Industrial Hemp Contributing to Alberta’s Economic Diversification

Innovations in agriculture are often cited as prime contributors to diversifying Alberta’s economy. Take development of industrial hemp for example. The industry appears on the surface to be a great fit for job creation in agriculture and applied manufacturing. The hold ups however are well known and substantial as cited in a discouraging overview contained in a New Frontiers Data article appearing this past July. HERE

“Discouraged?” Hardly, but then we have insider information about what’s up in Alberta. Perry Kinkaide’s interview of Jesse Hahn, Vice President of Natural Fibre Technologies shines a bright light on the prospects and progress for the industry in Alberta. Jesse has a deep and wide network of people who are well aware of the issues in growing Alberta’s industrial hemp chain.

Perry – Jesse, you’ve read the New Frontier Data article. It is discouraging, citing several barriers to development of the US industrial hemp industry. You remain positive about the prospects for Alberta. Why?

Jesse – Albertan farmers have been growing hemp for over 20 years so many are familiar with the crop and its a great fit for their crop rotations. Also, our northern latitude allows for the photosensitive crop to grow taller.  Alberta industrial hemp therefore has the potential to produce more biomass per acre, just what industry needs in order to establish a low margin, high volume biomass supply chain. For the past 20 years enthusiastic Albertan entrepreneurs and the Albertan Government have established a scientific foundation that could contribute billions in hemp-based economic activity. I’m not exaggerating, but I am forecasting.

Perry – the article also cites the US regulatory regime as an impediment, having been introduced to address its concerns with recreational cannabis. Does this regulatory impediment also apply to Canada?

Jesse – The Federal government of Canada recognized the difference between industrial and recreational cannabis over 20 years ago. Passage of Canada’s Cannabis Act in 2018 opened up the hemp industry for Canada even further by reducing regulations and recognizing Hemp as a safe and versatile, high value crop. Doing so has expedited the growth of Canada’s industrial hemp industry and kicked off a domino event of countries deregulating hemp around the world. Regulatory impediments will always be a barrier, however, there is currently a push for full deregulation of industrial hemp in Canada. This would be an incredible step for the plant becoming Canada’s next high value commodity cash crop and position Western Canada as a beneficiary from first mover advantage. Time is of the essence.

Perry – The industrial hemp fibre is unique in having so many applications. True?

Jesse – It is well known that Hemp can serve as a feedstock for several different industries with hundreds of food, medicinal and industrial products. With decline of the oil and gas activity in Alberta, there is a need for a new source of economic activity, particularly in rural areas. Developing the industrial hemp industry is a no brainier: quick and a great fit.

Perry – For an industry to form with extraordinary export potential, there must be a reliable and significant volume of fibre. Can manufacturers depend on Alberta or is the industry only expected to serve a domestic market?

Jesse – Alberta is ramping up in the planting of hemp as the demand for industrial hemp increases globally. Albertans have been growing hemp for seed/food for the last 20 years and since 2018 for the flower/medicinal portion. Alberta is lush with hemp straw that has previously been viewed as a waste, a burden for farmers – They used to burn it or till it into the soil, a total economic waste. This ‘crop residual’ of Industrial hemp is an economic opportunity for farmers to initiate supply to the high volume lucrative global textile, pulping and plastic markets.

Perry – It’s one thing to have a steady supply of hemp, but to obtain fibre from the stalk requires processing. Such processing plants are huge and very expensive – in the tens of millions of dollars each. They are therefore few in number and hard for the farmer to get to. Right?

Jesse – Alberta led the way in Canada for fibre processing with construction by Alberta Innovates of the Ag and Forestry R&D decorticator in Vegreville. New processors are now popping up including an innovation by Natural Fibre Technologies (NFT).

Out of sheer necessity one of Alberta’s Bio-economy Pioneers, Tam Tekle has developed a high throughput, low-cost, mobile decorticator.  The innovative technology allows the decentralization of processing – good news for the farmer, and eliminates the economic barrier attributed to large, expensive processing plants and shipping low value hemp bio feedstocks long distances.

Prior to developing the decorticator, Tam’s genius was in identifying and articulating hundreds of different products and then working tirelessly forming partnerships between the Biocomposites Group in Drayton Valley and Hempco/Aurora to establish markets for high value Albertan hemp based products and materials. NFT continues to foster partnerships globally by supplying technology and know-how to up and coming hemp entrepreneurs as well as blue chip corporations.

