SASKATOON — As one of the founding partners of Blue Sky Hemp Ventures in Saskatoon, Andrew Potter believes innovation within the hemp realm is key to ensuring its long term sustainability — from field to fork and from seed to sale.
“Hemp is the perfect tool to meet these goals. Each acre produces high quality plant-based protein as well as sustainable, industrial and nutraceutical products. That’s a win, win, win,” said Potter during a November conference hosted by the Canadian Hemp Trade Alliance.
This was the vision Potter and his partners saw when they founded the company in Saskatoon five years ago. It focuses on whole plant utilization for hemp superfoods, CBD and sustainable industrial products.
After more than 70 years of prohibition, Potter said hemp, the oldest industrial crop in the world, is making a comeback, albeit slowly as its image improves and memories of its difficult past fade.
“Hemp is kind of trapped in niche territory. It’s been around for a number of years, never really broken out in terms of significant acres in Western Canada. So, we looked at this five years ago and said, ‘why can’t hemp be a million acres plus?’
“And the answer is really no reason, as long as we can solve these four things: improved genetics, product innovation, whole plant utilization and producing at scale.”
Ted Haney, chief executive officer of the Canadian Hemp Trade Alliance, noted hemp’s potential versatility.
“The fundamental strength of hemp as an agricultural crop is its multi-use of both seed for human food and livestock feed and straw for commercial building products, textiles and polymers and epoxies production.
“Unlocking the whole plant utilization of hemp with processing capacity and strong markets in the food and commercial fibre sectors will unlock the growth potential for hemp in Canada and allow it to contribute to the sustainability of Canadian agriculture.”
There are about 75,000 acres of hemp grown in Western Canada today. That compares to flax at about one million acres, soy at five million and canola at 21 million.
“Executing our plan will see hemp economics surpass flax in the next five to 10 years,” said Potter. “Longer term, we believe hemp will compete with soy and canola in Canada as a mainstream crop.”
However, hemp acres have significantly declined since 2017, when it reached about 100,000 acres said Haney.
“The key element to that has been twofold. One is the cumbersome regulatory structures of Health Canada combined with extreme difficulty in communication to Health Canada and licensed cultivators, otherwise known as farmers, has led to frustration and at some point, there are farmers that have said, ‘I don’t need this hassle’ and they exit the hemp industry.”
Haney also cited lack of clarity surrounding the rules that farmers and processors must follow.
Efforts to explore and improve plant genetics for hemp have only recently been widely undertaken.
“One of the biggest areas of opportunity in the sector is around genetics and just innovating around genetics,” Potter said.
“Hemp got caught up in marijuana prohibition in the ‘30s, so nobody touched this plant in terms of genetic research for a lot of years. It’s really just been the last couple years that people have started to have access to it.”
Major improvements were made in canola research several decades ago and Haney thinks the same thing can happen to hemp, but in a shorter time.
Potter said product innovation for hemp has lagged, especially on the food side.
“The hemp food products that are most common are the same products that were on the shelf in 1999. They’re nutritious, but they’re meant more for niche audiences.
“We need to find a way to tailor those products to make them more accessible to mainstream markets,” he said.
Added Haney, “The growth of our industry to date has been based on processing hemp seed for human food. Adding additional revenue streams… will create the economic and sustainability environment for hemp to expand.”
Hemp can grow five to 15 feet tall, depending on variety, and whole-plant utilization would allow it to be part of three or four value chains, Potter said.
Those chains are:
- Superfood products: hemp hearts, protein powders and hemp seed oils
- Cannabinoid extracts: capturing chaff to extract all available content
- Industrial products: decortication of stalks for use in textiles and the cellulose extraction market
- Potential carbon credits: hemp stalks absorb CO2
Carbon sequestration, as a possible fourth value chain is appealing from a sustainability standpoint because of the plant’s negative carbon footprint, said Potter.
“What is so unique is that the stalk of the plant, because of its mass, can capture very large amounts of CO2 that most other crops can’t. We’re comfortable suggesting it can sequester about four tonnes per acre of CO2, and possibly significantly more.
“If a typical acre can sequester four tonnes of CO2 and we assume CO2 costs $150 per tonne, we can see a total value from just the CO2 of $600 per acre without contemplating the grain and stalk value.”
