According to the news report by Bloomberg, Curaleaf Holdings Inc. announced on Wednesday that CVS Health Corp. would begin selling products that were infused with non-intoxicating hemp components at over 800 of its stores. This is a part of the distribution deal the two companies have struck.
Curaleaf announced the deal on its earnings conference call that took place on Wednesday, March 20. The company stated that while its products would be available across over 800 of CVS’ stores to being with, it was hoping to expand to other stores as well.
The marijuana company’s stocks shot up by as much as 17% in trading on Thursday in Toronto, taking Curaleaf’s market valuation to over $2.6 billion. The company’s stocks had already jumped by more than 41% year-to-date. However, it did not reach the levels it did when its shares were sold via a private placement in October which took its shares public via a reverse take-over.
The Chief Executive Officer of Curaleaf, Joseph Lusardi stated that the company had been negotiating with national retailers for some months, and besides CVS, they had a number of possible partnerships lined up.
CVS, on its part, also confirmed that it had begun selling CBD-based sprays, lotions and creams in 8 different states in the US, including Alabama, California, Colorado and Illinois. The healthcare giant stated that these products would be sold in its stores’ aisles, and that its drugstore chain would not be offering any food additives or supplements that contained CBD.
CVS currently has more than 10,000 pharmacies across the globe. It already operates over 40 marijuana dispensaries in 12 states of the US and has now gained entry to the states of Nevada and California from recent acquisitions. Now, it has also developed a range of hemp-based products that include tinctures, patches, vape pens as well as lotions.
Cannabidiol, or CBD as it is more popularly known, is not an intoxicant, which means it cannot get a person high. It has now become a popular ingredient in wellness products, becoming a trend as laws and regulations have eased in the United States with regard to marijuana-based products.
In December 2018, a Farm Bill was passed into law, and it legalized this hemp. The passing of this bill has now opened up a massive market for products derived from CBD.
However, according to further details on the story given by MarketWatch, the 2018 Farm Bill did not legalize CBD. Instead, this compound was put under the jurisdiction of the US FDA (Food and Drug Administration), which promised to hold talks on the legalization of this compound in April this year.
Because of this, CBD, while being used in lotions, tinctures and other such products, are not allowed in food, drinks or any other ingestible health products. For the time being, CBD is being looked as a medical drug.
In fact, CBD is the key ingredient in Epidiolex, GW Pharmaceuticals Plc’s first cannabis-based medicine that has won FDA approval for the treatment of childhood epilepsy that is extremely severe.
However, the FDA stated that it would allow the addition of CBD in products without clinical tests as well as trials being completed, which sometimes can take years.
The portfolio manager of Foothill Capital Management’s recently launched mutual fund Cannabis Growth Fund, Korey Bauer said that he agreed that the use of CBD was still a grey area.
He said that was exactly why there needed to be legislation put in place. Clarity was needed on whether companies could add CBD to products in low dosages. He also stated that at this moment, such a move was risky for CVS due to a lack of clear regulation.