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Cannabis legalization opens the doors to new hemp markets

Hemp seed has driven most of Alberta production, but CBD offers rich promise for the future

Jan Slaski was one of many Canadians who celebrated last fall’s passage of the act legalizing cannabis — but not for the reasons you might think.

After 17 years of researching industrial hemp, Slaski was simply excited what he views as the next Cinderella crop might finally make it to the ball.

“It’s a game changer,” said the senior researcher at InnoTech Alberta. “This new act allows for whole-crop utilization of industrial hemp. Now farmers can draw revenue from three streams — grain, chaff or flowers, and fibre from hemp straw.

“The ability to collect all parts of the plant is literally game changing.”

Prior to cannabis legalization, hemp was only allowed for grain and fibre production. Anything that wasn’t grain or fibre was left to decay in the field. But there’s an emerging market for this leafy material — and hemp flowers in particular — which contain non-narcotic cannabinoids like cannabidiol (CBD) that are increasingly being used in medical treatments.

“This new regulation allows farmers to grow this crop and harvest all parts of the plant, including flowers and leaves for extraction of CBD and other non-narcotic cannabinoids,” said Slaski. “CBD has a much higher value than grain or straw, so some farmers are going to be growing hemp exclusively for CBD.

“Forget grain. Forget straw. If they have two per cent CBD in their flowers, they’re looking at making lots of money.”

Last year, in anticipation of this new market opportunity, some farmers harvested their hemp at flowering when the concentration of CBD was at its highest, while others collected their chaff at harvest to sell it to licensed CBD processors.

“There’s a great opportunity for both primary producers and processors right now,” said Slaski.

“It will be interesting to see how this opportunity pans out.”

He is “fairly optimistic” that the opportunity will translate into increased acres for hemp across Canada.

The record year for production was 2017, which topped out at around 140,000 acres nationally (including 45,000 acres in Alberta). But hemp acreage dipped again in 2018 to around 80,000 acres as South Korean demand for hemp seed dried up.

New market opportunities could turn that around, said Slaski.

“I’m getting a lot of inquiries about varieties that are best for CBD production. There’s a huge interest from new growers.”

Caution urged

However, Keith Jones, who manages Canada’s largest industrial hemp farm, is more cautious.

“There’s an opportunity there, but it’s a little bit of a Wild West gold rush right now,” said Jones, general manager of Rowland Seeds near Taber. “There’s a whole bunch of people who are diving into it, but the CBD marketplace has a lot of growing up to do.”

For all his optimism, Slaski agrees.

“Right now, there’s no value chain for this. In Alberta, we’re lacking sufficient processing capacity. Processing is lagging behind.”

And until the CBD market matures and processing capacity increases, Rowland Seeds is likely going to continue to grow organic hemp for the food market. This market has strong demand but limited supply — only a quarter of Canadian hemp acres were grown to organic hemp last year.

“Right now, the food market for conventional hemp is a bit saturated, but there is a lot of demand for organic hemp,” said Jones, who grows between 4,000 and 6,000 acres of the crop every year.

“We view CBD as a nice value-added opportunity for us, but it’s not going to have us change how we grow our hemp or what hemp we grow.”

The demand for high-quality fibre is also increasing. Right now, the majority of hemp acres are grown for grain, with the residual straw being sold in limited quantities because of low quality. Typically, grain varieties don’t work for fibre processors, who have stringent specifications around fibre strength that can’t be met by the shorter varieties grown in Alberta.

“With this demand for higher-quality fibre, we’ll be seeing increasing acres of hemp grown not for grain but for fibre,” said Slaski.

He also expects an animal feed market to emerge over the next year.

“Right now, low-quality hemp cannot be fed to farm animals, but this is something we’re working on,” said Slaski. “Farmers can eat it, but they can’t feed it to their pigs or poultry. You can feed it to your canary but not your chickens. It’s ridiculous.”

Do your homework

With this new feed market, as well as the growing CBD and fibre markets, farmers should be able to find a home for their hemp — but they’ll need to think long and hard about what that home looks like before they put the seed in the ground.

“It’s a really small-acreage crop, but if farmers think there’s an opportunity, they’re quick to respond to it,” said Jones. “I’m pretty sure there will be a whole bunch more hemp acres grown next year in Alberta.

“The question is: What will those hemp acres be grown for? What opportunity do you want to pursue, and which customer do you want to sell to?”

Farmers who are considering trying their hand at hemp this year will need to decide which market they hope to sell into and then develop a relationship with a potential buyer, who can offer some direction on which varieties will work best for each market.

“Hopefully farmers thinking about growing hemp really do their homework to make sure they’re talking with people who are credible and know what they’re doing,” said Jones.

“You need to get your licences in place, get good-quality seed from a reputable seed provider, and get a purchase agreement in place before you dedicate a bunch of acres to a crop that might be difficult to sell.

“Hemp is definitely not the kind of crop you grow and then try to figure out how to sell it afterward. That’s a recipe for disaster.”

About the author

Reporter

Jennifer Blair is a Red Deer-based reporter with a post-secondary education in professional writing and nearly 10 years of experience in corporate communications, policy development, and journalism. She's spent half of her career telling stories about an industry she loves for an audience she admires--the farmers who work every day to build a better agriculture industry in Alberta.

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