“We are not industry experts,” True North Cannabis CFO Brett Halvorson announced before a packed room at the Canadian Hemp Trade Alliance Conference in Winnipeg on November 21, 2018.

It was not what the 200 or so farmers expected or wanted to hear. Since August 2018, when industrial hemp growers were given the federal government's nod to harvest the part of the hemp plant containing CBD, a cannabis compound with medicinal benefits but no "high" - everyone in the broad-acre hemp industry has been scrambling to get up to speed on what it would take to make the most of the lucrative new opportunity.

Read: Industrial Hemp: Canada's Oldest New Industry

The room was standing-room-only because Calgary-based True North has made a name for itself as the Alberta leader in developing technology aimed at harvesting industrial hemp for maximum CBD potency. Company CEO Shayne Hamilton has been producing medicinal cannabis and broad acre hemp food products for over a decade. His company contracts 90 percent of its industrial hemp to farmers on upwards of 10,000 acres in both Alberta and Saskatchewan. This year, it collected on 8,000 acres. The company’s new 22,000 square foot hemp biomass refinery is the largest in Alberta and up to November, it had processed 2 million kilograms to make biomass that’s CBD extraction ready. This within only weeks of receiving government approval to process and sell hemp for CBD extraction.

Hamilton and his team, like many industrial hemp producers, decided to include CBD extraction in the mix when they realized broad-acre hemp could easily compete with precision greenhouse products on sheer volume. Although their CBD potencies are higher, greenhouse operations are limited by how many plants they can grow and by costs industrial growers don’t have, such as security and electricity.

Setting Realistic Expectations for Hemp

Halvorson’s conference announcement was part of his company’s cautiously optimistic approach: “We’re talking about an industry that’s less than a month old. Realistic expectations need to be set.”

For starters, he says, upstream producers will have to become more efficient and develop better economies of scale, while downstream companies need to introduce new products to push the industry forward.

Most of the hemp farming community doesn’t realize hemp chaff is not CBD-extraction-ready, he says, and measures need to be taken to decrease the cost of extracting the CBD from the hemp, like reducing the biomass-to-CBD ratio. He believes his refining process, which takes lower potency, high volume hemp biomass to a higher potency, provides an extraction product that can be cost competitive with those cultivated indoors.

While industrial hemp farmers may have a huge advantage because they can harvest and market the grain, fiber and leftover biomass containing CBD, this is also their greatest challenge says Hemp Genetics International president, Garry Meier. He argues that mature fiber harvest is relatively easy. What the industry needs now is to figure out how to facilitate a dual harvest of grain and non-fiber biomass that can produce high CBD levels, as well as develop more knowledge around drying, stabilizing and storing the biomass.

“Efficiencies can be very low right now and losses along the way could be very significant,” he said.

Working to Increase CBD Concentrations in Hemp

Over the past 15 years, Hemp Genetics International has turned a farm hobby into the world’s largest company specializing in hemp seed genetics. Last year, the company grew six hemp varieties for seed and CBD extraction on fields scattered across North America, Australia, New Zealand and Europe. In Alberta, the bulk of their hemp is produced in the Lethbridge and Medicine Hat area. According to Health Canada statistics, the company grew half of Canada’s hemp in 2017. As part of its breeding program, the company continually works to identify hemp varieties that push CBD concentrations higher and that can be efficiently, mechanically harvested. Rough estimates for yield run anywhere from 1,500 pounds per acre on dry land to 2,500 on irrigated land.

In the short term, Meier believes, farmers will make more money developing adequate harvesting techniques, like that being pursued by True North, than in hemp genetics. “For example,” he says, “you can plant a variety that claims 20 per cent CBD potency, but if you make mistakes in field agronomy and harvest technology your yield could go down to less than one per cent.”

