On Thursday, President Trump signed the 2018 farm bill, officially ushering in the era of legalized hemp and cannabidiol (CBD). Although both hemp and marijuana come from similar Cannabis plants, Medium reports only marijuana contains the high-inducing Tetrahydrocannabinol, commonly known as THC. While it lacks THC, hemp has several industrial applications while CBD has been touted to ease symptoms of several medical conditions, most notably seizures and anxiety, according to a report from Webmd.
“I think it’s really a game-changer,” said Fox Rothschild partner Joshua Horn, while speaking to CNBC. “The significance is now you have some aspect of the cannabis world legalized on a federal basis.”
Several major players in the food and beverage sector have long been eyeing an entry into the CBD-infused drink market. Recently, Budweiser beer’s parent company, Anheuser-Busch InBev, announced its plan to develop a non-alcoholic CBD drink in partnership with pot giant Tilray, according to a report from CBS. Coca Cola has also shown an interest in the market, reports Time.
Despite the enthusiasm surrounding the plant, how the market will develop is still unknown. According to a report from Market Watch, the federal relaxation of hemp laws may not be in total alignment with some states’ laws. Regulatory bodies, like the Department of Agriculture and the Food and Drug Administration, will have significant sway on the plant’s commercialization.
As excitement around the possible growth of the Cannabis industry is swelling, US markets were down considerably at Friday’s close. The ongoing trade war with China, which has been smoldering throughout the year, was escalated earlier this week after President Xi Jinping gave a speech indicating his country would not bend to US pressure. Other factors, including a government shutdown and a rate hike by the Fed, also contributed to the meteoric losses, according to a report from CNBC. Both Coca Cola and AB InBev finished down for the week.
“The message people should take home, especially if there’s a government shutdown, is that longer term, the prospects for equities are not good,” said Sri-Kumar Global Strategies’ president, Komal Sri-Kumar, while speaking to CNBC. “There are lots of signs now suggesting that we may be looking at a recession. I would say that the risk here is that a whole lot of confluence is taking place: The trade war is not going to end soon, and the Fed totally misjudged the market in suggesting two more rate hikes next year.”