Cannabis stocks weren't immune from Tuesday's market selloff, with all the big Canadian companies like Tilray (TLRY) - Get Tilray, Inc. Report, Canopy Growth (CGC) - Get Canopy Growth Corporation Report, Aurora Cannabis (ACB) - Get Aurora Cannabis Inc. Report and Cronos Group (CRON) - Get Cronos Group Inc Report falling more than 3%.
Overall market conditions didn't favor a strong day from cannabis stocks. New guidance from the U.S. Food and Drug Administration and the Centers for Disease Control and Prevention on THC products also didn't help the sector.
The two U.S. regulators issued warnings to consumers about the potential risks of the cannabinoid delta-8 THC, a psychoactive compound in hemp that has grown in popularity.
The CDC issued a new health alert saying that delta-8 THC may have "unclear and incomplete labeling" which could leave consumers at risk.
"It is important for consumers to be aware that delta-8 THC products have not been evaluated or approved by the FDA for safe use in any context,” the FDA said. “They may be marketed in ways that put the public health at risk and should especially be kept out of reach of children and pets.”
The agency says that its concerns include variability in product formulations due to the fact the product is unregulated by the agency.
Hemp is only currently federally legal if it contains no more than 0.3% delta-9 THC, which is the most commonly known and naturally occurring cannabinoid. However delta-8 THC can be synthesized from legal hemp.
Shares of U.S.-based multi-state operators were also dropping with Cresco Labs (CRLBF) falling 1.2%, Green Thumb Industries (GTBIF) dropping 3%, Curaleaf (CURLF) falling 1.35% and Truelieve Cannabis (TCNNF) - Get Trulieve Cannabis Corp. Report dropping 3.4%.