unable to lift prices so as to remain competitive with illicit markets, leading to disappointing earnings.”

However, the truth may be more complex than consumers preferring legacy markets over pharmaceutical-grade cannabis.

Ethanol prices are up 35%, and this affects entrepreneurs using ethanol as a solvent for cannabis derivatives. Higher gas prices also strain margins for cannabis delivery services, including wholesale supply.

Easy Money At Fault for Popping the Cannabis Bubble?

The cannabis bubble may be popping because the era of easy money is coming to an end. Central banks worldwide are attempting to lift interest rates after over twenty years of keeping them near zero. Many economists suggest this manipulation of interest rates acts as an unnatural price control on the money supply. The result is a capital market that divorces itself from consumer demand.

In other words, market interest rates reflect consumer demand and the relative scarcity of capital. A central bank lowering interest rates below its market rate creates an illusion of more prosperity and, thus, the funds to realize long-term projects. However, as we’re discovering now, printing more money doesn’t create more resources. Banks and governments can blame supply chain disruptions on COVID or the Russians, but evidence points to monetary policy, namely easy money, being at fault.

An economy flush with easy money explains how Canada’s cannabis bubble grew to unprecedented heights. Large LPs are cash flow negative, and they have trouble competing with the legacy market and smaller craft producers. Despite their popularity in the financial world, the fundamentals are not there to support their business model. And with large LPs shutting down facilities and firing employees, it’s becoming more apparent every day that the cannabis bubble has popped.





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Publicly Traded: Which Psychedelics Companies Completed An IPO

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The world of investment is a big place with a ton of offerings. In the last few years, a new genre of company has been added to the list of possible corporations to invest in. Yup, there are now a plethora of publicly traded psychedelics companies, and they’re all just getting started.

The world of publicly traded companies is always expanding, and now includes psychedelics companies. This was unheard of just a few years ago! We’re a news platform specializing in the psychedelics and cannabis industries, and the important stories within. Keep up with us by signing up for The Cannadelics Weekly Newsletter, and also be first in line for all product promotions, as they come out in the upcoming months.


What is an IPO?

There are different kinds of businesses. Some are small and operated by one person. Some are massive and span several continents, with thousands of employees. The latter, though it could be a private company, is most likely publicly traded.

A publicly traded company is one that sells its shares on a stock exchange, like the New York Stock Exchange, or the London Stock Exchange. The stocks reach the exchange via an initial public offering, or IPO, which is the opening sail of a company’s shares. Through the IPO, anyone in the general public can purchase a portion of the company, meaning that it’s not owned by a single person or group, but by whoever owns its shares. One of the benefits of doing this, is the ability to get capital together for expansion. One of the deficits, is losing control of a private company to a group of shareholders.

Public companies generally have a CEO and board of directors, as well as shareholders. Who holds the most power can vary between organizations. Decisions can be made by the board, which is generally made up of high level executives, or the shareholders by way of voting. All public companies are regulated by the Securities and Exchange Commission, under the eye of the PCAOB (Public Company Accounting Oversight Board).

IPO publicly traded companies

If a company does not go public, its control is retained by the smaller number of owners or investors that it has, and decisions are made at the behest of this smaller group. In some cases it’s a single person making these decisions. In some cases, a private company can be very large, like Cargill, the largest privately held company in the US, which boasts a staff of 113,000.

Anyone legally able with enough money can purchase shares of a publicly traded company on whatever exchange it exists on. For example, the biggest exchange for stocks in America is the New York Stock Exchange. But there are also other exchanges like the Nasdaq for buying and selling securities, and exchanges in other countries like Euronext, the EU’s biggest exchange.

One aspect of publicly traded companies is that they must report certain financial information to both the government and investors. This is not the same for private companies, which don’t have to release as much information, and can be more secretive about overall earnings. For some industries that hover mainly in the black or gray markets, there isn’t always much data released, and its through the reporting of public companies that we get any sales information at all. The cannabinoid market is a great example of this.

Since publicly traded companies are more closely regulated by federal agencies, they must be tax-paying companies, operating above-board. They might employ shady tactics, but they can’t be black market companies. As such, in order for publicly traded psychedelics companies to exist, they must not sell products or services that are federally illegal.

Publicly traded psychedelics companies

Psychedelics are making a huge comeback in light of study after study showing their benefits for both a myriad of psychological issues, as well as pain. In fact, psychedelic medications are now repeatedly showing up standard pharmaceutical remedies in both avenues, with the drug ketamine (and its legalized counterpart esketamine) taking the lead, highlighting the ability for better depression and pain management. This is especially important because of the ongoing and increasingly bad opioid epidemic which claims tens of thousands of lives a year.

