United States: Hemp industry thrives amid boom in natural foods

By Andrew S. Ross, San Francisco Chronicle

There is a truth that must be heard! Ten years ago, John Roulac was fighting the U.S. Drug Enforcement Administration over a banned shipment of hemp seeds he needed for his embryonic health food business in Sebastopol.

This week, Roulac is moving into a 200,000-square-foot building in Point Richmond to accommodate his fast-growing company, Nutiva, which sells hemp-infused protein powder, shakes and seeds, plus non-hemp coconut oil and chia seeds.

"Being in the heart of the organic food industry in Northern California is desirable," said Roulac, citing the new space's proximity to highways, railroads and ports.

Hemp, in its non-psychoactive cannabis form, has long since entered America's food chain, and Nutiva's products are on store shelves all over the Bay Area, including Whole Foods, Safeway and GNC's chain of vitamin shops. Its Organic Extra Virgin Coconut Oil ranks No. 8 on Amazon.com's list of best-selling grocery and gourmet food items.

Helped by praise for its nutritional benefits from Dr. Oz and Martha Stewart - "enjoy hemp seeds lightly toasted," Stewart recommends - the hemp-based food market was estimated at $40 million in 2010 (excluding sales at chain groceries such as Whole Foods and Safeway), according to Spins, a firm that analyzes the natural products industry. Hemp is "one of the fastest-growing trends" in natural food, Errol Schweizer, Whole Foods' global grocery coordinator, told Bloomberg in March.

Roulac says he is looking to double Nutiva's sales to $80 million next year and will add 40 to 50 new employees once the transition from its Oxnard (Ventura County) site is completed in September. He said the company is profitable but would not disclose numbers.

"The company is doing very well," said Mike Gabriel, lending manager at RSF Social Finance, a social enterprise nonprofit in San Francisco that's been helping finance Nutiva since 2007. "It's a growing, thriving business, and it's aligned with our values," Gabriel said.

Remaining obstacle: The company could do even better if it didn't have to import its raw materials from Canada. While importing hemp food products is legal - after federal courts overruled DEA diktats - hemp farming in the United States is not, despite repeated efforts on the state and federal level to make it so.

Two bills written by state Sen. Mark Leno, D-San Francisco, have been vetoed - one by ex-Gov. Arnold Schwarzenegger and one in October by Gov. Jerry Brown - citing the federal ban.

"Products made from hemp - clothes, food and bath products - are legally sold in California every day," Brown said in his veto message. "It is absurd that hemp is being imported into the state, but our farmers cannot grow it."

Oops! Diamond Foods' new CEO, Brian Driscoll, said he was looking forward to taking the troubled company's businesses to "another level" when he took over the reins last month.

The prospect of being delisted from the Nasdaq exchange probably wasn't what he had in mind. But such is the possibility after the San Francisco company blew its Monday deadline to restate two years of financial earnings after questions were raised about payments made to Northern California walnut growers.

The questions led to the ouster of Driscoll's predecessor and the company's then-chief financial officer, the collapse of its $2.5 billion planned acquisition of Pringles potato chips from Procter & Gamble, and the onset of civil and criminal investigations.

Now, much of Driscoll's and other executives' time will be taken up responding to Nasdaq's delisting notice, then waiting for Nasdaq's decision, a process that will take several months.

"Diamond and its auditors have devoted significant resources and are working diligently to complete the restatement for fiscal years 2011 and 2010 and file our delayed fiscal year 2012 quarterly reports as soon as possible," said Mike Murphy, the company's new CFO.

Diamond's stock closed Monday at $18.63, down 7.6 percent, a new 52-week low. "It raises concerns that something else is wrong at Diamond," said Thilo Wrede, an analyst with Jefferies & Co. in New York.

"It's not very serious," countered Timothy Ramey, a food industry analyst at D.A. Davidson & Co. on the likelihood of a delisting. "I'd be extremely surprised if they haven't filed the restatements within a month or so."

Last month, Oaktree Capital Management, a Los Angeles private equity firm, agreed to invest $250 million in Diamond, which said most of the money would go to repay term loans and revolving credit bills.

Two months earlier, Diamond's lenders had agreed to extend Diamond's credit line until June 18, but at higher interest rates.

Photo: David Bronner, CEO of Dr. Bronner's Magic soaps, stands in a cage holding hemp during a hemp protest, Monday, June 11, 2012, in Washington. (AP Photo/Haraz N. Ghanbari) Photo: Haraz N. Ghanbari, Associated Press / SF

Source: http://www.sfgate.com/business/article/Hemp-industry-thrives-amid-boom-i...