Could High Canadians = High Producer Profits?

How the Legalization of Marijuana Could Result in the Growth of the Hemp Industry

By Kendra Bailey, University of Saskatchewan student

With the recent election whirlwind and the Liberal win, many are concerned that the agriculture industry may have lost its voice. But could Trudeau’s plan to legalize marijuana be the next step in high demand, high-profit agriculture? Could it help bring about fewer restrictions within marijuana’s sister industry, hemp production? I believe that fewer restrictions on the commercial hemp industry would provide Canadian producers with increased profit opportunities within a growing market. 

Currently, the United States is going through this very process, lifting the restrictions on industrial hemp production. The Bill known as the Industrial Hemp Farming Act of 2015 was introduced January 8, 2015. If passed, it will distinguish marijuana from industrial hemp, thereby excluding hemp from the Controlled Substance Act and the Drug Enforcement Administration’s regulations. Fewer restrictions will open up potential markets and lessen the barriers to entry for producers hoping to enter the industry. However, in 2013-2014, only 15% of US bills made it past committee and only 3% were enacted. The Industrial Hemp Farming Act’s projection, upon introduction, was a 3% chance of passing committee and a 1% chance of being enacted. This large distinction illustrates the stigma towards hemp and the difficulty the industry faces in adopting new reduced regulations. As marijuana becomes more widely accepted, and the stigma begins to shift, policy makers may find a glimmer of hope.  With Canada’s impending legalization of recreational marijuana could we, too, see the benefits of unrestricted hemp production?

Prior to 1937 hemp was grown within Canada but was banned due to its similarity in appearance with marijuana. Industrial hemp has been legal to grow in Canada since March 12, 1998, when the Industrial Hemp Regulations came into effect. However, producers are strictly monitored by the Office of Controlled Substances of Health Canada. The following are examples of Canadian producer restrictions under Industrial Hemp Regulations.

  • Producers must be licenced.
  • They must hold a permit for each shipment imported or exported.
  • Seed testing prior to planting.
  • Submit to a criminal record check.

These restrictions deter potential producers and limit the growth of the industry. All hemp produced must contain less than 0.3% tetrahydrocannabinol (THC), THC is what makes the leaves a psychogenic drug, where marijuana plants often contain more than 5% THC. So the two can be easily differentiated. 

Renee Johnson, an agriculture policy specialist with The Congressional Research Service says that hemp can be used in nearly 25,000 different products. Products such as fiber rich foods, clothing and now even as insulation in homes can all be produced with hemp. There is a need that producers can capitalize on. The potential economic benefit for producers is huge. AG ANNEX reports that in 2012 hemp prices were reaching $1.10 to $1.20 per pound for organic seed and $0.70 to $0.80 a pound for conventional hemp. An acre can produce 700 pounds of seed reaching to 1,200 and 1,300 pounds. In comparison canola fetches about $0.18 a pound. These prices are enticing producers to take a second look at a crop that many had not considered. With the potential for restrictions to be eased, producers would have fewer barriers to entry to the marketplace and profit from hemps many uses.

 

Kendra Bailey

Kendra is currently completing the 3rd year of an Agribusiness Degree at the University of Saskatchewan. She grew up on a cattle farm near Eatonia, Sk and in 2003 moved to farm east of Yorkton, Sk. During previous summers Kendra has worked for Ag companies, and currently during the school year she is working for Scotiabank. Having a passion for agriculture and a strong background in the sector, Kendra plans to continue supporting the Ag industry with her Degree.

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