Can you sell US hemp flower to Canada?
Hemp is treated quite differently in the US than in Canada. While Canada has consistent federal regulations for the production, processing, and sale of hemp, the US has 50 different regulations that are different in each state. To make matters even more complex, Canadians are largely growing hemp for food while US hemp growers are mainly seeking to cash in on CBD trends. Many US hemp growers have high hopes of selling their CBD and hemp flower to Canada (and beyond) as US interest dwindles. They are now finding that to be an unachievable aspiration due to the large gap in regulatory standards, something a licensed cannabis producer normally doesn’t have to think about. Just how big is that gap? It might surprise you!
Why Grow Hemp?
There are four main uses of hemp, the first is for food. Hemp foods such as hulled hemp seed, toasted hemp seed, and hemp seed oil are the most developed use of hemp and also the most popular use. Hemp can also be used for livestock feed, a practice that is still working out some regulatory kinks but offers a lot of hope for opportunity. Third, hemp can be used to produce fiber. These first three uses of hemp have been practised through ancient history and are re-emerging today. The last use of hemp is for fractions. Fractions are more commonly just called CBD oil, they are the extracted plant oils that contain cannabinoids, terpenes, and other active compounds. Fractions are the most controversial use for hemp. In Canada, fractions are controlled by Health Canada and the Cannabis Act (or Bill C-45), but in the US they are completely unregulated!
Hemp Regulation: Canada vs the US
Canadian hemp regulations include the Industrial Hemp Regulations and the Cannabis Act and its regulations. In the US, the 2018 Farm Bill federally legalized hemp cultivation but individual states are responsible for creating their own regulations for hemp cultivation, and then those regulations are reviewed and approved by the USDA. That means that regulation and cultivation of hemp in Texas is significantly different than growing hemp in Missouri or Colorado.
Just imagine if local provincial farming regulations were multiplied exponentially! How difficult would it be to just transport hemp crops to another province? The US has struggled with this very issue as some states that have not recognized the legalization of hemp have seized shipments passing through their state, claiming that they are marijuana and cannot even pass through the state lines.
Here are the 10 states that produced the most hemp in the US in 2019:
Montana: 44,910 acresCannabis Reports, “Which States Grow The Most Industrial Hemp? (Updated 2020)“
Colorado: 20,330 acres
Kentucky: 18,910 acres
North Carolina: 7,390 acres
Oregon: 7,100 acres
Minnesota: 6,340 acres
Oklahoma: 4,610 acres
North Dakota: 4,070 acres
New Mexico: 3,590 acres
Indiana: 3,290 acres
There are some similarities between Canada and the US when it comes to regulating hemp cultivation. Both have similar licensing structures where there are separate licenses for cultivation, processing, and other activities. Like Canada, there are many US states that also restrict which varieties of hemp can be cultivated. Similarly, hemp food products can be traded without a license as long as the seeds are not viable. Likewise, the US and Canada are both working out issues in their regulations to permit hemp seed for animal feed. In both nations, there is also a small but growing business interest in other hemp-based consumer goods like textiles, plastics, and hempcrete.
Almost everything else is quite different though. Most US states require hemp growers to pass criminal background checks (not required in Canada), and unlike Canada, growers can propagate clones and are not restricted to seed. While hemp chaff for fractions (fractions is the proper term for CBD/hemp extract type products) is well regulated by the Cannabis Act, US hemp producers can freely make CBD and hemp oil products from any or all plant parts and face very little regulation (more on this later).
US State Hemp Regulation
To give you an idea of what US hemp programs look like, here is an example. This video from the Texas Department of Agriculture outlines how that state operates its hemp program:
While Texas hemp legislation has left a lot of ambiguity in its regulations, other states like New York go so far as to implement regulatory requirements like FDA Good Manufacturing Practices (GMP) for hemp processors and CBD producers. Unfortunately, New York and most other states have not put together such exuberant regulatory summary videos.
