Marijuana stocks are soaring because of recent changes to how hemp is regulated in the United States. That’s got everyone asking: What are the top marijuana stocks to buy in 2019? In order to understand the impact from hemp deregulation on marijuana companies, it’s useful to understand how marijuana and hemp are different.

Same but different

Marijuana is the dried flower of the female cannabis plant, and it can come from either the cannabis indica or cannabis sativa(for example East Coast Sour Diesel) species. Hemp is only a member of the cannabis sativa family.

It’s differences in their chemical composition that really set them apart, though.

More than 100 chemical cannabinoids are found in cannabis, but the amount of these cannabinoids differs dramatically between hemp and marijuana.

Marijuana’s most common cannabinoid is tetrahydrocannabinol (THC) — the chemical cannabinoid associated with the plant’s psychoactive effect. In marijuana, THC levels can reach 30%, depending on the strain, but THC levels in hemp are less than 0.3%.

The low levels of THC in hemp mean that, unlike marijuana, it has historically been used for industrial purposes. Hemp’s rapid growth and strong fibers made it ideal for crafting durable rope, clothing, sail, and paper.

Although hemp won’t get you high, it does contain significant amounts of another cannabinoid, cannabidiol (CBD), which is also found in marijuana. CBD is a nonpsychoactive cannabinoid, and its interaction with receptors in the central nervous system and immune system can offer medicinal benefits, making hemp-CBD concentrates popular ingredients.

Why it matters

Medical and recreational marijuana use is legal nationwide in Canada, so it’s home to the largest publicly traded cannabis companies.

In the past, those companies were unable to do business in the U.S. because of restrictions placed upon them by the major stock exchanges. In order to maintain their listing, they can’t conduct business in countries where the sale of marijuana is prohibited at the federal level.

In 1970, the Controlled Substances Act classified all cannabis, including hemp, as a schedule 1 drug. As a result, hemp cultivation was tightly controlled and limited for industrial and research purposes.

That’s no longer true. The U.S. Farm Bill that passed in December contains language distinguishing hemp from marijuana for the first time. It allows states and the U.S. Department of Agriculture to create a licensing program supporting the widespread cultivation of hemp with THC levels below 0.3%.

The shift in federal classification of hemp has already led to Canada’s biggest cannabis company, Canopy Growth (NASDAQ:CGC), announcing plans to enter the U.S. market. After receiving a license to process hemp in New York state, Canopy Growth plans to invest up to $150 million there on a hemp-focused industrial park where it can develop products containing hemp-derived CBD.

Check out the latest Canopy Growth earnings call transcript.

What is hemp? 

hemp vs weed

Hemp is a specific variety of C. sativa. People have grown hemp for hundreds of years, using it to make rope, clothes, sails, food, and much more. Industrial hemp has an equally long history in the United States – Thomas Jefferson, the third president of the country, grew it himself.

The 2018 Farm Bill considers C. sativa plants with less than 0.3 percent THC as hemp or industrial hemp. Producers can grow it legally across most of the U.S., subject to strict regulations, and excluding three states.

Hemp plants do contain THC but at very low levels. However, certain types of processed hemp, such as tinctures, gummies, or capsules, can still cause euphoria.

In most cases, manufacturers use the leaves and flowers of the hemp plant to make CBD products.

What is cannabis? 

There are three standard varieties of cannabis plants: C. indicaC. sativa, and C. ruderalis. There is also a range of hybrid plants that are a mix of these three strains. These cannabis plants contain much higher and varying levels of THC than hemp plants.

Besides containing more THC, these plants also tend to contain less CBD than hemp plants, and the difference has become steadily more pronounced.

A 2016 analysis found that the average potency of cannabis plants rose from about 4% in 1995 to 12% in 2014. Average CBD levels decreased from 0.28% in 2001 to less than 0.15% in 2014.

What is the legal difference between hemp and marijuana?

The key difference between hemp and marijuana is the amount of the cannabinoid tetrahydrocannabinol (THC) that each plant is legally allowed to contain. Hemp, also called industrial hemp, can only contain less than 0.3% THC, according to Federal law, while marijuana plants are generally bred to contain much higher levels of the intoxicating THC.

What is industrial hemp?

Industrial hemp, the type of cannabis plant that hemp-derived CBD is extracted from, is non-intoxicating and can legally only contain less than 0.3% THC. Now legal in all 50 states, thanks to the passing of the 2018 Farm Bill, hemp is used in the manufacturing of a wide variety of CBD products. These types of products include those made by Harbor Hemp Company such as CBD tinctures, CBD pain creams and topicals, CBD capsules and CBD pet products.

In addition to being used for the CBD industry, hemp is also widely used to produce a range of other products, including food, fiber, fuel and personal care products.

Will I get high from hemp?

hemp vs weed

No, hemp will not make you high. Unlike marijuana which can have very high levels of intoxicating THC, hemp plants can legally only have less than 0.3% THC and are considered non-intoxicating. The thc oil for e cig devices are usually never extracted from a hemp plant.

Does CBD come from hemp or marijuana?

Like THC, CBD is found in both hemp and marijuana plants, however hemp-derived CBD is the only CBD that is legal in all 50 states. If you live in a state where medicinal marijuana is legalized you may be able to purchase marijuana-derived CBD at a medicinal marijuana dispensary. But it’s a good idea to check your local laws before shopping as you may need a prescription to buy from a dispensary.

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