Canada has officially legalized and regulated the production, sale, and adult-use of cannabis. Prime Minister Justin Trudeau says this approach will “kneecap,” or cripple, black market sales, protect the public, and provide more comprehensive marijuana education overseen by one agency, Health Canada. This decisive move means that Canada is now essentially leading the world, or at least G7 nations, on cannabis policy. 

However, it’s already been a quarter century since the Canadian government blazed paths and took another decisive step in 1994 that defined “industrial hemp” as cannabis containing no more than 0.3 percent THC in the dried flower, thereby adopting a standard used in Europe and, later, the United States. No mention was made of cannabidiol (CBD) or other cannabinoids. 

The Canadian government began to issue research licenses to grow cannabis hemp on an experimental basis for fiber, sterilized seeds, viable seeds, and seed oil. A few years later, on March 12, 1998, commercial farming, production, and export of industrial hemp products was legalized in Canada, with Health Canada issuing licenses and authorizations with severe limitations and security requirements. 

Looking ahead, as the U.S. prepares to expand its national hemp program, and politicians toy with the idea of federal legalization by de-scheduling cannabis, valuable lessons can be learned from looking back at the Canadian hemp experience.  

How has the market developed? What changes did the new law bring? What challenges do we face as the Great White North goes green and the U.S. Hemp Farming Act of 2018 allows its hemp farmers to compete? 

As two nations stand poised on the threshold of a new era, it’s a good time to look at how these two neighboring nations approach — and stand to benefit from — the many uses of cannabis hemp. 


This hemp, grown for CBD extraction, looks similar to marijuana in terms of plant spacing and the lack of male plants. Males are kept away so the hemp will produce more resin. Photo courtesy of Chris Conrad

Evolution of Industrial Hemp in Canada 

Circumstances have evolved for Canadian hemp farmers and entrepreneurs since 1998. Interest in industrial hemp production was building momentum into the early 2000s. The hemp seed food, oil, and cosmetics export markets, in particular, took off. Overproduction in 2005 and 2006 meant supply exceeded demand, and the leftover inventories triggered a severe drop in production in subsequent years. 

By 2012, the crop had fully recovered. Total acreage seeded that year surpassed the 2006 levels, and since then has grown at a sustainable rate. In 2015, two hemp food industry pioneers, Manitoba Harvest and Hemp Oil Canada, merged to further expand their market reach.

Regulations loosened over time and became more reasonable, as comfort with the crop and industry has grown. However, until now, Canada’s farmers had been limited to seed and fiber crops. The new law opens the door to extracts and markets where U.S. farmers already have a toe hold. 

The changes that went into effect in Canada on October 17 cover new ground that can be viewed in two categories — security regulation and business expansion.

Security Regulation: 

  • The field GPS coordinates and cultivar variety and pedigree being grown must be reported to Health Canada within 15 days of planting the crop
  • Hemp seed no longer has to be stored in dedicated locked containers; it can be stored like other crop seeds
  • Elimination of the one kilometer buffer zone previously required between hemp fields or processing plants from schools and public places 
  • Elimination of criminal record background checks for hemp license applicants  
  • Elimination of other security clearance requirements 

Business Opportunity Expansion:

  • Commercial use of whole plant allowed, including non-THC extracts such as CBD, whereas it was previously only for seed and fiber products
  • Elimination of on-site THC testing for commercial farm locations planting certified and approved cultivars 
  • Elimination of minimum acreage size (previously four hectares / 9.88 acres) so farmers can run small batches or experiment with crops and technologies 
  • More time to make changes to application; raised to 30 days from 15 days to give farmers and licensees more flexibility 
  • Longer license periods; raised to five years from one year to give licensees more security and stability in their ability to perform contracts 
  • Longer export and import permits; raised to six months from three months, to allow for delayed deliveries and other logistical details 


Canada’s Early Success Helped Advance Hemp in the U.S.

“Hemp seed grain products are still driving hemp production in Canada,” observed Anndrea Hermann, President Emeritus of the Hemp Industries Association (HIA) and a consultant at Ridge International Cannabis Consulting, who has been actively engaged in hemp advocacy and commerce in both the Canadian and U.S. hemp markets. “But the fiber interest is also growing, with processing facilities finally coming on line.” 

The omega-rich oil pressed from hemp seed has a strong following in the health food industry, health and beauty aids, and even for treating wooden decks, leather saddles, and horse hooves. Smashing and soaking hemp seeds produces a tasty, nutritions and popular “milk” beverage, and once the hemp seed market got hold of machinery to remove seed hulls from kernels, it opened the door to cereals and multi-grain breads

Hermann added that “big changes have been made in the scope of food safety, with companies now requiring Global Food Safety Initiative and hazard analysis and critical control points (HACCP) standards compliance.” This is an international system at all stages of a supply chain that uses a preventative approach to ensure food safety from potential biological, chemical, and physical hazards and contaminants. 