Other compounds like psilocybin and MDMA are getting close to legalizations as well on a federal level. In fact, the FDA has helped structure trials with more than one company studying these compounds, to ensure trial results meet all regulation. The FDA also issued ‘Breakthrough Therapy’ status to three companies studying MDMA and psilocybin, in order to get their drugs to market faster.

FDA

One organization that received such treatment is MAPS – (Multidisciplinary Association of Psychedelic Studies) which is currently in Phase III trials into MDMA for PTSD. MAPS, however is not a corporation, but a non-profit group. Another organization that received this help from the FDA is COMPASS Pathways (CMPS) which is researching psilocybin for treatment resistant depression. COMPASS Pathways is a publicly traded psychedelics company on the Nasdaq and New York Stock Exchanges.

Other companies that join COMPASS on these two exchanges, include Field Trip Health, Inc. (TSE), one of the biggest operators of ketamine clinics; MindMed (MMED), a Swiss biotech company investigating how LSD and MDMA can be used in combination; and Atai Life Sciences (BMV), a company that acquires business in the psychedelics space, and which is one of the psychedelics company with the greatest market capital in 2022, topping $860 million. As of October 2021, there were at least nine publicly traded psychedelics companies on both the Nasdaq and NYSE.

OTC Exchange

However, some publicly traded psychedelics companies are traded elsewhere. In fact, the majority reside on the OTC Markets Group, which includes the OTCQX (highest tier), and OTCQB (mid-tier). Companies that show up here include Pharma Ther (PHRM) which is developing microneedle psilocybin skin patches for medical purposes. Mindset Pharma (MSET) which is working on psilocybin analogues, which are stronger than the standard compound. Delic Holdings Corp (DELC), another chain of ketamine clinics that just bought out Ketamine Wellness Centers Arizona LLC, with major expansion plans.

Then there’s Wesana Health Holdings (WESA), a developer of neurological health therapies, which announced in summer 2021 its acquisition of Psychedelitech, Inc. And Nova Mentis (NOVA), a company in the psilocybin skin patches space, working in conjunction with Mycrodose. All together, as of October 2021, there were at least 27 publicly traded psychedelics companies on the two top tiers of this exchange.

The lowest tier of the OTC exchange is called the Pink Open Market, and several more psychedelics companies reside here. One such company is Levitee Labs (LVT), which joined the Exchange in 2021, and is a producer of mushrooms and associated products. Another is Small Pharma (DMT), which is currently conducting the world’s first official DMT trials into depression along with Imperial College London. Another is Red Light Holland (TRIP), a Netherlands company that sells truffles in the legal market in the Netherlands. And Numinous (NUMI), a wellness company specializing in holistic treatments with psychedelic medicines. Altogether, as of late 2021, at least 14 companies were on this tier of the exchange.

Non-US exchanges

On the international stage, one of the biggest publicly traded psychedelics companies is Jazz Pharmaceuticals (JAZZ) out of Ireland, a Nasdaq company which announced its acquisition of GW Pharma in 2021. GW is a British pharmaceutical company and the maker of leading pharma medicines epidiolex and Sativex, the reason that the UK is one of the biggest cannabis exporters in the world.

public companies

Other companies not necessarily based around the US exchanges include Clarify Pharma (PSYC), a British company which is an investment platform that promotes psychedelic medicines, and which can be found on the Aquis Growth Market for equity and debt securities. Neon Mind (NEON) a Vancouver-based company working on psilocybin weight loss treatments, which resides on the Canadian Securities Exchange. And Graph Blockchain (GBLC), a blockchain company out of British Columbia, which recently acquired mushroom company Shroom Streets, making for a marriage between tech and treatment. This company can also be found on the Canadian Securities Exchange.

For those interested in private and public psychedelic investments, this list contains both companies in their respective spaces. For those interested in investing in private companies, and have the ability to do so, its best to contact the individual companies to speak with their management as shares are not open to the general public. For the right investors, private companies are great opportunities, though they won’t apply to most of the investing world.

Conclusion

If the idea is investment, interested investors should go through the publicly traded psychedelics companies to find the ones that best suit their investment needs. As a dynamic industry with many moving pieces, the landscape is sure to change soon enough, and those getting in on the action, would be wise to keep their eye on daily changes to promote safe and profitable investments. If you’re still unsure about investing in this marketplace, give it more time, and see if its any more appealing in a few months, or a year, from now.

Hello and welcome! Thanks for making it over to CBDtesters.co / Cannadelics.com, your top spot for fully-rounded independent news covering the expanding cannabis and psychedelics fields. Join us whenever possible to keep updated on these dynamic landscapes, and head over to The Cannadelics Weekly Newsletter, for your daily dose of industry news.





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