Financial Post pg 50
Hemp Finds Redemption
Caption: Joe Strobel (left) and Geof Kime, Hempline Inc.'s founders, in August 1995 with one of the first hemp crops grown in modern times.
Canadian farmers got the nod this week to cultivate marijuana's more respectable cousin on a commercial scale.
Dom Cramer has the unnerving habit of yelling "Right on, man!" as an expression of bonhomie in the same way someone else may say "Fantastic."
In fact, the burly 24-year-old has the stoner/slacker thing pretty much down pat. Sitting in his office, with his feet resting on his desk, Cramer is the picture of laid-back equanimity. Nearby, his pet Rottweiler, Utah, gnaws happily on a stick beneath a poster of a serene-looking Bob Marley. So it's cognitively jarring to think this unconventional entrepreneur is in a business that could play a critical role in Canada's future well-being.
Having acquired an university education in economics and computer science, Cramer founded Toronto Hemp Co. three years ago. Today, in his 2000-square-foot store, located a flight of steps up from Yonge Street, he sells jeans, shirts, caps, backpacks, paper, soaps, lotions and lip balms - all made from hemp.
Frequently touted as a miracle plant, industrial hemp is one of nature's finest renewable fibre sources, famous for its strength and amazing ability to be turned into everything from food, clothing, fuel and medicine, to paper, plastics, oils and building materials.
"There's enormous potential [in hemp]," maintains Cramer. "We are just touching on it."
Alas, hemp also suffers from the "snicker factor," largely because of its hippy-dippy image and close association with marijuana, its conciousness-altering cousin (both plants have identical-looking leaves). That's why growing and processing hemp was outlawed in the 1930s.
In fact, all the items sold in Cramer's store are made from hemp imported from Asia or Europe, thus making them prohibitively expensive. A pair of hemp jeans, for instance, goes for $90, while a tube of lip balm sells for $5. To stay in business, Cramer must hawk a colourful line of hookahs and marijuana-related literature.
"I couldn't survive if I didn't sell the other stuff," he admits.
Cramer's retail outled is one face of the hemp business today - small, underground and barely profitable. But this is about to change.
Hemp is on the cusp of becoming a big business in Canada. In 1966, Parliament passed a bill that allows industrial hemp to be legally grown and processed. After regulations are issued by the government this winter, Canadian farmers will begin planting hemp on a commercial scale come springtime.
North America's market for hemp is estimated at US$30 million and is growing at a rate of US$8 million to US$10 million a year. The global market for hemp is valued from US$100 million to US$200 million, with a burgeoning flotilla of companies like Adidas, Ralph Lauren and Giorgio Armani using it in their products.
Yet Sotos Petrides, president of Wiseman Noble Sales & Marketing Ltd., a Vancouver based events company that organizes hemp conferences, believes hemp could become a $1-billion industry in Canada alone, generating employment in farming, processing, manufacturing and retail.
"This is an emerging industry," he insists. "It will offset some of the strains placed on forestry and other economic sectors."
Indeed, interest within business circles over hemp's commercial potential is rising.
In January, the Canadian Pulp & Paper Association is holding a symposium in Montreal where forest industry executives will hear about hemp being a possible source of fibre for their mills.
In February, for a third year in a row, a two-day symposium on hemp will take place in Vancouver, with up to 6000 delegates and retailers expected. Representatives from companies like Domtar Inc., Le Chateau stores, the federal government, the Alberta Research Council, and hemp producers from as far afield as Poland and the Ikraine will attend. Bank of Montreal is co-sponsoring the event.
"There's an entrepreneurial spirit we like about the hemp industry where all points in the supply chain, including government, are working together - which you don't often see," says Peter Brown, the bank's senior manager of agriculture.
Investors are keen, too. Fraser Smith, president of Kittyhawk Securities Ltd., a Victoria-based securities firm, will invest in hemp farming this year. Smith predicts Canada will become a world leader in hemp, especially since it won't be legalized for production in the U.S. anytime soon.
"It's a wonderful crop," he says enthusiastically. "For my investors, the main opportunity is to capitalize on the fact the Americans need this stuff and the market is ready."
Provincial governments are pretty enthusiastic about hemp as well.
Last summer, Ontario Agriculture Minister Noble Villeneuve announced his government will spend $500,000 on basic hemp research.
Why hemp and why now?
Interest stems from the spreading realization it produces a strong fibre, yet contains none of the psychoactive qualities of marijuana. Moreover, hemp is environmentally friendly, requiring little in the way of water and pesticides. And, finally, it has a dazzling array of uses.
