By Connor Lynch
METCALFE — After years of hype, some farmers are actually reaping rewards from growing hemp. A change to Health Canada regulations earlier this year created a new market opportunity for hemp growers and they’ve been partnering with processing companies to capitalize on it.
One of the few farmers growing hemp in Eastern Ontario is Shawn McDonald, who partnered with Canadian Pure Hemp to grow and dry hemp in the old Metcalfe mushroom farm that he bought two years ago. He is growing for a new market that demands the extraction of the active CBD compound in hemp that is either sold as a medicinal oil or in food as pain relief or as a general relaxant and to relieve anxiety.
In the early 2000s, one potential product, hempcrete (concrete made with hemp), helped convince growers here that hemp’s renaissance was just around the corner. Farmers were growing hemp for fibre then, and Ontario’s small but stable grain market was to follow. But it’s this new use for hemp that’s creating all the hype.
Hemp is the same type of plant as marijuana. Both are cannabis sativa. But hemp produces very little THC, the active ingredient that gives a high. Some varieties of hemp contain significant amounts of CBD, the slow bass line to THC’s high-powered guitar riff. CBD isn’t intoxicating or brain-altering like THC is, though it is psychoactive, and it’s popular as a natural remedy as an oil, added to food or body creams. Ben & Jerry’s hopes to introduce a CBD-infused ice cream. Other U.S. companies have already launched CB-infused water and beverages.
As far as the World Health Organization is concerned, there is no public health risk or risk of abuse or addiction associated with CBD. It can be used as a treatment for epilepsy, and appears to relieve nausea and pain, but that’s about as far as the clinical evidence goes.
U.S. federal government think-tank, the National Institute on Drug Abuse, concurred. In 2015, its director, Dr. Nora Volkow, wrote that CBD “appears to be a safe drug with no addictive effects, and the preliminary data suggest that it may have therapeutic value for a number of medical conditions.”
The single biggest CBD company in the U.S., Charlotte’s Web, posted revenues of $25.1 million from products in over 6,000 stores, including oils, for the third-quarter of 2019, up from $11.1 million over the same quarter last year. The company had planned to plant 700 acres of hemp last spring.
In the U.S., CBD is a $620-million industry, according to hemp market research firm Brightfield Group. Brightfield projected the CBD industry to grow to $5 billion by the end of 2019, and to hit $23.7 billion by 2023, anticipating that the U.S. federal government will legalize drugs in food.
Canada is ahead of the game. A regulatory change by Health Canada opened up the food-infused CBD market. The Oct. 17 changes legalized “edibles,” or consumable THC products (that give a high), but also opened the door for edible CBD products. Companies can now be licensed for CBD extraction from the leaves and flowers of the plant. The number of industrial hemp licences in Ontario went from 111 in 2018 to 182 by Sept. 30 of this year.
But this is an industry dominated by, well, industry. Farmers might have some opportunities to get involved (someone has to grow the hemp, after all), but they are partnering with companies that have an extraction licence.
West of Barrie, at Stayner, farmer Brian Dunlop is growing about 400 acres for CBD Acres. The cash crop farmer has 11,000 acres between the home farm and land up in the Cochrane-area in Northern Ontario. He’s one of two farmers working with CBD Acres to grow 2,480 acres of hemp in Ontario.
Growing is the easy part, said Dunlop. It’s everything else that’s hard: What rotation should he have on his fields and how to break down the tough fibre in particular. “It’s like bamboo,” he said.
And, of course, there is the harvesting, drying, handling and extraction. “As a farmer, you’re gonna need to find a partner (with an) extraction licence.”
Mark Gobuty owns CBD Acres and is the man with the licence. He also lives down the road from Dunlop. His company is a fully-integrated operation: It can handle the crop from seed to sale. It’s not his first venture into hemp. He bought Canada’s second-ever hemp company, Mum’s Original, in 2007, which is mostly focused on food products. He got Canada’s first Cannabis Act licence back in 2013 for the Peace Naturals Project, which he sold in 2017.
There’s been interest in extracting CBD from hemp before and it went nowhere. “A lot of people got together, crops got plowed in and then the companies walked,” said Gobuty, explaining that CBD levels were too low and farmers were told to not even bother harvesting their crop.
The problem of low amounts of CBD isn’t entirely fixed. But he has three varieties being developed by Uni-Seeds, operated by St-Isidore-area hemp and crop farmer Marc Bercier. And current varieties are still profitable, especially considering what Gobuty calls a massive shortfall in CBD supply.
Gobuty said a heavily-seeded operation will have around 160,000 plants an acre, and each produces around 100 grams of flower. At around 4 per cent CBD content (consistent with current varieties) that shakes out to 6,400 grams, or 6.4 kilograms of CBD per acre. Valuations are as high as $25,000 a kilo for CBD or even higher, he said, though he cautioned that it won’t last.
Prices will decline as hemp supply increases. He’s expecting prices to drop to around $6,000/kilo in 2020, then $3,000/kilo in 2021 as higher-CBD varieties get approved and more players get into the industry.
He’s willing to work with more growers in his area as the market grows, but the logistics of drying and extracting hemp means he’s limited to sourcing locally. He said the likeliest bet for farmers is to form a co-op to buy equipment and facilities and get licences, if they’re interested in the crop.
Dunlop isn’t risking his farm on hemp. His hemp crop is 400 acres out of his 11,000, after all. But he didn’t get into farming to lose money either. “I think there’s opportunity here. I think it’ll be another commodity, eventually.”
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By Connor Lynch