Canada's world leading cannabis producers took a huge hit on Canada’s stock exchanges and Wall Street Tuesday after the U.S. Food and Drug Administration (FDA) warned the marijuana compound cannabidiol (CBD) can cause liver injury and other damage to the human body.

The worldwide cannabis industry is relying heavily on CBD to fulfill its promise as a legitimate multi-billion dollar industry. Among the health benefits attributed to CBD by anecdotal evidence include the relief of anxiety, arthritis pain, depression, inflammatory pain, nausea and vomiting associated with cancer and nerve-related pain. 

CBD is currently marketed in a variety of product forms. These include topicals such as oil drops, topical lotions and creams. CBD is also imbibed as capsules, syrups and food products such as chocolate bars and teas.

On Monday, the FDA slammed CBD in its strongest language yet. Its updated guidance claims CBD "has the potential to harm you, and harm can happen even before you become aware of it."

FDA said the lack of scientific evidence about CBD means it can't conclude CBD is "generally recognized as safe among qualified experts for use in human and animal food."

It also warned the paucity of research means it's still now known how CBD affects people that use it daily for extended periods. There is also limited data on how CBD interacts with other drugs and substances in the body or how it affects the brains of children and old people.

FDA said cumulative exposure to CBD is another cause for concern. This means the FDA is still researching how CBD affects people that eat it, use CBD-infused skin creams and imbibe CBD-based products in a single day.

The distressing FDA announcement saw the stock of Aurora Cannabis Inc., the second largest cannabis company in the world by market capitalization after Canopy Growth Corporation, fall 4.5 percent to C$3.18 Tuesday from its opening of C$3.27 at the Toronto Stock Exchange. It closed Monday at C$3.33 before the FDA announcement.

Canopy Growth watched its stock drop 1.8 percent to C$24.06 from Monday's close of C$24.50. Aurora Cannabis and Canopy growth are both Canadian firms. Another Canadian cannabis leader, Tilray Inc., was down 3.6 percent to US$20.05 from Monday's close of US$20.79 at the NASDAQ. Tilray was the  the first Canadian cannabis company to debut on Wall Street.

Canopy Growth previously invested in hemp assets in New York State with the intention of producing CBD products. Tilray said it welcomed the FDA’s latest guidance.

“We believe more data and research is needed to inform this guidance and regulation accurately,” said Tilray spokeswoman Kristina Adamski. “Ultimately, a regulated and legal market is the safest for consumers and in the best interest of the nascent cannabis and hemp industry.”

U.S. cannabis companies, which are much smaller than Canada's, also took a hit. Charlotte’s Web Holdings Inc., which specializes in CBD products, ended Tuesday at C$12.70, down 2.08 percent. Curaleaf Holdings, which received an FDA warning letter over its CBD health claims in July, fell 1.3 percent to C$7.86 on the Canadian Securities Exchange.

“We’ve argued for a while that some near-term industry estimates for CBD are too high given the unclear regulatory outlook & this will likely be a catalyst for re-basing,” wrote Owen Bennett, a Jefferies analyst, in a note. “Longer term, we see significant potential but do not expect material contribution to coverage names from U.S. CBD in the next 12 months.”