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Hemp industry faces down ‘cannabis’ label for CBD

Hemp producers will have to bridge the line between hemp and cannabis regulations if they want to sell hemp for CBD extraction

While the concept of CBD and cannabinoids are still exciting to the hemp industry, reality has begun to settle in.

The federal government’s decision to treat marijuana and hemp-derived nutraceuticals the same will mean an extra layer of red tape for any producer itching to jump on this bandwagon.

Hemp growers are placing high hopes on the nutraceutical market after spending months arguing for the right to harvest the CBD-containing branches, leaves and flowering heads. That was previously illegal as a hemp production license only allowed growers to harvest and store seed. The rules were changed earlier this year in the lead-up to cannabis legalization.

Why it matters: Hemp producers may be itching to source hemp for nutraceuticals, but marking those plants for the cannabinoid, and therefore, the cannabis market, also means dealing with cannabis regulations, not just hemp.

It was good news for an industry fighting off market pressures and trying to overcome bottomed-out prices. Canada’s hemp market took a nose-dive in 2017, following the downturn from a formerly lucrative South Korean market and sudden influx of hemp from places such as China.

“I think there’s already some people doing it,” Russ Crawford, president of the Canadian Hemp Alliance, said of the dawning CBD opportunities.

“There’s a lot more people who are interested in producing CBD, either as an extraction business or just as a primary production at the farm level. Some guys want to build extraction facilities on their farms. I’ve talked to a number of people who say, ‘I’m going to put a small extractor in. I’m going to sell a value-added product off my farm.’”

Not simple

Those small processors may be biting off more regulatory red tape than they know.

Producers would need a cannabis-processing licence, not the more lenient licence handed out for hemp processing, in order to extract CBD. Under the Cannabis Act, cannabinoids are considered “cannabis,” regardless if they are sourced from hemp.

That may come as an unpleasant surprise for producers eyeing the CBD market, according to Chris Dzisiak, chair of the Parkland Industrial Hemp Growers. The industry is just beginning to navigate the regulatory framework around hemp-derived CBD, he said.

Dzisiak raised concerns over taxation, arguing that the hemp does not have the same retail value as cannabis and that regulating both plants the same would have a chilling effect on the hemp-derived CBD market.

The Canadian Hemp Trade Alliance would like to see Health Canada differentiate between hemp and cannabis in the nutraceutical market. Crawford says the organization is lobbying for legislation that would ease the noose around hemp-derived CBD.

“We need to see it as a food and a natural health product,” he said.

Growing issues

Hemp slated for CBD extraction will also have to meet the same mark as cannabis when it comes to pesticides and production practices.

In November, Health Canada released a list of allowed pesticides, along with allowed thresholds for fresh and dried cannabis and cannabis oil. Any pesticide outside that list, or above the threshold, would keep a product off the shelves. For hemp producers selling CBD, straying from cannabis guidelines might leave a crop locked out of the market.

All cannabis products must be tested for pesticide active ingredients, including those derived from industrial hemp.

“We have at least one Group 1 wild oat herbicide that’s been certified for hemp,” Dzisiak said.

“They’ve been around for ages, so I don’t think there’s much of a limitation with that, but again, you don’t know until you see what the testing results are,” he added. “We don’t know because it hasn’t been done to any real extent yet.”

Mandatory testing may also mean “huge” expense for producers, even if tests do come back in the clear, Dzisiak said, while slow test results may mean a choice between missing the ideal CBD harvesting window and losing a crop if hemp is harvested, and then tests above pesticide thresholds.

“I have no idea what the extent of the testing is going to be,” he said. “If it’s a simple random sample across-the-field $1,000 test, it’s feasible to do something like that. If it’s an all-inclusive, every 100-square-feet test and it’s $1,000 a test, then it becomes an entirely different situation.”

Health Canada says it will periodically review its list of allowed chemicals.

Markets?

Health Canada does not keep track of whether a processor is sourcing CBD from hemp or marijuana, but said 75 cannabis-processing licences had been handed out as of Nov. 23. The agency was also in the process of publishing a list of cannabis licences.

When asked how many licences pertained to CBD, a Health Canada spokesperson suggested that any hemp growers use that published list to contact licence holders and inquire on each business’s interests.

As of late November, Health Canada was working through more than 600 applications to either grow or process cannabis.

The agency is now attempting to streamline those applications. Health Canada tripled its review capacity from May 2017 to late October 2018, a spokesperson said in an emailed statement, a move that was echoed by the RCMP. The RCMP also tripled ability to stream security clearances and expect to double it again in the next six to eight months, the spokesperson said. Meanwhile, Health Canada hopes its online tracking and licensing system will help remove part of the strain.

“The time to process an application is affected by a number of factors including the quality, completeness and complexity of the application, and the state of readiness of the applicant (e.g. whether a facility exists that could be licensed),” a Health Canada spokesperson said.

About the author

Reporter

Alexis Stockford is a journalist and photographer with the Manitoba Co-operator. She previously reported with the Morden Times and was news editor of  campus newspaper, The Omega, at Thompson Rivers University in Kamloops, BC. She grew up on a mixed farm near Miami, Man.

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