Legalization of cannabis for recreational use has made way for a cannabidiol (CBD) industry to take root in Canada.

There is currently more demand for this cannabis extract than supply, which means it could be lucrative for at least a few growing seasons before supply catches up.



The problem is that little is known about producing CBD on a broad-acre scale, and many of the self-proclaimed industry leaders are touting unproven technologies and business models.

“Some due diligence is definitely needed in the early stages in this game,” said Jeff Kostuik of Hemp Genetics International.

“Everybody I’ve recently met or talked to out there has the one and only process that will put everybody else in the dust, and everybody has the best variety, extra. Not everybody can be right on that.”

Kostuik studied hemp agronomy for Manitoba Agriculture before taking on a Hemp Genetics International portfolio, and he said a stumbling block for producing CBD is that this cannabis extract is closely related to tetrahydrocannabinol, (THC), the compound that produces psychotropic effects.

“Generally speaking, the relationship between CBD and THC is fairly tight. So the higher the CBD potential, the higher the THC also, so it puts it in the realm of marijuana as opposed to hemp,” Kostuik said.

Varieties that have below 0.3 percent THC are considered hemp, while plants with more are considered cannabis.

“It doesn’t really matter what the CBD value is, that (THC) is the only thing that is being regulated or classifying it as either hemp or marijuana,” Kostuik said.

Growers need to be careful the variety they grow doesn’t exceed the THC threshold, because cannabis cultivation with high THC content is subject to much stricter rules and hefty fines when laws are broken.

“Many of the cultivars are not pedigree cultivars, you don’t get a blue tag. So it’s really a buyer beware and believe it or not, there are people out there trying to take advantage of that,” Kostuik said.

Hemp Genetics International has six hemp cultivars on the approved cultivar list, however Kostuik said many may not be classified as high CBD varieties at this point.

He said most of what is produced in the United States in Kentucky and Colorado are grown in smaller plots of about 10 acres.

“Those are the varieties that the claims are there for eight to 10 percent CBD. So I guess the question is whether we as broad-acre specialists up in Canada can compete on the efficiencies of growing hemp with our system and our scalability,” Kostuik said.

Until varieties are available that divorce the tight relationship between THC and CBD, a broad-acre approach to CBD harvest in Canada will see varieties with low CBD levels grown.

“If we can harvest a crop at say two-to-four percent CBD and we’ve got hundreds of acres and it’s done mechanically, as opposed to the majority of what is being done in the U.S. by hand, will we be competitive?” Kostuik asked.

“CBD is essentially attached to the chaff. I don’t know if this is the right terminology, but it can essentially gas off. Essentially, you need to keep everything enclosed to maintain the percentage of CBD. So every time you handle it, you run the risk of lessening the CBD within that product,” Kostuik said.

One harvest option for large-scale production includes full plant use where the entire plant is harvested, possibly by being cut and baled.

“You would essentially have to then take that bale to an area where you would actually separate the stalk and the leaf. There is not a lot of CBD percentage in the stalk itself. It’s mostly found in the head, the seed head and the flowering parts around it,” Kostuik said.

Another harvest method could have the top of the hemp plant cut off and taken by conveyors to a cart and later dried.

“A tumbler dryer I think is a little too aggressive. There are other drying systems that might be better like a hops-type drying system, where you’re not agitating as much. It’s just a matter of air flow through,” he said.

Another harvest approach would see a typical hemp seed harvest, but the chaff where the CBD is located would also be collected.

“Those are the two or three of them that we as a company will be looking at. Cutting high, cutting green material then being able to dry that, and then also perhaps pulling a cart behind with conveyors as opposed to blowers, to try and gently collect the chaff as possible,” Kostuik said.

“Most of the time we’re harvesting our seed in the industry at anywhere from 10 to 12 percent seed moisture. So obviously, the chaff is at a higher moisture than that. But how do you stabilize that?”

So some of the earliest beneficiaries of cannabis legalization on the agriculture side will be researchers.

“Is it better to grow 30 acres of a tri-purpose type, a three-way crop, or do you grow 10 acres of each? That’s another question that needs to be answered,” Kostuik said.

He said there is downward pressure on hemp seed values from countries like China that has increased seed production, and the United States is also on the verge of legalizing hemp production. Fortunately, hemp has other revenue streams.

“We’re going to see more innovative ways to harvest for fibre along with CBD. Hopefully, on a per acre return we can maintain it as one of the highest returning crops on the Prairies. It may take all three even at one point in time, but that’s the beauty of having this type of crop,” Kostuik said.

He said the hemp industry was largely built upon people sharing ideas, but that seems to be in the past because now everyone appears to be reaching for the upper hand in the CBD market.

“There is a concern that with the CBD market it’s not going to take all that long to meet that demand,” he said.

“Most people are kind of guessing that the market will stay strong in terms of price paid for CBD, for two to three to maybe five years on the positive side.”

“There is going to be some winners and some losers but that is just the nature of the beast unfortunately,” Kostuik said.

“We are a little behind what the U.S. has been doing already and many of the European and South American countries. So yeah, it’s going to be a bit frantic for the next few years.”

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