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EU's CBD ruling and Biden victory could spark investment surge into global cannabis sector

Both events could herald a regulatory sea change in two huge markets for the industry

Cannabis CBD

A ruling on Tuesday by the European Court of Justice (ECJ) regarding the status of cannabidiol (CBD) in the European Union (EU), as well as the incoming Joe Biden administration in the US, could spell good news for the world’s cannabis firms.

In its ruling, the ECJ said that an EU Member State may not prohibit the marketing of cannabidiol legally produced in another EU country, while also clarifying that CBD does not appear to have psychotropic or harmful effects on human health, meaning it is not a drug or a narcotic.

READ: Sativa Wellness hails EU court decision on CBD products

The ruling has been seen by some in the industry as an end to the murky regulatory framework around CBD in the EU, with Alexej Pikovsky, chief executive of CBD products firm AlphaGreen, saying the judgment is “long overdue” and will serve as a “very positive catalyst” for the industry.

“[The ruling] should give more clarity to players in the industry to get on with their growth plans. While the UK already decided that CBD should be treated as a Novel Food, I now expect the EFSA (European Food Standard Authority) to come out with a similar proposal as the current status is that it is not a narcotic or a drug, but it is still not considered a food and thus a lot of the brands selling CBD in the EU are doing it under the category of cosmetics”, Pikovsky told Proactive.

Biden win will also provide a boost

On the other side of the Atlantic, the formal start of the transition from the Donald Trump presidency to the incoming administration of president-elect Joe Biden has also been cheered by Wall Street’s cannabis firms.

In the first hours of trading in New York on Tuesday, shares in major cannabis players have surged upwards following renewed clarity on the political state of play. Shares in Canadian producer Aurora Cannabis Inc (NYSE:ACB) have risen 23.8% to US$8.89 following the news of the transition, while ETFMG Alternative Harvest ETF (NYSEARCA:MJ), the world’s largest cannabis exchange-traded fund (ETF) rose 5.5% to US$14.31.

There is an expectation that a Biden presidency is more likely to pursue reform of federal cannabis laws in the US, particularly with another handful of states legalising the drug for various purposes at ballot initiatives earlier this month.

Cannabis is currently criminalised at the federal level, however, it is hoped that Biden will push to remove this prohibition, opening up the massive US market even further to the industry.

 Given Biden’s victory and the favourable ECJ ruling, Pikovsky said there are now “lots of tailwinds” and the sector “a strong inflow of investment and acceleration of US players coming to the UK and the EU”.

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