Understanding Cannabis: THC Vs CBD
The cannabis plant contains a complex blend of numerous chemical compounds. However, two compounds in particular are produced in abundance. Known as cannabinoids, tetrahydrocannabinol (THC) and cannabidiol (CBD) make up the lion’s share of cannabis’ chemical structure. Continue reading to find out how these compounds contribute to the cannabis industry.
The chemical structure of cannabis is comprised of several crucial “families”, with cannabinoids, flavonoids, and terpenes acting as the key players. Of the three main contributors, cannabinoids are the largest family, with over a hundred believed to exist within the plant. They are not all active in the same ratios, nor are they all present at the same time. Some cannabinoids only exist during the seedling phase, while others develop once harvested flowers have been left to age. Regardless, CBD and THC exist in their raw forms (CBDA and THCA) from the earliest stage of cannabis cultivation, and this trend continues through to a mature plant. To transform them from their raw acidic form to active cannabinoids, all we need to do is apply heat.
Another significant factor that contributes to the prominence of these two cannabinoids is the plant's genetics. Particular strains have greater levels of THC compared to others based on where they developed in the world, or on novel breeding techniques. For the most part, cannabis grown for recreational purposes will have a greater concentration of THC compared to CBD. If a company aims to isolate CBD specifically, they can do this with certain marijuana strains; however, hemp is usually favoured for this task. Years of breeding for industrial purposes has resulted in a species of cannabis that boasts naturally high levels of CBD, and barely any THC.
THC is not only the most prevalent chemical compound in cannabis, but also the most well-known cannabinoid. It is not uncommon for people to associate cannabis as only having THC, even though we know dozens of other cannabinoids exist. This notoriety is not without reason. When consumed, THC interacts with our endocannabinoid system (ECS), triggering a windfall of chemical reactions by stimulating receptors in our brain. The activation of these receptors affects our mood, appetite, cognition, and more.
In simple terms, THC is responsible for the “high” that has earned cannabis its popularity. THC is also the primary reason the cannabis plant is considered illegal in most parts of the world.
Second to THC is cannabidiol, or CBD as it is commonly known. CBD works using roughly the same principle as THC; when consumed, it activates receptors in the body. CBD differs, however, in that it doesn't just stimulate receptors in the ECS, but also those of other biological systems. This general approach has helped CBD become famous as a potential holistic remedy. CBD is currently being explored as a treatment or treatment aid for a vast number of health conditions.
The crucial difference between CBD and THC is that the former does not induce a high. It is non-psychotropic, and will not alter a person’s mental state in the same way as THC. Unfortunately, unless you use hemp-derived CBD, products may contain potentially “illegal” levels of THC. It does vary from nation to nation, but plants need to have THC levels below 0.2% or 0.3% (country-dependent) to be considered legal to cultivate.
Despite the different effects they induce, both are found in medicinal and recreational markets. If we had to generalise, THC would be the leading player in the recreational market while CBD tends to dominate the medical and wellness sectors.
When building a portfolio, it is essential to look at all the ranges or services a company offers. There is still a gap in the market for businesses that choose to isolate and focus on specific cannabinoids; but on the whole, cannabis companies that incorporate both THC and CBD will have a significantly larger pool of consumers. Some businesses choose to focus on CBD and the cultivation of hemp because it circumvents the issues surrounding legality. Pharmaceutical companies often take a similar approach, not purely based on legal reasons, but also because CBD appears to have a broader scope of potential applications.
Now that we know how THC and CBD work—and how they feature in different markets—it is less a case of pitting the two cannabinoids against each other, and more a matter of matching the compound to the desired outcome. If you plan to build an investment portfolio around the medicinal cannabis market, CBD-centric companies would be of particular interest. On the other hand, those who choose to specialise in recreational markets may favour THC. Both cannabinoids have pros and cons, not only in their effects, but also in their investment opportunities. We are still a long way from seeing THC widely accepted by governments, and this will limit your investment options—for the time being.
While the cannabis industry is evolving, diversification is an important strategy to consider. As our understanding of both THC and CBD continues to grow, so too do their potential applications. Investment opportunities surrounding both cannabinoids are going to continue to peak and trough in line with new research outcomes and global legislative changes. Having a portfolio that features both compounds will help to negate some of the uncertainty that presently surrounds the cannabis industry.