Curaleaf (CURLF), the largest cannabis company in the U.S. by revenue, saw shares close more than 7% lower Tuesday after the U.S. Food & Drug Administration sent the company a warning letter over its CBD marketing practices and “unsubstantiated” health claims.
The FDA flagged problematic claims on Curaleaf’s website that touted health benefits from its CBD lotions and creams that included “properties that counteract the growth of [and/or] spread of cancer," as well as that products were capable of “killing human breast cancer cells."
Other posts flagged by the FDA, which have since been removed, claimed CBD worked as an effective treatment for Alzheimer’s and Parkinson’s disease.
"As we examine potential regulatory pathways for the lawful marketing of products containing cannabis and cannabis-derived compounds like CBD, protecting and promoting public health remains our top priority,” Acting FDA Commissioner Ned Sharpless wrote in the warning letter. “Selling unapproved products with unsubstantiated therapeutic claims — such as claims that CBD products can treat serious diseases and conditions — can put patients and consumers at risk by leading them to put off important medical care.”
Curaleaf shares fell by as much as 13% following the FDA’s announcement, but recovered in afternoon trading to close 7% lower.
‘Compliance is a top priority for Curaleaf’
The Massachusetts-based company responded to the FDA’s warning letter in an emailed statement to Yahoo Finance, noting that the safety of the company’s product was not in question and that it would formally respond to the letter within the FDA’s 15-day window.
“Curaleaf is fully committed to complying with FDA requirements for all of the products that it markets,” the statement read. “Compliance is a top priority for Curaleaf. We can reaffirm that nothing in the letter raises any issues concerning the safety of any Curaleaf product.”
During an interview with Yahoo Finance’s YFi PM following Curaleaf’s acquisition of West Coast-based Cura Partners in May, Curaleaf CEO Joe Lusardi dismissed the likelihood of a hypothetical FDA crackdown on CBD, noting that American demand for CBD was swelling.
“American consumers want to use cannabinoids (CBD), so I think that frankly the Congress and the FDA is out of step with the American public and so I think you’ll see the demand for these products continue to proliferate and they’ll be available across the country because of that,” Lusardi said.
Curaleaf secured a deal to sell its CBD products in 800 CVS stores across multiple states earlier this year. The company behind the leading CBD lotion, CV Sciences, which inked a deal to sell through 975 Kroger stores in June, also saw its shares close about 1% lower Tuesday.