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Tuesday, Jun 6, 2023
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Health Canada opens up CBD market with new hemp cultivar approvals

With around a dozen new high-CBD hemp varieties approved, companies eye low-cost production and looser cannabidiol rules

Close view of hemp seeds, macro photo for background

As Canada green lights new high-CBD hemp varieties, North American growers are celebrating the move saying it will boost low-cost production and signals the country is closer to easing regulations for hemp-derived cannabidiol.

On Monday, Health Canada officially added 15 new hemp varieties to its list of approved cultivars for outdoor cultivation, including about a dozen that produce flowers with 10-per-cent-CBD content or higher.

The majority of approved cultivars to date have been for industrial hemp grown to produce food, fibre and animal feed.

New feminized seed additions open up a pathway for the Canadian government to regulate CBD as a natural health product, says Dwayne Stewart, founder of BC Hop Company, a hemp and CBD producer in Abbotsford, British Columbia.

Health food groups and the Canadian Hemp Trade Alliance have been lobbying Ottawa to remove CBD from the Cannabis Act, and placed under federal Natural Health Products Regulations because it doesn’t have the same intoxicating effects of THC.

They argue that long-awaited policy change would open up an eventual $2.5 billion market for the touted wellness extract, while improving consumer safety with more regulated products to choose from.

Read more: Ottawa’s strict CBD rules block $2.5B market potential: report

Health Canada opens up CBD market with new hemp cultivar approvals

Jan Slaski with a fibre-type hemp crop in Vegreville, Alberta. Slaski is a leading hemp expert with Alberta Innovates, a government-funded centre, where he studies the many uses of hemp. Photo submitted

Despite Canada being one of the first countries to federally legalize the sale of cannabis, its hemp-CBD wellness category is underdeveloped and dominated by unregulated sellers.

Because most CBD produced in Canada comes from cannabis, cultivation costs are higher and selection is limited for products with 0.3 per cent THC or less. Cannabidiol has rarely been extracted from hemp in the country to date, since a massive amount of biomass is required from the low-CBD cultivars previously available.

“This is going to be a game changer for the hemp industry because until now we haven’t had these high CBD varieties,” says Jan Slaski, a leading hemp expert with government-funded Alberta Innovates. “Cultivators and licensed processors have been screaming for 10 per cent or more CBD industrial hemp flowers for years, and now with this new list they will get it.”

Hemp growers look to cash in on Canadian CBD market

BC Hop Company was among several Canadian and American CBD producers that on Tuesday revealed some of their proprietary hemp cultivars were among those approved by Health Canada.

America’s top CBD seller, Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF), says its three approved cultivars clear the way for the firm to develop products in Canada this year.

Charlotte’s Web told Mugglehead that all cultivation, extraction, production and distribution of hemp and CBD products will be through unnamed partnerships under an asset-light model.

Canadian CBD producers either need a cannabis cultivation or industrial hemp licence, as well as a processing licence to manufacture the extracted products, regardless of the source.

Although it won’t have products on store shelves by the first quarter of next year, the firm says it’s eager to service the undeveloped market for full-spectrum CBD products with low amounts of THC.

The company will also be able to develop and sell weed products in Canada that contain THC for the first time.

Health Canada opens up CBD market with new hemp cultivar approvals

Colorado-based CBD producer Charlotte’s Web says it will work with Canadian partners to plant its high-CBD cultivars in the country this year. Press photo

Charlotte’s Web has been eyeing international markets, and by setting up operations in Canada it says it will be able to legally export CBD and THC products into Europe.

“We aspire to be the world’s leading botanicals wellness company, entering countries with an asset-light model where federal laws permit hemp extracts for health and wellness,” CEO Deanie Elsner said in a statement.

For Stewart, getting two new high-CBD cultivars approved in Canada will help his BC Hop Company create big, new opportunities for the CBD space.

“It’s more expensive to grow cannabis. So at the end of the day, adding these [high-CBD hemp] cultivars will create a price point per milligram that’s sustainable and will allow CBD to one day be in your Cheerios, and an input for other natural health products,” Stewart explains in a phone interview.

In 2018, the company pivoted toward growing industrial hemp for cannabinoids other than THC.

Veteran hemp grower Davis Farms in Oregon teamed up with and provided two patented genetic varieties to the BC Hop Company, which will have exclusive distribution rights for the cultivars in Canada.

Stewart says Davis Farms has been working for 20 years to develop hemp cultivars with high CBD content that could be used as wellness and medicinal products.

Because the two approved cultivars — Painted Lady and Eighty-Eight — also have high terpene content, the BC Hop Company is getting its sister company Flow Scientific to extract the terpenes for new innovative health products.

Health Canada opens up CBD market with new hemp cultivar approvals

Valens has contracts with hemp cultivator BC Hop Company to produce CBD-extract products. Press photo

The BC Hop Company will double down on producing more low-cost CBD products with its existing partners in Canada, Stewart says.

The firm intends to expand its current white-label contracts for hemp-based CBD oils, sublingual strips, sleep aids, topicals and live resin vapes with big extractors like The Valens Company (TSX: VLNS) and Neptune Wellness Solutions Inc. (TSX: NEPT), as well as mega-producer Tilray Inc. (Nasdaq: TLRY).

Expert warns of delays for Canadian CBD rule changes

Stewart says his company and the industry expects that new regulations will be created in the coming year — possibly when the Cannabis Act is reviewed in October — so hemp-derived CBD oil can be used in so-called natural health products.

Health Canada formed a cannabis health product committee in November to develop such regulations.

Read more: Non-diverse cannabis health product committee ‘aligned’ with selection policy

Read more: Health Canada forming a committee to regulate non-prescription weed products

While CBD products in Canada can only be legally sold in recreational weed stores, that policy shift would open up sales at major retailers and mom-and-pop shops.

But hemp expert Slaski warns that hemp producers should be patient for regulations to ease.

They should be wary of following in the footsteps of U.S. cultivators, he says, that planted over 500,000 acres of hemp in 2019 in an effort to cash in on the CBD health craze. Just a year later, many American hemp companies filed for bankruptcy due to an oversaturated market running up against regulatory roadblocks.

If Canada treated CBD as a natural health product, the Canadian Hemp Trade Alliance previously estimated there would be 450,000 acres of industrial hemp planted in the country.

Read more: Canadian hemp industry calls on Ottawa for CBD regulation changes

There were more than 92,000 acres of hemp seeded in Canada in 2019, and preliminary data shows total acres planted grew almost 20 per cent for 2020, according to the trade group.

For Slaski, the rising popularity of CBD products and mounting industry pressure means the Canadian government will inevitably reform CBD rules.

“It’s going to happen, but I don’t have a crystal ball and can’t give you timelines,” he said. “Just knowing Health Canada, they’re notoriously slow on moving forward with relaxing regulations — just look how it took us 20 years to get CBD cultivars approved.

Top image via Deposit Photos


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