Industrial Hemp Production in Canada

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 14 000 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). However, area under hemp has decreased by about 68 per cent in 2007, primarily due to lack of processing facilities for hemp fiber and stock. Table 1 below provides data on commercial hemp production in Alberta and Canada from 1998 to 2007. Tables 2 and 3 provide hemp production in Canada by provinces from 1998 to 2007 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. However, the 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, Food and Rural Development (AAFRD) 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; Natures Path; However; among others – working with hemp food. 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 is that a few years ago the National Research Council Canada (NRC) entered into collaboration with Hemptown Clothing Inc., a manufacturer of hemp clothing that has promoted the idea of using hemp fabric for the uniforms of Canada's 2010 Olympic team. Under this partnership, Hemptown will work 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.

Table 1.
History of Commercial Hemp Production in Alberta and Canada, 1998 - 2007

Year	Alberta Hectares	Alberta Acres	Canada Hectares	Canada Acres	% Alberta
1998	38	93	2371	5857	1.59
1999	745	1,840	14,031	34,657	5.31
2000	306	756	5487	13,553	5.58
2001	113	279	1,316	3,250	8.59
2002	123	304	1,530	3,780	8.04
2003	153	379	2,733	6,750	5.61
2004	639	1,577	3,531	8,721	18.09
2005	916	2,262	9,725	24,021	9.42
2006	2,103	5,194	19,458	48,060	10.81
2007	1,455	3,593	6,132	15,145	23.71

Table 2.
Hemp Production in Canada, 1998 - 2007 (Hectares)

Year	BC	Alberta	Sask.	Manitoba	Ontario	Quebec	NB	NS	PEI	Yukon	CANADA
1998	72	38	263	606	1,163	23.89	214	19	0	0	2,400
1999	225	754	3,096	8,889	1021	86	4	126	4	0	14,205
2000	291	306	1,426	2,902	217	239	1	102	2	0	5,485
2001	96	113	392	472	209	30	0	0	0	4	1,312
2002	200	123	449	597	142	19	0	0	0	0	1,530
2003	7	153	672	1,468	397	13	4	18	0	0	2,733
2004	18	639	1,004	1,655	183	10	4	18	0	0	3,531
2005	0	916	3,429	5,018	251	74	19	18	0	0	9,725
2006	111	2,103	6,025	10,705	398	91	8	18	0	0	19,458
2007	70	1,455	2,293	2,088	40	182	4	0	0	0	6,132

Table 3.
Hemp Production in Canada, 1998 - 2007 (Acres)

Year	BC	Alberta	Sask.	Manitoba	Ontario	Quebec	NB	NS	PEI	Yukon	CANADA
1998	178	94	650	1,497	2,873	59	529	47	0	0	5,927
1999	556	1,862	7,640	21,950	2,523	212	10	312	10	0	35,075
2000	719	756	3,522	7,179	535	590	2	252	4	0	13,559
2001	237	279	968	1,165	516	74	0	0	0	10	3,239
2002	495	304	1,110	1,474	351	47	0	0	0	0	3,781
2003	18	379	1,661	3,625	981	32	10	44	0	0	6,750
2004	44	1,577	2,480	4,089	451	26	10	44	0	0	8,721
2005	0	2,263	8,469	12,395	620	182	47	44	0	0	24,021
2006	273	5,194	14,882	26,442	982	224	20	44	0	0	48,060
2007	173	3,593	5,663	5,157	99	450	10	0	0	0	15,145

Source: Health Canada