Cannabis stocks were mostly lower on Tuesday, led by Curaleaf Holdings, after the U.S. Food and Drug Administration sent a warning letter to the company for claiming CBD-based products could treat a range of serious diseases, including Alzheimer’s disease.
Curaleaf CURLF, -7.27% is “illegally selling unapproved products containing cannabidiol (CBD) online with unsubstantiated claims that the products treat cancer, Alzheimer’s disease, opioid withdrawal, pain and pet anxiety, among other conditions or diseases,” the FDA wrote.
The FDA has asked for a response from the company within 15 working days, saying how it plans to address the violations. “Failure to correct the violations promptly may result in legal action, including product seizure and injunction,” said the letter.
The move is the first against a multi-state operator and is expected to shake the entire sector. CBD, a non-intoxicating ingredient in cannabis, is widely held to have wellness benefits and many companies are waiting for the FDA to create rules before launching product lines. But the FDA views CBD as a drug, because it’s the main ingredient in the only cannabis-based drug it has approved—GW Pharma’s Epidiolex, a treatment for severe childhood epilepsy.