Canada’s Narrowing Hemp Industry Advantage

July 23rd, 2015 – Canada’s North American market leadership in hemp production is at risk. Picture 1While commercial hemp production in Canada began in 1998 and Canada currently grows approximately 100,000 acres annually, competition from the U.S. is quickly emerging a hemp researcher warns.

“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.

While Canada mainly exports hemp seeds and oil for the food industry, uses of hemp in medicine, in construction and car-part manufacturing are also quickly emerging markets which U.S. competitors may soon get federal regulatory approval to produce. (Currently state-level legislation is driving America’s emerging hemp industry)

One rapidly emerging use of hemp is the production of Cannabidiol (CBD) a cannabinoid drug used for Epilepsy and other conditions which is currently illegal in Canada. In this market Canada is at great risk of being completely surpassed. Production of CBD from imported european hemp account for an estimated $40 Million in annual sales in the U.S., whereas Canadian hemp producers are left out of this rapidly emerging market.

Canadian producers currently have a competitive market advantage over Americans however the market is changing rapidly south of the border as 13 states have recently passed legislation to establish commercial industrial hemp programs and, earlier this year, a bill was introduced in the U.S. Senate that seeks to end the federal ban on cultivation. Legal hemp production states include: California, Colorado, Indiana, Kentucky, Maine, Montana, North Dakota, Oregon, South Carolina, Tennessee, Vermont, Virginia and West Virginia. Make no mistake, the U.S. hemp industry is quickly emerging.

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

Businesses are gearing up to capitalize on the growth. To meet increasing demand for hemp foods, Manitoba-based Hemp Oil Canada is building a $14-million processing plant to triple its production capacity.

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.

There’s still strong growth potential in the U.S., where less than one per cent of the population has ever tried hemp foods, Saunderson says. And, here in Canada, less than four per cent has.
“We’re really just scratching the surface,” she said.

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