“Just to put this into context, if you planted 21 million acres of hemp rather than canola, you wouldn’t lose any food value and you would have a massive amount of industrial products produced.”
A study by the University of Cambridge’s Centre for Natural Material Innovation has found hemp is twice as effective at capturing carbon as trees.
Only five years ago, burning hemp stalks after harvesting the grain was common industry practice.
“There’s so much value going to waste here. We need a different business model,” said Potter. “That’s what Blue Sky has really been trying to develop, is demonstrate that the whole plant utilization model works. And that’s been our five-year journey.”
However, government has been slow to understand hemp’s potential, said Haney.
“Health Canada’s focused on cannabis and the regulatory management of the hemp industry has really fallen flat since the Cannabis Act was put into place in 2018. That has been a major constraint on growth.”
Added Potter, “if I were a politician and I were in Saskatchewan (or) Alberta, and somebody was telling me about an oilseed that can capture CO2, can generate industrial products, while still producing even more nutritious food products, why wouldn’t I be excited about that? It just seems to tick every box but it’s hard to get people to pay attention.”
Hemp hearts are the most popular product with consumers, and Blue Sky also produces cold pressed hemp seed oil and hemp protein powder.
While these are nutritious products, Potter said they have significantly underperformed in terms of sales versus competing products in those categories.
“There’s a niche audience that loves these products, but they’ve never broken into mainstream,” he said.
Haney and Potter believe the next breakthrough will come through development of hemp protein and oil products that align with the needs of the global food processing industry.
“Like pulses before us, consumers will be taking hemp home in processed foods at a much higher volume than today — dehulled hemp seeds in a bag, cold-pressed hemp seed oil in a bottle or hemp protein concentrates in a can,” said Haney.
“Hemp has a lot to offer to health and well-being of Canadian and global consumers and it is functionally well suited for protein blends because it improves digestion ability and provides a more complete nutrient package than many other non-plant-based proteins. So that is the route forward.”
Blue Sky and other companies are developing oil products that improve on traditional cold-pressed oil with better colour, smell and neutral taste profiles.
“Neutral is the name of game. But the big change is that the smoke point is now about 420 degrees. So now you can actually use this oil in most mainstream cooking applications,” Potter said.
“The big benefit, though, is that you get about three times the essential fatty acid content out of this oil than you do, as an example, out of a canola oil.
“Everybody in the world is saying they are concerned about food security, wanting more sustainable food products. This is the ultimate in sustainable food products. And you can do it and generate incremental value out of each acre without giving up any food volume.”
Higher value protein products with neutral colour and taste properties are also being marketed.
“With hemp oil, if you can’t monetize the meal or the protein at a high value, then you end up having to sell the oil for such a high price, which cuts off the market potential. So, you need both of these products developed at the same time,” Potter said.
“So, in our minds, this is the first hemp food offering that really has the potential to scale. Hemp food sales in North America are probably less than $150 million. We believe that this oil and protein, these are the first real products that have the potential to get into the billion-dollar category.”
Potter used his experience in the Alberta energy industry to develop Blue Skies’ business model.
“I would describe our business model as a biorefinery. Hemp needs a different business model and this is what it is. So, we’ve got an input just like an oil and gas refinery. We take the whole hemp plant rather than crude oil. It goes through a variety of processes and surprise, out comes products that fall into different categories.
“So just like an oil and gas refinery, you have some products like nutraceuticals that are generally low yields but get very high prices, very high margins. That’s kind of like your propane or butane. The middle of the barrel, you’ve got your superfood ingredients. That’s kind of like your gasoline, where you get a pretty decent yield and pretty good margins.
“And then at the bottom of the barrel, you have the stalk of the plants for which you can turn into industrial products and that’s your heavy oil. There’s a lot of it. It’s generally lower priced. But just like an oil and gas refinery, to have success, you need to be maximizing value from all these.”
Potter thinks the timing is good because hemp can take advantage of advances made with canola.
“It’s hard for people to see today because the hemp market is very limited in size, but the combination of new plant genetics and new products that we’re working on and scaling up, we expect to have cost of production down to levels that rival canola in the next three years, which is a game changer for the sector.
“We’ve got all the pieces in play right now.”
