The cannabis industry has been seeing plenty of new opportunities off late thanks to increasing legalization in the United States and the increasing use of Cannabidiol (CBD). However, growing concerns surrounding the legality of CBD in dietary supplements could negatively affect the sales of CBD producers. This, along with uncertainty surrounding the legalization of marijuana at the federal level in the U.S., makes the prospects bleak for financially weak CBD stocks Canopy Growth (NASDAQ:CGC), Village Farms (VFF), Charlotte’s Web Holdings (CWBHF), and Neptune Wellness Solutions (NASDAQ:NEPT). Let’s discuss.Cannabidiol (CBD) has gained immense popularity recently owing to its growing use in various sectors, such as healthcare, cosmetics and wellness, food and additives. However, a persistent confusion related to CBD and its benefits, coupled with uncertainty surrounding the legality of hemp-derived supplements, remain a concern for the industry. In fact, the longer the FDA takes to legalize CBD in dietary supplements, the higher the odds of people losing faith in its benefits. This could negatively impact the sales of leading CBD producers.
Although the legalization of cannabis by different states for recreational purposes could be pivotal for the cannabis industry, the use of marijuana has yet to be legalized at the federal level. In addition, given the increase in competition in the cannabis industry, a few stocks have failed to generate sufficient revenues to stay afloat.
Against such a backdrop, we think financially-weak CBD companies Canopy Growth Corporation (CGC), Village Farms International, Inc. (NASDAQ:VFF), Charlotte's Web Holdings, Inc. (OTC:CWBHF), and Neptune Wellness Solutions Inc. (NEPT) may not be able to show any improvement in their businesses. So, we think it could be wise to avoid these stocks now.