Will Gottlieb’s departure from the FDA help stocks?

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The head of the FDA is stepping down after two years on the job

The head of the Food & Drug Administration (FDA), commissioner Scott Gottlieb, recently stated that the FDA would seriously look at regulating cannabidiol (CBD). Now, only about a week after making the announcement, Gottlieb has decided to leave the agency, putting the future of any possible regulations in doubt. It is still too early to tell who might replace him and how quickly a new commissioner might be able to grab the reigns, but the short-term ramifications of his departure are not positive.

Brett Hundley, an analyst with Seaport, asserts, “Gottlieb’s departure is most relevant for the US CBD market, along with the development of cannabis as a therapeutic ingredient product […] We have been watching for developing guidelines on full CBD legalization in the US, based on two potential regulatory catalysts: (1) the ECDD/UN, or (2) the FDA.”

He adds, “Now, with Gottlieb’s resignation, additional questions related to his successor’s views and the Senate confirmation process could cloud CBD/M&I market growth even further. We acknowledge that CBD has still found its way onto many store shelves across the US, but it is our view that approval by the FDA will unleash considerably more in the way of market growth, with new entrants in the form of CPG, pharma, and retail grocery adding a material amount of muscle to M&I market evolution. Until this happens, we see the US CBD market remaining relatively constrained. We view prior FDA Commissioner short-list candidates like O’Neil, Gulfo, and Srinivasan as favorable for de-regulation and thus CBD approval, but we also worry about the Senate confirmation process and what happens to an FDA (and its review of CBD) that goes on too long without a leader in place.”

Due to the FDA’s lack of CBD regulations, many jurisdictions across the U.S. have begun to pull CBD products from their shelves and are ordering restaurants and other food establishments to not include any CBD items on their menus. With Gottlieb’s departure, there may be a more widespread action to remove CBD from the public eye, at least until the FDA can get back on its feet.