BACKGROUND: Cannabis sativa has been cultivated throughout human history as a source of fiber, oil and food, and for its medicinal and intoxicating properties. Selective breeding has produced cannabis plants for specific uses, including high-potency marijuana strains and hemp cultivars for fiber and seed production. The molecular biology underlying cannabinoid biosynthesis and other traits of interest is largely unexplored. RESULTS: We sequenced genomic DNA and RNA from the marijuana strain Purple Kush using shortread approaches. We report a draft haploid genome sequence of 534 Mb and a transcriptome of 30,000 genes. Comparison of the transcriptome of Purple Kush with that of the hemp cultivar 'Finola' revealed that many genes encoding proteins involved in cannabinoid and precursor pathways are more highly expressed in Purple Kush than in 'Finola'. The exclusive occurrence of Δ⁹-tetrahydrocannabinolic acid synthase in the Purple Kush transcriptome, and its replacement by cannabidiolic acid synthase in 'Finola', may explain why the psychoactive cannabinoid Δ⁹-tetrahydrocannabinol (THC) is produced in marijuana but not in hemp. Resequencing the hemp cultivars 'Finola' and 'USO-31' showed little difference in gene copy numbers of cannabinoid pathway enzymes. However, single nucleotide variant analysis uncovered a relatively high level of variation among four cannabis types, and supported a separation of marijuana and hemp. CONCLUSIONS: The availability of the Cannabis sativa genome enables the study of a multifunctional plant that occupies a unique role in human culture. Its availability will aid the development of therapeutic marijuana strains with tailored cannabinoid profiles and provide a basis for the breeding of hemp with improved agronomic characteristics.