Perry – Waste management and the recycling or removal of plastics altogether is getting a lot of public policy and industry attention. I understand industrial fibre may have a contribution to make here.

Jesse – Hemp biomass can serve as a supplement in the production of most industrial construction materials including concrete and plastics. REDUCE is one of the big R’s my generation grew up with – so lets put our money where our mouth is and reduce the amount of petroleum we use in plastics. The more biodegradable hemp biomass is used in plastics manufacturing, the less petroleum based material will find its way into the environment.

In this spirit, NFT has co-developed a composite that uses a biodegradable plastic compounded with hemp. Both the hemp and the plastic were produced in Alberta. The two industries are very complimentary. This is already a great opportunity for collaboration between industry and government that has many spin-off benefits.

A further example of integrating the hemp and petrochemical industries is Eastman (Kodak) Naia. It uses cellulose in their plastic yarns.

Perry – Some years ago many Alberta farmers switched from wheat to canola. Why would they switch again, this time to hemp?

Jesse – There is high value in producing industrial hemp. Processing is becoming affordable and accessible while big corporations and niche artisans are all turning to bio-feedstocks for novel new products. Besides, Canada’s canola market is heavily concentrated in China market. This market has recently become unstable, even undependable. Clubroot and other diseases can be a problem with canola so farmers are seeking a different crop to add to their crop rotations. A high-value crop that is not susceptible to the Clubroot disease; this is hemp.

Perry – So far so good. But any industry needs capital, financing for players in the hemp chain: farmers, producers, and distributors. Is access to capital an issue for those wanting to contribute to development of Alberta’s industrial hemp industry?

Jesse – Yes. Primarily because the industry is recently getting fresh attention from investors prompted by the deregulation of hemp flower harvesting in 2018.  The future role of government in supporting the development of an industrial hemp industry for Alberta is yet uncertain. It certainly didn’t help for the Alberta Government to terminate the Alberta’s Investor Tax Credit program.  Regardless, governments need industry support to diversify an economy. Lots of government virtue signaling via available grants in the bio-economy, hopefully industry money will find its way.

Our challenge remains to engage domestic sources of investment to kick-start Alberta’s industrial hemp industry. But investors have to come to terms with the fact that the Hemp industry is not a get rich quick opportunity while entrepreneurs must continue to cultivate resilience while they find the right partners.  Civilization, now more than ever, must be working to build a resilient, diverse bio-based economy which is less reliant on status-quo, industrial era thinking – Albertan capital could be leading the way.

Promising is development of the so called “innovation ecosystem” for supporting the growth of small business. But, as you know Perry, the system is fragmented and immature. It is as yet inadequate to rely on for supporting the commercialization of new technologies and associated industries such as industrial hemp. Government can help, but in what way remains to be determined.

Perry – The industry is clearly just starting up. But there are already a few big players. Who are they and what has been their focus?

Jesse – A few hundred players in the industry have participated in a couple of conferences in 2018 and 2019 to identify measures for expediting the industry. Just getting to know one another cannot be emphasized enough. Networks and networking are an essential industry building contribution.

Innotech Alberta in Edmonton has been a big supporter of the industry including co-funding the decortication line that Hempco Canada and Aurora Cannabis built with Natural Fibre Technologies as industry partners. Their research is also contributing to the increased growth of hemp at various locations around the province.  As for Alberta Innovates, it operates the R&D decorticator in Vegreville that is owned by Alberta Agriculture and Forestry. Also, there is considerable interest among rural municipalities, investment among indigenous farming groups and co-ops, plus several agricultural colleges.

As for big industry players, they are yet to be determined and smaller payers are yet to be focused. The next few years may prove the Hemp sector to be a fascinating space to watch as Alberta evolves.

Perry – thank you Jesse and we’ll be watching. The hemp industry is growing thanks to the enthusiasm and a “can do” attitude of Alberta farmers, small businesses , and entrepreneurs. If readers are interested in learning more about Natural Fibre Technologies they can visit https://naturalfibretech.com/

Of course, we’d like to learn more about what various levels of government have to say about their interest and contributions to diversification of the economy. We’ll be reaching out for comment and highlight both the general role of government in economic diversification and the associated development of an innovation ecosystem – critical for helping small businesses survive, grow and stay.  So please stay tuned for the results of our October survey that will be the subject of discussion in our November issues.