5 Reasons Why CBD Could Just Be the Next Big Thing

Now that the U.S. has legalized hemp, the legalization of CBD may be just around the corner. Find out what it means for Canadian-based Hexo Corp (TSX:HEXO) and the broader cannabis industry.

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The legalization of recreational marijuana across Canada in addition to several U.S. states has garnered a lot of attention as of late — and rightfully so.

Experts are forecasting that the Canadian market for recreational marijuana could reach as much as $10 billion annually within the next decade, and if you were to factor in the potential of a federally regulated U.S. market, that figure could literally go sky high (ahem).

But this Foolish writer has to wonder about the possibility that some of those same experts have been overlooking the role that a lesser-known substance — Cannabidiol, or “CBD” — could play in revolutionizing the way adults look at responsible cannabis consumption.

Unlike conventional marijuana, CBD doesn’t contain any psychoactive properties

One of the main hurdles preventing cannabis from achieving widespread adoption is the negative connotation associated with regular users of the drug. Most readers will naturally associate cannabis use with the feeling of “getting high” or “stoned.”

But that “high” feeling is actually a function of THC, which happens to be only one of the two chemical compounds present in the cannabis plant. The second is CBD.

Despite not giving its users the “stoned” feeling, CBD still provides valuable health benefits

What is important for prospective investors in cannabis stocks to recognize is that users can still get the benefit of CBD’s health properties without having to deal with the distraction of THC’s stimulative properties.

Cannabis products that have minimal to no THC present can still be effective in the treatment of a variety of disorders, including anxiety, sleep deprivation, high blood pressure, and depression without experiencing the consequences of any unwanted side effects.

Unlike THC, CBD has not been linked to the onset of mental health ailments   

Along with not interfering with daily activities like driving, familial responsibilities, and work, CBD also has the benefit of not being linked to the onset of various mental disorders. There is some research that has linked frequent and heavy marijuana use with the early onset of certain mental conditions such as schizophrenia and psychosis.

Yet, in these studies, that link has been attributed to THC and its psychoactive properties rather than the effects of consuming CBD-only product.

Cannabis absent of THC may have particularly useful applications as it relates to the medical treatments for what have traditionally been more vulnerable populations.

These would include not only younger users being treated for things like epilepsy but also older patients that may be dealing with arthritis, cancer treatments, Alzheimer’s, and other illnesses.

The United States just legalized hemp

On December 20, U.S. president Donald Trump signed the U.S. Farm Bill into law, which, along with other items, legalized the commercial production of hemp.

While CBD can be harvested from the marijuana plant, it can also be harvested from the hemp plant. This new bill could very well open the floodgates on the CBD industry.

So far, it remains to be seen whether or not the U.S. DEA will enforce CBD extracted from hemp differently from CBD extracted from cannabis plants, which remains illegal.

CBD is already a burgeoning industry

Thanks to the grey area already surrounding the enforcement of CBD in the United States, products touting CBD as an ingredient seem to be popping up everywhere.

CBD oil has already made its way into coffees, teas, topical creams, and even as a supplement for craft beers.

In fact, Canada’s own Hexo (TSX:HEXO) inked a deal last year with brewing giant Molson Coors Canada for the two to form a joint venture to work on the development of a CBD-infused adult beverage.

Cannabis-infused edibles and beverages for the time being remain prohibited in Canada but are expected to be introduced to the market later this year.

Meanwhile, Hexo already offers several low-grade THC products in Canada as well as some that don’t contain any THC at all, including its Elixer CBD Oral Spray made with MCT oil that retails at over $100 for a 15 mL bottle.

Bottom line

Amid all of the frenzy that has taken place in cannabis stocks throughout the past couple of years, it’s all too easy to lose sight of the big picture.

But I have to wonder if it may not be the long-term applications of CBD that could far outweigh those associated with the strictly recreational aspects of THC consumption.

It’s just a thought…

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jason Phillips has no position in the companies mentioned. The Motley Fool owns shares of Molson Coors Brewing.

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