Canada: Industrial Hemp Production

Canada:  Industrial Hemp Production

By Government of Alberta, Agriculture and Rural Development

Canada:  Industrial Hemp Production Industrial hemp (Cannabis sativa) is one of the oldest cultivated plants in the world. The species was banned in North America in late 1930s because its leaves and flowers contained a hallucinogenic drug known as delta-9 tetrahydrocannabinol (THC). It was banned internationally in 1961 under the United Nations’ Single Convention on Narcotic Drugs. Hemp does suffer from the “snicker factor”, largely because of its hippy-dippy image and close association with marijuana, its conscious-altering cousin.

Effective March 12, 1998, the commercial production (including cultivation) of industrial hemp is now permitted in Canada, under licenses and authorization, issued by Health Canada. This action was prompted by several years of field research and lobbying by the agricultural and business community. Prior to 1998, there were only a handful of licenses issued to grow industrial hemp in Canada. In 1998, the first year after Health Canada opened up the licensing process, 241 licenses were issued. These licensees grew almost 2 370 hectares (5,857 acres) of hemp for industrial use. In 1999, the number of applications to grow hemp jumped dramatically to 545 with the area of hemp production increasing six-fold to nearly 14 031 hectares (34,657 acres). It looked as though the industrial hemp was well on its way to becoming the "Cinderella" crop in Canada. However, events in the summer of 1999, i.e., the demise of the perspective hemp processing company in Manitoba, changed the outlook for hemp production in Canada.

The number of licensees decreased by over 53 percent to 255 and area by almost 63 percent to 5 487 hectares (13,553 acres) in 2000. In 2001, industrial hemp acreage further decreased very dramatically to 1 316 hectares (3,250 acres). In 2002, production of industrial hemp showed an increase of 16 percent to 1 530 hectares (3,778 acres). Then in 2003, the area licensed to produce industrial hemp again increased by almost 79 percent to 2 733 hectares (6,750 acres) but this was still nowhere near the 1999 level (See Table below). It appears that interest in producing industrial hemp is again coming back. In 2004, area licensed for industrial hemp production increased by 28 percent over in 2003 to 3 531 hectares (8,721 acres).

In 2005, area licensed for hemp production in Canada increased almost three-folds to 9 725 hectares (24,021 acres). The largest increases in hemp production area were in Manitoba and Saskatchewan. Area under hemp production increased to its highest level in 2006 at 19 458 hectares (48,060 acres) almost double than in 2005. Prairie Provinces again lead the country in hemp production with almost 97 percent of hemp area. Manitoba had 10 705 hectares (26,442 acres) of hemp followed by Saskatchewan at 6 025 hectares (14,882 acres) and Alberta at 2 103 hectares (5,194 acres). Area under hemp decreased by about 68 per cent in 2007, primarily due to lack of processing facilities for hemp fiber and stock. In 2008, area licensed for commercial hemp production in Canada further decreased by almost 47 percent to 3 259 hectares (8,050 acres). Total number of licenses issued by Health Canada was 85 in 2008, a significant decrease over the last few years.

In 2009, area licensed for hemp production increased by 72 percent across Canada over in 2008, i.e., from 3 259 hectares (8,050 acres) to 5 602 hectares (13,837 acres). Major increases in area were again on the Prairie Provinces lead by Manitoba (145%) and Saskatchewan (34%). Area under hemp production in Alberta increased by 200 hectares (524 acres) over in 2008. Only province to report decrease in hemp area in 2009 was Quebec from 134 hectares (331 acres) in 2008 to 92 hectares (227 acres) in 2009. In British Columbia, area for hemp production increased from five (5) hectares in 2008 to 84 hectares in 2009. Similarly, area in Ontario increased from mere eight (8) hectares in 2008 to 132 hectares in 2009. Table 1 below provides data on commercial hemp production in Alberta and Canada from 1998 to 2009. Tables 2 and 3 provide hemp production in Canada by provinces from 1998 to 2009 in hectares and acres.

In 2010, area licensed for hemp production increased by almost 94 percent across Canada over in 2009, i.e., from 5 602 hectares (13,837 acres) to 10 856 hectares (26, 815 acres). Major increases in area were again on the Prairie Provinces lead by Saskatchewan (204%) and Manitoba (156%). Area under hemp production in Alberta increased by 1 304 hectares (3,221 acres) over in 2009, an increase of almost 267 percent Similarly, area in Ontario increased from 132 hectares (325 acres) in 2009 to 372 hectares (919 acres) in 2010, an increase of about 283 percent. In Quebec, area under commercial hemp production increased more than three-fold to 321 hectares (793 acres) in 2010 over 2009. Only province to report decrease in hemp area in 2010 was British Columbia from 84 hectares (207 acres) in 2009 to 64 hectares (158 acres) in 2010. No hemp was grown in the Atlantic Provinces and Yukon Territories in2010. Table 1 below provides data on commercial hemp production in Alberta and Canada from 1998 to 2010. Tables 2 and 3 provide hemp production in Canada by provinces from 1998 to 2010 in hectares and acres.