“We’ve had little to no security issues in Canada, hence the removal of the locked-up hemp seed rule.” Until 2018, viable seed had to be stored in a locked container, or in a facility that could only be accessed by authorized personnel, requiring large, secure facilities. This is no longer the case, however, although detailed records of grain sales and movement still must be kept. 

Apparently, consumers and even thieves can tell hemp from marijuana. As such, in Canada, early fears of diversion into the marijuana marketplace have proved to be unfounded, as well as an important lesson for its southern neighbor: Nobody wants to smoke this stuff. 

“Canada’s hemp industries have long been the success story advocates have leveraged in conversations with legislators and regulators,” noted Hemp Industries Association (HIA) Executive Director Colleen Keahey-Lanier. The HIA is a non-profit trade association that was founded in Arizona the same year that hemp farming was legalized in Canada to promote the industry and encourage domestic hemp cultivation. In 2003, the HIA prevailed over the U.S. DEA in its lawsuit that saved hemp seed food products, and the group recently fought another battle over cannabis extracts that ended in a stalemate — one that stands to be resolved by the upcoming Farming Act.


Two Nations Plow Different Rows to Hemp Revival 

Canada has been producing and exporting hemp for decades and the U.S. has been a major importer and consumer of those products. The evolution of the cannabis extract markets under the umbrella of state medical marijuana — and, more recently, U.S. hemp laws — is where that situation has been reversed.  

Market research by the Hemp Business Journal estimated that the U.S. made $553 million in domestic retail sales of hemp food, supplements, and body care products in 2017. When sales of clothing, auto parts, building materials, and various other products were included, that estimate hit $820 million for the total retail value of hemp products purchased in America. 

Hemp-derived CBD products constituted 23 percent (or $190 million) of that total. 

In a rare bipartisan move, U.S. Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Chuck Schumer (D-NY) joined forces and backed The Hemp Farming Act of 2018 to de-schedule low-THC hemp plants. The policy will place federal regulatory authority of hemp solely on the Department of Agriculture, instead of the DEA. It would require each participating state Department of Agriculture to file hemp program plans with the USDA, but lets them regulate cultivation within state borders. 

“Unlike Canada, the rapid growth of the U.S. based hemp industries is not primarily attributed to industrial or nutritional products, even though those are sizable categories,” pointed out Keahey-Lanier. “The opportunity to grow hemp in the U.S. for the purpose of extracting cannabinoids has provided a lucrative entry point to market.” 

In other words, rather than textile fiber and seed oil, the market driving demand for domestic hemp here has been for non-euphoric hemp medications. A new policy enacted this year in California requires a marijuana license to produce CBD for oral consumption, but allows hemp licensees to produce topicals and other uses to split up that market and spread the wealth around. 

In a twist, Hermann pointed out that “in the U.S., I see medical marijuana as the gateway for hemp” by creating social acceptance and opening up the CBD market. In Canada, however, the acceptance of hemp moved medical marijuana forward — it destigmatized the plant, which subsequently increased social and political acceptance of medical and adult cannabis use. 


Above: Anndrea Hermann, President of the Hemp Industries Association (HIA). Photo by Ben Droz, courtesy of Hermann

Once Again, CBD May Hold the Key 

Despite Canada’s history of hemp farming, it remained illegal to harvest CBD until the nation’s adult-use legalization laws kicked in. With “whole plant” processing now allowed, including most extracts, Canadian farmers hope to see that market open up, as well. Theoretically, the national markets should not compete, since importation of cannabinoids remains subject to customs oversight. 

Meanwhile, the United Nations and World Health Organization have recognized the medical value of cannabis-derived CBD, and the federal U.S. Food and Drug Administration only recently approved the plant-derived pharmaceutical Epidiolex to be imported as a low-risk prescription drug for use in the United States.

“Allowing CBD production will help increase the farms’ gate,” said Hermann, referring to how much money goes directly to the farmer. “It will enable them to potentially get more contract options from a single crop, open the doors for smaller farmers, and assist in rural revitalization.” 

Canadian farmers are already taking a “value-added” approach with other hemp products. That could mean bringing a decorticator machine on site to separate textile fibers from the inner pulp used for housing materials and paper, or using portable equipment to press oil from hemp seed before it ever leaves the field. Subsequently, the farmer saves money on transportation and processing fees and gets a higher financial return on the semi-finished goods shipped out. 

