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Hemp Legalization Sparks Growth of New Industries

Posted on July 26, 2000

Montreal, Québec — Now that the jokes about getting high on hemp are trailing off, Greg Herriott is happier. It means people have a better grasp of the differences between hemp and marijuana.

Industrial hemp, like marijuana, is a member of the cannabis sativa family, but has negligible traces of the hallucinatory chemical THC. Herriott is in the hemp business, one of a growing number of entrepreneurs developing a new industry now that hemp can be grown legally in Canada.

In 1998 the Canadian government legalized the growth of industrial hemp under license from Health Canada, the country’s ministry of health, following a 60-year ban because of hemp’s association with its psychotropic cousin. Hemp generally contains 0.1 percent to 0.4 percent THC, far less than needed for any kind of drug-induced high. Marijuana, by contrast, generally has THC levels of between 4 and 20 percent.

In legalizing hemp production, Canada has broken step with the United States, which has adamantly refused to lift its ban. Four states — Hawaii, Maryland, Minnesota and North Dakota — have passed legislation to permit hemp production for research and commercial purposes, but the federal Controlled Substances Act still keeps it illegal. Legislatures in five other states — California, Illinois, Montana, Vermont and Virginia – have called on the federal government to change its policy. Until that change occurs, hemp production remains off limits.

U.S. drug czar Barry McCaffrey has argued that legalizing hemp would make it impossible to bust marijuana-growing operations, since hemp in the field looks similar to marijuana. But Andy Kerr, a member of the board of the North American Industrial Hemp Council, scoffs at that line of argument. “There are 30 countries that can tell the difference between hemp and marijuana, but he can’t seem to,” Kerr said.

There’s other opposition to legalizing hemp. Hemp is a remarkably versatile crop requiring almost no herbicides that can be used to make everything from fiber products and oil to textiles and paper, according to the Hemp Industries Association, based in Occidental, Calif. Hemp advocates say the synthetics industry, which supplies so much of these products already, sees hemp as a threat to its market share.

Canada’s legalization of industrial hemp has opened the door to a whole new market comprising mainly small companies selling a variety of hemp-based products ranging from soap to salad dressing.

Herriott and his wife, Kelly Smith, operate Hempola, based in Port Severn, Ontario, which sells hemp-based products including massage oils, flour, salad dressing, soap, moisturizing cream, lip balm and hemp oil. “We were pretty gun-shy,” Herriott recalled.

“After close to two years of research we finally bit the bullet.”

Hempola is part of an industry that, still in its infancy, is growing at an estimated 20 percent a year. According to a 1998 study by the province of Nova Scotia, the North American market for hemp is estimated at $28 million to $30 million (U.S.), with annual increases of $8 million to $10 million. That includes the United States, where industrial hemp products are legal, but their manufacture is not.

Efforts to market hemp products in Canada are only just beginning because most of the first crop was used to develop seed for a new crop, explained Sasha Przytyk, general manager of Regina, Saskatchewan-based GEN-X Research. “After this, you’ll probably see more than one brand of hemp oil, for example, on the market,” he said.

Hempola hopes to capitalize on this growth potential. Through its Canadian and American distributors, its products are available in health food and grocery stores in Canada and some stores in the United States.

With some consumers wanting to know how hemp differs from its cannabis cousin, education is an important part of marketing, Herriott said. “When it comes to natural products, people are information-hungry.”

Health Canada officials could have used some information in October 1998, soon after the government lifted the hemp ban, when they tried to stop The Body Shop Canada from launching Hemp Dry Skin Treatment products and a provocative campaign that used such slogans as “High in protein, essential fatty acids and hysterics.” Confused officials, who worried the skin products could get customers high, came to their senses when they realized the products weren’t going to give users the slightest buzz.

The resulting national headlines about the controversy actually helped companies such as Effort Industries Inc., based in the Toronto suburb of Scarborough. “It had a positive impact because it showed just how ridiculous our government is,” said Effort vice president Robert Greenwald. “It made it easier when we made (marketing) phone calls.”

Effort began selling 30 varieties of hemp fabrics, mostly to manufacturers, six years ago. It launched T-shirts, pants, bags, hats and dresses three years later to demonstrate to potential customers how the sturdy hemp fabric could be used.

“We thought if people could see what you could do with it, that would encourage them to buy the fabric,” Greenwald said. The clothes were a success in their own right. They are now available in about 70 boutiques across Canada.

While hemp textiles have made it big, they tend to be pricey, said John Roulac, author of several books about hemp and founder of the California-based hemp food company Nutiva. Food and body care products are poised to become big sellers, he predicted.

“More people are willing to spend $1.50 for a hemp bar or $2.50 for lip balm than $70 for hemp jeans,” Roulac said.

Shaftesbury Hemp Ale is another product making a small splash among consumers. It was launched in May 1998 by Vancouver-based Shaftesbury Brewing (now Okanagan Spring Brewery). The beer is currently available through government liquor stores, privatized beer and wine stores, and bars and restaurants in British Columbia and Alberta. And there are signs that demand for the product could spread, said marketing director Steve Pelkey.

“We’ve gotten requests here from people who have been visiting the area or gone into a pub and had a pint of it and want to know when it’s coming out east,” he said.

Shaftesbury began producing hemp ale to capitalize on growing consumer interest in hemp-based products. But despite its increased popularity, hemp beer is not and never will be a big player in the beer category, Pelkey predicted. It accounts for only 7 percent of Shaftesbury’s sales volume, last on its roster of four beers.

“It’s a niche brand but it’s a very important brand for us because it’s a cutting-edge beer that pushes the envelope a bit,” Pelkey said.

For companies in the fledgling hemp industry, finding enough money for marketing is one of its biggest challenges, said Jason Freeman, president of BioHemp, a Vancouver-based company founded in January 1999 to develop markets for hemp-based products.

“To market to the end user, you need a lot of marketing dollars, and that’s hard for small companies,” he said. BioHemp will be promoting organically grown hemp products to capitalize on the growing market for organic food.

Freeman also believes that with a limited number of suppliers available, this positioning will protect his company from bigger players who come along later. “If we’re doing regular hemp, we’re likely open to being trounced by a bigger player,” he said. “But if we go for organic farming, they’ll have trouble finding suppliers.”

The flip side of having so many small players is that it makes the playing field level for everyone. “It’s an open market right now,” Freeman said. “It will be two or three years before the big players get into it.”

By then a cutting-edge industry could well be going mainstream if many consumers nonchalantly make hemp products a part of their lives, perhaps starting off the day lathering up with hemp-based soap in the shower, and winding down after work with a hemp beer.

Copyright © 2000, WireTap Magazine. All rights reserved.

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