The industrial hemp production received a lot of attention in the early years. Advocates of hemp production painted a rather rosy picture for growth potential. However, the sudden demise of Consolidated Growers and Processors (CGP) Inc. of California left a large number of hemp growers in Manitoba sitting with a huge crop and nowhere to market it. This company was largely responsible for the rapid increase in acres in 1999 and the fallout in 2000. The company created a lot of interest and hype for hemp among producers, particularly in Manitoba. The CGP contracted an estimated 40 per cent of the total industrial hemp area licensed in Canada in 1999. However, the company went into receivership after failing to meet contractual obligations. This left the hemp producers with a huge surplus of hemp seed and fiber hanging over the market. This surplus was stored in warehouses and farmers’ bins, awaiting bankruptcy settlement. A considerable portion of the hemp crop did not get sold and producers had to absorb the losses. Thus, the negative events of 1999 have brought a lot of skepticism and fear for the future growth potential of hemp industry in Canada. Downturn in hemp cultivation during the last three –four years is buoyed by a steady increase in the processing of hemp, and the development of many small businesses engaged in developing new products and marketing of these products. In Alberta, work is well underway at Alberta Research Council (ARC) and Alberta Agriculture and Rural Development (AARD) to evaluate hemp as a potential source of producing pulp and fiber.

Currently, there are many Canadian companies – including Hempola Valley Farms; Fresh Hemp Foods; Ruths Hemp Foods; HMF Sales and Marketing; Hemp Oil Canada; Cool Hemp; and Natures Path, etc.; working to develop and market products made from hemp seed. Many of these companies have strong regional distribution but there is no clear national leader yet. All of these companies are involved in the hemp seed market and are producing a wide range of products. These are snack foods, hemp meal and flour, edible oil, shampoo and conditioners, moisturizers, commercial oil paints, beer and aromatherapy and cosmetic products. Most of the companies are reporting good growth. Another trend worth noting is that much of the hemp food industry has switched to certified organic production because of strong demand. A few industry experts estimate that around 1/3 of Canadian hemp seed production is certified organic.

Another interesting development in 2007 was the collaboration between National Research Council Canada (NRC) and Naturally Advanced Technologies (NAT) previously called Hemptown Clothing Inc., a manufacturer of hemp clothing. NAT has been working with the NRC Institute for Biological Sciences (NRC-IBS) to commercialize NRC developed enzyme technology for processing hemp fabric (enzymes are used widely in industrial applications for everything from pulp bleaching to meat tenderizers). The technology promises dramatically improved fiber quality (softer, whiter fabric) using environmentally friendly methods.

In April 2010, the Province of Manitoba provided $500,000 to Plains Hemp Processing in support of a new, innovative project design to process hemp. This hemp processing project is a first of its kind located in Gilbert Plains, Manitoba. Plains Industrial Hemp Processing currently manufactures several hemp based products such as hemp pellets, animal bedding and insulation. The newly built hemp processing plant will have the capacity to process up to 18 000 tonnes of hem per year.

On December 13, 2010, the federal government announced an injection of $728,000 to help the hemp industry increase production capacity and make new inroads into the U.S. market. “Canadian farmers and processors are finding tremendous success with hemp thanks to its many nutritional benefits and wide range of uses in pasta, salad dressings and frozen desserts,” said Minister Toews. “This Government is proud to invest in this growing industry so that farmers can continue to expand their markets and develop more products.”

The Government of Canada investment will support three groups:

A $410,000 repayable contribution through the AgriProcessing Initiative for Fresh Hemp Foods to purchase and install new dehulling, oil pressing, and packaging equipment in its new 20,000 square foot state-of-the-art facility.

A $300,000 repayable contribution through the AgriProcessing Initiative for Hemp Oil Canada to purchase and install new air classification milling and cold press oil expeller technology.

A $18,625 investment through the AgriMarketing program for the Canadian Hemp Trade Alliance to enhance its website, hold a strategic planning meeting of its board of directors and take the first steps toward achieving Generally Regarded as Safe status in the U.S.

In 2009, exports of hemp seed and hemp products were valued at more than $8 million, with most exports going to the U.S.