Add to that the value of CBD and other cannabinoids that can be extracted from the crop — and the incentive in Canada to plant hemp goes up yet another notch.  


Competition and Cooperation Between Good Neighbors

In economic sectors where the two countries’ hemp industries will more directly compete, it comes down to a matter of risk diversification for both sides of the border. 

Canada has one unified system to coordinate the marijuana, CBD, and hemp markets. The U.S. hosts an obstacle course of conflicting state and federal laws, complex local regulatory schemes, and combative drug warriors. 

The greatest growth potential will be in the fiber sectors once hemp infrastructure comes online — continuing a technological process that was disrupted 81 years ago by the U.S. Marihuana Tax Act that banned hemp farming. At the time, the paper, textile, cordage, and plastic industries were clamoring for more hemp and Henry Ford anticipated producing auto bodies made with hemp and soya and cars powered by hemp and plant ethanol fuels. Today, the food industry, construction industry, extraction industry, and 3-D printers have joined the cry.  

Hermann pointed to juicing raw cannabis as a huge potential health food, as well as the horse feed/supplements and pet foods as underdeveloped niche markets in both countries — once the legal issues are sorted out. “I hope to see hemp grain pulling ahead and, maybe, being bigger than canola, once the market is firmly based on well-established grading systems for grain and fiber,” she said.

Hemp seed grain-based products could be mainstreamed as a prime ingredient for their nutritional value, not just a marketing gimmick used to catch the consumer’s attention. This is the area where there is the best potential for fast growth, but also the area with the strongest and most established competition. 

Fortunately, there is already infrastructure in the U.S. to process hemp seed grain for domestic use or international export, and the USDA has begun recognizing low-THC hemp cultivars for domestic farmers.  

Unfortunately, fiber decortication equipment is needed on both sides of the border to separate the high-cellulose, high-tensile bark fiber (bast) from the more absorbent and pithy core fibers (hurds) used in hempcrete housed and industrial fabrication. This will require the use of existing equipment, retrofitting and repurposing related equipment, and creating new designs in emerging technologies to be applied in the hempfields and all along the production chain.  


Help Wanted: Time for More People to Climb Aboard

Part of the current developmental holdup is that hemp needs more infrastructure, more momentum, and greater economy of scale to compete with other industries. 

It will take plenty of biomass, and more than a few sources of raw or value-added materials, to get hemp embedded into industries such as housing biocomposites, non-woven products (like felts for fabrication), and the auto industry. Spreading the farms around the map is essential to control transportation and shipping costs. 

As Hermann noted, while global protocols exist for food products, hemp fiber products need an international grading system, like flax and jute have, to control quality and determine specifications and applicability for manufacturers, especially in textiles.

While the U.S. struggles to separate hemp and marijuana — and drug warriors continue to conflate the two — Canada is now bringing the two markets together, at least in terms of its regulatory framework. 

“The crossover is beneficial for both sides,” concluded Hermann. “Here in Canada, most of the medical marijuana licensed producers have already developed a hemp-type division or are working on one. Like when Aurora Cannabis bought up Hempco Food and Fiber Inc.,” one of that nation’s biggest hemp producers, with the specific intent of merging their combined markets and expanding into extraction. 

The uniformity of oversight and long-term developmental strategy gives our Northern neighbor a big advantage moving forward. The cost of transporting hemp typically favors the local producer, but that edge could be overtaken by the grand economy of scale envisioned by the Canadian cannabis and hemp industries. 

To some extent, Canadians are content to watch the U.S. flounder about with internal conflicts and mixed messaging while they lay the groundwork for global hemp conquest. But Canadians also realize that their opportunity to surge ahead of us may have a very limited window, particularly if U.S. Congressional leadership is taken away from GOP prohibitionists like Representative Peter Sessions (R-TX) and Senator Chuck Grassley (R-IA), both who use their committee chairmanships to block votes on key legislation.  

Hopefully, the U.S. will learn from Canada and incorporate these lessons to help make up for the time lost due to the War on Drugs. Otherwise, we should expect to follow in the wake of the Great White North for several more decades as it continues to plow ahead. 


Above, hemp pioneers: Larry Duprey (far left) joined the HIA board and became the Hemp Industries Association’s first international liaison. Author Chris Conrad, the first HIA President, is seated on the right. Chris Boucher, Steve DeAngelo and Don Wirtshafter have likewise remained active in the cannabis industry.

For more on Chris Conrad and his decades of cannabis-focused work, visit