"I see it as a potential to replace some of the logging that goes on for pulp and paper," says Lorna Milne, a Liberal senator who has championed hemp on Parliament Hill. "It has possibilities for the cosmetic, edible oils, seed and farming industries. They tell me there are something like 25,000 different uses for the plant."
Hemp has a long and storied history. The tall leafy plant was cultivated by humans in China as far back as 4500 BC. By the 1800s, it was the No. 1 fibre in Europe for clothing, sails, ropes and canvases.
Hemp fell out of favor for economic and political reasons. Upon the invention of the cotton gin in 1770, cotton soon emerged as a more inexpensive fabric. And fossil fuels began replacing hemp oil for light and heat.
In North America, hemp's demise was caused by the reefer madness/anti-drug hysteria of the 1930s.
Media baron William Randolph Hearst's newspapers ran inflammatory articles, with headlines like "Hashish Goads Users To Blood Lust," claiming marijuana and hemp led to crazed behavior among minorities. In reality, Hearst was in cahoots with forest, chemical and oil interests who wanted hemp driven off the market because it was competing with their wares.
In 1937, Congress obliged Hearst's wish to ban hemp and marijuana by essentially taxing it out of business. A year later, Canada's Parliament followed suit.
Hemp finally emerged from obscurity in the 1990s largely because of the efforts of the environmental movement, which champions it as a green plant that could replace wood, fossil fuels and cotton.
In 1996, Parliament Hill was convinced of its benefits and passed Bill C-8, effectively opening the door for industrial hemp to be grown in Canada once more.
Even before then, in 1994, a your engineer, Geof Kime, and his business partner, tobacco farmer Joe Strobel, planted the first hemp crop since the 1940s near Tillsonburg, Ont. With government approval, they seeded 10 acres on an experimental basis.
"We're interested in hemp because it's one of the few textile fibre crops we can grow in Canada," says Kime, 30, whose company, Hempline Inc., plans to start full-scale hemp production in 1998. "We don't produce cotton in Canada, and that leaves us ouside the market for natural fibres and textiles in general."
Other farmers are eager to leap onto the hemp bandwagon. Jean Laprise, owner of Laprise Farms Ltd. near Chatham, Ont., has invested more oney in hemp than anyone else.
The 43-year old farmer owns 1,500 acres where he grows tomatoes, brussel sprouts and peas. But in 1995, he tried hemp as a rotational crop, all the while envisioning a new business that would allow him to supply fibre to the U.S. and Canadian textile, carpet and automotive industries. This past year, he planted 110 acres of hemp and spent $2 million on processing machinery and other start-up costs.
Laprise also established Kenex Ltd., a company that will contract 2000 acres of hemp to neighboring farmers in 1998. he plans to invest another $2 million in his fleddgling enterprise.
"Some people say it's going to be a gold mine," he says. "I don't agree with those statements. It's a crop that's going to have its place. In the end, it will be another commodity with a very green label attached to it."
Still, there are critics of industrial hem pfarming, of whom the most persuasive if Patrick Moore, a director of the Forest Alliance of B.C., a lobby group for the forest industry.
He says hemp is a fine plant, but sees no reason why it should be grown instead of trees.
He points out that all annyal agricultural farming (including hemp) is destructive, causing soil and ecosystem depletion. It's mythical, he says, that hemp doesn't need pesticides or fertilizers. Moreover, fast-growing hybrid trees can produce more fibre per acre than hemp.
"My main point is that it doesn't make sense to advocate the massive establishment of hemp plantations if you could be growing more trees," says Moore.
"If you're interested at all in biodiversity you would be better off growing trees. Yet a lot of people in the environmental movement and hemp industry are promoting hemp as a way of saving trees.
"Except they forget to point out you have to grow hemp somewhere. Why not grow trees it you are interested in the environment? Even the most sterile of tree plantations provides more habitat for biodiversity than an annual monoculture farm crop like hemp. There's no doubt about it, birds and squirrels prefer trees to hemp any day of the week."
Nevertheless, hemp is slated for a comeback. Whether it will be simply another niche plant, or a huge industry, will soon be evident.
But as minister Villeneuve said in a speech delivered at Laprise's farm during a hemp field-day last August: "Industrial hemp has been described as an agricultural Rip Van Winkle. Well, I say it's time to wake up to industrial hemp and its potential within our agriculture and food industry."