Hemp vs Marijuana: Legal Distinctions and Industry Impact

The Key Differences Between Hemp vs Marijuana

Although hemp and marijuana both belong to the Cannabis sativa species, they have significant differences, primarily in their chemical compositions and uses.

• • Hemp refers to cannabis plants that contain 0.3% or less THC (tetrahydrocannabinol) by dry weight. THC is the psychoactive compound that causes the “high” in marijuana. Because hemp contains such low levels of THC, it may still provide therapeutic benefits without getting you high. Hemp is also cultivated for industrial uses such as textiles, food, and building materials.
  • Marijuana, on the other hand, generally contains more than 0.3% THC and is cultivated for its psychoactive and medicinal properties.

The distinction is legal as much as it is botanical. According to U.S. law, THC content is the defining factor between hemp and marijuana—not the appearance, not the smell, and not the intended use.

Legal Landscape: How the 2018 Farm Bill Changed the Game

The 2018 Farm Bill was a monumental piece of legislation that significantly altered the landscape for hemp in the United States. Prior to the bill, hemp was classified as a Schedule I controlled substance, making its production and sale highly restricted. However, the 2018 Farm Bill differentiated hemp from marijuana by defining hemp as cannabis with no more than 0.3% THC. This reclassification removed hemp from the list of controlled substances, thereby legalizing its cultivation, processing, and sale at the federal level.

Key outcomes of the bill included:

• • Legalizing the cultivation and sale of hemp at the federal level.
  • Allowing interstate transport of hemp products.
  • Opening the door for hemp-derived CBD products—although the FDA still maintains regulatory authority over ingestible products.

However, the rollout was anything but smooth.

Industry Complexities Post-2018

With legalization came a host of new challenges:

• • Testing and Compliance Confusion
    The line between hemp and marijuana is razor-thin—literally just 0.3% THC. A crop testing at 0.4%? That’s now classified as marijuana and must be destroyed in many states. This variability puts growers at risk and creates gray areas in enforcement.
  • CBD Regulation Still Murky
    While hemp-derived CBD is federally legal, the FDA has not approved its use in dietary supplements or food products. This regulatory limbo has made it difficult for businesses to market CBD legally and consistently.
  • Delta-8 THC: The Loophole
    The industry has also seen a rise in hemp-derived cannabinoids like Delta-8 THC, a psychoactive compound made through chemical conversion of CBD. Delta-8 exists in a legal gray area that some states are now starting to address, highlighting the need for more cohesive federal oversight.
  • Banking and Insurance Issues
    Despite hemp’s legal status, many financial institutions are still wary of working with cannabis-related businesses. This has led to limited access to capital, banking services, and insurance—a major hurdle for entrepreneurs.

The Industry Impact: Opportunities and Caution

The legalization of hemp has undoubtedly expanded the cannabis job market, especially in sectors like farming, processing, retail, and research. According to New Frontier Data, the U.S. hemp market was projected to reach $6.26 billion by 2025, driven largely by demand for CBD and other hemp-based products.

However, the lack of uniform regulation, inconsistent state laws, and product confusion have also slowed progress. For job seekers and entrepreneurs, this means the stakes are high—but so is the potential for innovation and impact.

Whether you’re looking to work in compliance, product development, or cannabis health and wellness, knowing the distinctions between hemp vs marijuana sets you up for success. Enroll in our Dispensary Agent Certification today to get an in-depth training on the state of the cannabis industry, the various products and routes of administration and so much more!