Canadian Manufacturing

Canada on the cusp of industrial hemp boom

Researcher warns Canadian entrepreneurs will have to act soon if they don't want to deal with U.S. competition



CALGARY—Business is booming for Canada’s hemp industry, but industry experts say it could be on the cusp of even bigger things.

“This year is a year of change,” says Jan Slaski, a senior researcher at the government-funded Alberta Innovates Technology Futures who has been studying hemp uses.

Slaski is confident that after several false starts, Canada will soon start to see traction on some of the more industrial uses of hemp. Those range from a building insulation made of lime, water and hemp called “hempcrete” to replacing fiberglass in car parts and new types of textiles.

So far, however, it’s been food products that have put Canadian hemp producers on the map.

“Hemp has really made its footprint with the food sector,” said Kim Shukla, executive director of the Canadian Hemp Trade Alliance.

In the first four months of 2015, Canada exported $34 million worth of hemp seeds and oil, well on the way to besting the $48 million exported last year and far ahead of the $12 million exported in 2011.

To meet increasing demand for hemp foods, Manitoba-based Hemp Oil Canada is building a $14 million processing plant to triple its production capacity.

And in June, U.S.-based Compass Diversified Holdings bought Manitoba Harvest Hemp Foods for $133 million.

The buyout came after Manitoba Harvest, which sells hemp-based foods, saw a 500 per cent growth in sales over the past five years.

Both companies have made significant inroads into the U.S., which already accounts for about half of Manitoba Harvest’s sales, according to company spokeswoman Kelly Saunderson.

Saunderson says there’s still strong growth potential in the U.S., where less than one per cent of the population has ever tried hemp foods, while here in Canada less than four per cent has.

“We’re really just scratching the surface,” said Saunderson.

Canadian producers have a competitive advantage over Americans: hemp, a distant and non-high-inducing cousin to marijuana, is still largely banned from commercial growth in the United States.

Meanwhile, it’s been legal to grow in Canada since 1998, though farmers still need to apply for a license and jump through a few other hoops.

“This is our great advantage,” said Slaski. “That’s what I’m preaching to the farmers, and all people along the value chain. Take advantage.”

Several Canadian companies have advanced plans to start developing the fibre side of hemp in here, she added, but the $30 million cost to build a processing plant has been a barrier.

Alberta Innovates has a smaller processing plant in Vegreville where they are testing production and manufacturing options, and Slaski says he expects to see progress soon.

“We are just at the verge of seeing hempcrete buildings across the province and beyond,” he said.

Canadian entrepreneurs will have to act soon, though, if they don’t want to deal with American competition.

Several states have already started to relax regulations, and earlier this year a bill was introduced in the U.S. Senate that seeks to end the federal ban on cultivation. The bill is currently in committee.

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