Why Legalizing Hemp in US Opens Doors for Innovation



Skepticism over cannabis

There has always been skepticism when it comes to accepting cannabis CBD-based drugs as mainstream medicine. The culprit is CBD’s evil cousin, THC, which has psychoactive properties and the whole reason why cannabis has been a controlled substance and illegal in many countries. Without the legal backing, there was little room for companies to develop CBD-based drugs since there would be significant restrictions on its sale, especially in the US.

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Reason to innovate

With the legalization of hemp in the US, demand will likely rise and give cannabis companies reason to bring hemp-based products to the market. During its Q1 2019 earnings call, Canopy Growth (WEED) further provided insight into its strategy for capturing the hemp market in the US. The company stated that it has been experimenting with hemp farming with the goal of converting hemp into CBD-based products that are backed by science. Canopy Growth is expected to spend nearly 5.3 million Canadian dollars in research and development in 2019, as seen in the above chart.

Canopy Growth stated that it is developing CBD-based drugs to lower anxiety in dogs. The company believes that this development could then lead it to develop an anxiety-reducing drug for geriatric patients. For Canopy Growth, it is more important to find end uses of CBD products from hemp than to pursue the farming and extraction business. This strategy may also set the company apart from other players (MJ) such as Cronos Group (CRON), Tilray (TLRY), and Aphria (APHA).


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