Prairie hemp farmers could win big with new cannabis rules
Ottawa estimates ‘whole plant’ harvest could reap up to $10B over next decade
While the federal government is legalizing marijuana to regulate and tax the psychoactive drug, Prairie farmers growing non-smokable hemp appear set to become major beneficiaries of the new regime.
The updated industrial hemp regulations, released this week alongside Health Canada’s recreational cannabis rules, will allow hemp growers to harvest the flowers and leaves from their crop for non-psychoactive compounds such as cannabidiol (CBD).
“Whole plant” harvest could generate up to $10 billion in economic activity over the next 10 years, the government estimates, as the market for CBD — seen as a potential input for medical products, supplements and beauty products — continues to grow.
“They, as a government, are being smart to us as entrepreneurs, because if they waited one or two more years the American market would have blown us up,” said Chris Dzisiak, a hemp farmer and the president of the Parkland Industrial Hemp Growers Co- Op in Dauphin, Man.
In 1998, Canada legalized the cultivation of hemp, a form of cannabis plant with negligible levels of high-inducing tetrahydrocannabinol (THC). CBD and other cannabinoids that occur in hemp, however, remained controlled substances, meaning farmers could only harvest the plant’s grain, which is used in food, and fibres, used primarily in textiles.
Hemp flowers and leaves containing cannabinoids had to be left decomposing in the field.
“It was really sad to see how this opportunity for the farmers to make money was wasted,” said Jan Slaski, a hemp researcher and the team lead for InnoTech Alberta’s crop development and management division.
“The market for this class of compounds is phenomenal,” Slaski said. “In three or four years we’ll be taking cannabinoids or CBD as we take omega-3, vitamins, supplements, you name it.”
The hemp crop in Canada remains relatively small compared to most Prairie staples, with less than 140,000 acres seeded last year and a total crop value between $400 million and $500 million annually. With oversupply driving down hemp grain and hemp oil prices, the crop is expected to be even smaller this year.
But Canada is still the world’s leading industrial hemp grower, Slaski said. A patchwork of laws has prevented U.S. farmers from diving into the opportunity, and Europeans grow hemp at a much smaller scale. Only China is beginning to emerge as a significant competitor for Canadian hemp farmers, Slaski said.
“Farmers are always looking for alternatives, and right now wheat prices are low, canola is sliding a bit … so gives them some alternatives,” said Russ Crawford, president of the Canadian Hemp Trade Alliance.
“Some years there’s a high value for the oil, other years it’s meal; well we’ve got a third option here, which is the cannabinoid piece of it. So now you’ve got this trifecta of opportunity within one plant,” Crawford said.
Harvesting CBD from hemp, however, won’t be as simple as taking chaff leftover when the hemp grain is collected in combines.
Cannabinoids are contained in tiny and delicate hairs called trichomes.
“The fear is that if you do collect the material… these brittle structures on the leaf or flower surface will break off and all cannabinoids will end up in dust,” said Slaski.
Farmers could harvest the plants earlier, collecting the leaves and the flowers when they’re at peak CDB levels, and foregoing the hemp grain. But there is considerable research that needs to be done to figure out how to do this on a full-field, industrial scale.
“You’re talking about equipment, you’re talking about the whole process you have to work out, you’re talking about mass drying, you’re talking about acres of it, you’re talking about potential contamination from birds with feces,” said Dzisiak of the Parkland CoOp. “It will happen fairly quickly, but it will be years before it gets up and running.”
Hemp strains, which contain much lower levels of cannabinoids than their smokeable cousins, also need to have their CBD levels increased through breeding programs.
Since 1998, most Canadian hemp breeders have focused on grain yield, said Slaski. The highest level of CBD he’s seen in a Canadian crop is only around four per cent, with most crops containing only one to two per cent CBD.
With the psychoactive variety of cannabis containing much higher levels of cannabinoids, many licensed producers — the companies’ that will supply the recreational market — are hoping to dominate the market for CBD.
“It’s an ongoing dispute between us and them,” said Slaski, whether hemp farmers or indoor marijuana growers will take the lion’s share of the CBD market. In the end, Slaski thinks scale will win out.
“If you put together — and I’m just guessing here — all indoor grow-ops and marijuana operations in Canada, it will be perhaps like one tiny farm of industrial hemp,” he said.
Extractors may prefer working with high-CBD marijuana, he added, but they “realize they have to adjust or modify their extraction technologies, and acknowledge they’ll be getting not shopping bags of marijuana for CBD extraction, but truck loads of chaff or just designated flower head for CBD extraction.”
Several large licensed producers have already taken note of hemp’s potential. In the past year, Aurora Cannabis Inc. acquired a majority stake in hemp food company Hempco Food and Fiber Inc., while Canopy Growth Corp. acquired Saskatchewan hemp company Green Hemp Industries Ltd. Financial Post
In three or four years we’ll be taking cannabinoids or CBD as we take omega-3, vitamins, supplements, you name it.