He says there have been a lot of unproven rumours coming out about the CBD content of industrial hemp. “Claims of 10 per cent CBD potency are not uncommon, but we really don’t know that,” he says. “We have to walk down the street and make eye contact with our customers every day, so we’re not going to make claims we can’t back up.” That’s why his company prefers to concentrate on quantifying the science before coming to any conclusions about his hemp’s CBD potency. With prices for hemp-derived CBD ranging from $2,000 to $10,000 per kilogram, he feels it’s well worth the effort. If the market continues to show a lot of interest in CBD, he’s confident his company can have improved CBD seed genetics ready sometime within the next two to five years.

A big part of the confusion around the size and activity of farming industrial hemp for CBD extraction in Alberta is that there are so many conflicting opinions out there as to what should be done to ramp up CBD content. “Everyone has a different theory of what’s going to work," says Specialty Seeds’ Will Van Roessel. That’s why, he adds, different harvest methods are being field-tested this fall by various companies in Alberta, Saskatchewan and Montana.

Roessel's biggest issue is the lack of public research regarding the timing and method of harvest on a field scale, rather than through random plant selection. The Bow Island pedigreed seed company devotes 25 per cent of its business to growing industrial hemp for seed and food to be sold to farmers. He has also been planting 130 to 500 acres of hemp seed over the years with a typical yield of 1500 to 2000 pounds of clean product per acre. He feels there is too much conflicting information out there between research done by agencies like Innotech and companies performing smaller scale trials. It’s a real problem, he says, because there are so many new people out there with no field scale experience who need this information. This year he sent out five samples of different varieties to labs for CBD content analysis with inconclusive results. There was a two-fold difference in CBD content from samples taken from the same plant.

A Combined Effort

Dr. Jan Slaski, Innotech Alberta crop development and management team lead, argues higher CBD potency seed varieties, together with improved crop management practices and the development of more processing plants to ramp up Canadian exports, will lead to a stronger industry. “We don’t have any elevated CBD variety in Canada or major hemp biomass processors in Alberta yet, with the exception of a few smaller operators,” says Slaski. The Canadian Hemp Trade Alliance director says the Alberta industry is looking at industrial hemp CBD potencies that exceed two per cent. While other jurisdictions have lines that may reach as high as 10 to 15 per cent, he says, these can’t be grown in Canada until they become recognized and registered by Health Canada and other authorities and field tested for two to three years to ensure the THC levels are below the regulated .3 per cent.

His team has been conducting hemp research for over 16 years on a 640-acre Vegreville research farm to provide farmers with advice on what varieties to plant and best crop management practices. Innotech’s scientific team ramped up their evaluation of hemp biomass for CBD extraction three years ago in anticipation of regulation modifications. They typically work with 12-14 leading varieties at over a dozen locations across Canada, sampling them at different growth stages to determine the highest CBD levels, as well as other non-narcotic cannabinoids with medicinal properties. He says CBD potency could rise or fall depending on when farmers harvest: “Some varieties picked around the late flowering stage showed both lower and higher CBD content.”

He predicts industrial hemp growers can increase the CBD potencies in their plants the same way greenhouse marijuana growers have and will eventually be able to fill the gap in consumer demand. If an indoor marijuana grower can get 20 per cent potency on 20 acres, he adds, imagine what will happen when broad acre growers get close to that CBD content on 140,000 acres. None of this will occur, he believes, unless processing expands.

But the biggest unknown that could make or break the industry, claims Garry Meier, is market size. “We don’t even know what the recommended daily CBD consumption rate for humans is,” he said. “We could end up burying the market with more CBD than it can take. It’s so new no one seems to know its size.”

Van Roessel adds, “No one has any idea of the potential for CBD production. Everyone thinks there will be lots of money, but nobody is writing any cheques yet.”

Health Canada has yet to release its 2018 report on the number of industrial hemp acres cultivated in Canada. In 2017, Alberta farmers planted close to one third of all industrial hemp grown nationally and is in a close race with Saskatchewan for becoming the largest producer in the country.