There's arguably no buzzier investment on Wall Street at the moment than marijuana. And within the cannabis industry, no trend is hotter than the rise of cannabidiol (CBD).
Cannabidiol is the nonpsychoactive cannabinoid best known for its perceived medical benefits. It can be extracted from the cannabis plant or from hemp, the latter of which is almost always a more cost-effective source from which to obtain large quantities of CBD extracts. Given that CBD-infused derivatives, such as oils, capsules, edibles, infused beverages, and topicals don't get a user high, they're believed to be the perfect means to market to users who've never used, or considered using, a marijuana or hemp-oil product before.
For Wall Street, CBD is nothing more than a gigantic dollar sign hovering over the industry. The Brightfield Group foresees U.S. CBD-based sales rocketing from $591 million in 2018 to $22 billion by 2022. That's good enough for a compound annual growth rate of 147%. The passage of the farm bill in December, which legalized industrial hemp production and hemp-derived CBD extracts, only adds fuel to CBD's sizzling growth prospects.
And for prospective consumers, it's a means to possible therapeutic benefits. In June 2018, GW Pharmaceuticals (GWPH) saw its lead drug Epidiolex, a CBD-based oral solution, get approved to treat two rare forms of childhood-onset epilepsy. This was the first time the U.S. Food and Drug Administration (FDA) had approved a cannabis-derived drug.
We've also witnessed plenty of university-level studies that have shown positive correlations between CBD consumption and improvements in chronic pain, glaucoma, epilepsy, and a host of other ailments for patients.
In many respects, CBD is being hailed as an inexpensive cure-all for a number of conditions. But this faith in CBD and its medical benefits may be misplaced, at least according to one new study.
CBD: Not as safe as you think?
The study, titled "Hepatotoxicity of a Cannabidiol-Rich Cannabis Extract in the Mouse Model," was published in the journal Molecules in late April, although it was a recent Forbes article that brought this study to my attention.
As the title suggests, researchers at the University of Arkansas for Medical Sciences used a mouse model to examine CBD toxicity in the liver based on varying dosages of the substance. What's particularly interesting about this study is that the researchers used "allometrically scaled mouse model equivalent doses of the maximum recommended human maintenance dose of CBD in Epidiolex (20 mg/kg)." In other words, the high-dose parameters of GW Pharmaceuticals' lead drug, and the only approved CBD-based therapeutic in the U.S., was the basis for the dosing in this study.
In the sub-acute (presumed nontoxic) phase of the study, 8-week-old mice were gavaged dosages of 0 mg/kg, 61.5 mg/kg, 184.5 mg/kg, and 615 mg/kg for 10 days. Again, this was the sub-acute toxicity portion of the trial (the acute portion saw dosages as high as 2,460 mg/kg). Of those mice in the sub-acute study receiving the highest dose of 615 mg/kg, 75% either died or were near death by day three or four. These mice showed many of the telltale signs of liver damage (i.e., elevated liver enzyme levels, and significant increases in the liver-to-body weight ratio) that were seen in the highest doses of the acute study.
Now, here's the aha moment: The 615 mg/kg dose that caused the death or near-death of three-quarters of mice in the sub-acute group is the allometric equivalent to the highest dose of GW Pharmaceuticals' Epidiolex in humans.
It's also worth noting that on Epidiolex's warning label, "hepatocellular injury" is the first warning listed. As noted by the FDA-accessible label:
In controlled studies for LGS [Lennox-Gastaut syndrome] and DS [Dravet syndrome], the incidence of ALT elevations above 3 times the upper limit of normal (ULN) was 13% in Epidiolex-treated patients compared with 1% in patients on placebo. Less than 1% of Epidiolex-treated patients had ALT or AST levels greater than 20 times the ULN. There were cases of transaminase elevations associated with hospitalization in patients taking Epidiolex.
The FDA takes a cautious approach
Does this prove CBD is unsafe? Well, no, it doesn't. However, it does raise some warning signs that we don't know a lot about what CBD is capable of treating, and what it's long-term or regular-use side effects might be on the body. That led researchers at the University of Arkansas to conclude that additional studies should be conducted on the matter.
Additionally, given that the FDA is the regulatory body to have thoroughly reviewed GW Pharmaceuticals' CBD-based drug, and understanding the impact of CBD maintenance therapy on liver function, this could help explain why the FDA has been reluctant to allow CBD additives in food, beverages, and dietary supplements. Even though hemp-derived CBD is legal nationwide, the FDA has been reluctant to budge on its premise that an insufficient safety profile exists for CBD as an additive.
More than likely, this mouse model study will have little to no impact on the near-term sales of CBD products in the United States. With zero marijuana overdose-related deaths on record, the public is likely to assume that CBD-rich products are equally as safe to consume as cannabis. But the FDA is not as easy to win over, even with popular opinion likely pushing the regulatory agency for a green light on adding CBD to foods and beverages.
My suspicion is this isn't the last time we'll see the safety of CBD called into question, and that's something consumers and investors will want to keep in the back of their minds.