Still, New York GMP requirements and the Texas hemp requirement to have a permit for every lot of hemp demonstrates how batch tracking and quality testing requirements can benefit from using seed-to-sale software like GrowerIQ. Even the TX Dept. of Agriculture Commissioner Sid Miller knows that successful hemp farmers utilize tools like GrowerIQ’s seed-to-sale and cultivation software to reduce paperwork, monitor crops, use crop metrics to ensure profits are maximized, and keep their crops in compliance with regulations.
Defining Hemp by THC Content
In Canada, hemp must contain no more than 0.3% total THC. This is similar to many European nations but differs from the US where different states define THC differently. While some states enforce the 0.3% total THC limit, others allow 0.3% delta-9-THC. This means that the conversion of THCa (potential THC) is not considered and when smoked, the hemp may contain up to 1% THC in some states!
This is a huge problem because hemp in one US state can be considered marijuana in another state. Then, ultra-conservative states like Idaho consider hemp to be marijuana and therefore prohibit it despite the 2018 Farm Bill which clarified the legal difference. The Farm Bill itself is not entirely clear on whether THC content for hemp should be considered on a “total THC” or “delta-9-THC” basis.
In the legal world, the total THC definition seems to be the most legitimate. However, there is an abundance of farmers that are arguing that their crops should be allowed to have more THC. Why? Because they want to sell it as smokable hemp or for CBD production and the attractive varieties of hemp for that have been crossed from marijuana and have unstable genetics that often produces more than 0.3% total THC.
From a Canadian perspective, this all might sound pretty absurd, but without legal federal recreational cannabis, there is a big US market for anything that can legally help people get a buzz. Likewise, US hemp farmers are not as interested in producing hemp for food or fiber because they have heard that can charge more for smokable or extractable hemp flower. New hopes of federal cannabis legalization have taken root as the US House of Representatives passed a bill to decriminalize cannabis. Time will tell if it will pass the Senate and be signed into law, but there is growing demand to end the ridiculous prohibition of marijuana in the US. If passed, that would likely reduce demand for CBD products from hemp and further underline its importance as a food and fiber crop.
Hemp Cultivation for CBD
In Canada, CBD is treated as a pharmaceutical and is regulated by the Cannabis Act. In the US, the FDA has yet to take steps to implement regulations for CBD products. This regulatory standstill has allowed the CBD market to grow unchecked and sell consumable products that have no health or safety standards or testing. This is a growing problem in the US as these companies are not producing products to normal health and safety standards. Many companies are using untested formulas with inconsistent contents and they are making these products in home kitchens, warehouses, and even pole barns and garages.
If a US hemp company were to produce CBD products to FDA’s GMP standards for pharmaceuticals, they likely could go through permit processes to export their products. However, as is the case in the UK, some countries require extensive and expensive approval processes like getting a product approved as a Novel Food. The US simply cannot compete in a global CBD market until the FDA properly regulates the industry. US hemp growers still have lots of opportunity to trade hemp seed and hemp oil food products and hemp for fiber. However, as many entered the market with their eye set on CBD, disappointment with reality is beginning to set in.
Concluding Thoughts: Canadian Hemp Prospects
The Canadian Hemp Trade Alliance projects increased hemp cultivation worldwide in the coming years with top demand in Canada being driven from the food market and not the fractions (CBD) market. Since Canada has coherent regulatory standards that are consistent across the nation and comparable to international standards, they are able to export much of the hemp seed and hemp oil they produce. Ironically, much of these exports are going to the US as farmers there try to scheme ways to sell fractions and hemp flower to Canada.
Canadian hemp had much broader prospects than US hemp simply because it is governed by coherent and globally accepted standards. The benefit of coherent federal hemp regulation is quite obvious. If you want to learn more about Canadian hemp regulation and the Canadian hemp market, this video from the Canadian Hemp Trade Alliance is a great introduction.
To learn more on hemp and the marijuana industry, start with the basics by learning about the 7 Things You Need to Know About the Cannabis Industry, learn about the oppourtunity of Hemp Cultivation in South Africa, or check out the GrowerIQ podcast.Discuss with Our Expert Advisors
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