Hemp food sales in the US set for growth

Sales of hemp-based foods are growing in the U.S.

Sales of hemp-based foods are growing in the U.S.


July 19, 2016

By: Ed Zwirn

The liberalisation of regulations has opened the door to hemp­based food products in various US states. Growing consumer interest in the natural products industry also looks set to support expansion of what remains a nitch area. Ed Zwirn looks at the prospects for this fledgling sector.

Mirroring the increasing trend toward legalisation of marijuana for recreational and/or medicinal purposes in the US and Canada, North American consumers are incorporating the cannabis plant and its byproducts into their diets.

Some 25 American states and the federal District of Columbia had, by this month, liberalised their marijuana laws following decades of prohibition. The result has been proliferation of businesses selling the weed, particularly in early adoption states like Colorado and Washington.

And not all of these sales are coming in the form of the traditional, smokeable drug. Edible cannabis products, a legal industry that had been non­existent a few years ago, is expected to generate sales of US$1.6bn in 2016, as cannabis aficionados ingest confectionery bars, smoothies and even morning mints infused with tetrahydrocannabinol (THC, the active ingredient that produces the ‘high’ in marijuana).

Growth is expected: revenues from hemp­based products are expected to top US$10bn by 2019, according to estimates compiled by GreenWave Advisors, a New York­based consultancy that advises the burgeoning legal cannabis sector.

In the meantime, growing acceptance of the Cannabis Sativa plant is dovetailing with the lessening of restrictions and increasing consumption of industrial hemp, a variety of the same plant bred to contain less than 0.3% THC – too little to give consumers a buzz.

According to Eric Steenstra, executive director of the California­based Hemp Industries Association, at least US$573m of retail hemp products were sold in the US in 2015, the vast majority of this coming from Canada, which legalised hemp in 1998.

Of this market, the HIA estimates that hemp foods last year constituted 16%, or US$90m; supplements constituted 8%, or US$47m, and hemp derived cannabidiol (or CBD) health products constituted 11% ­ worth US$65m. For comparison, personal care products constituted 26% ­ US$147m, textiles constituted 17% ­ US$95m; industrial applications such as car parts constituted 20% ­ US$116m; and other consumer products such as paper construction materials accounted for the remaining 2% of the market.

It is the hemp­based food, supplements and personal care products segments of this market that are experiencing the greatest growth, with their combined sales total of US$283m up 10.4% in 2015 alone, according to the HIA. This figure does not include the sales of food products at Whole Foods, Costco and other key retailers that have begun marketing food products containing hemp as an additional ingredient over the past few years.

Bolstered by both growing acceptance in general and health claims in particular, sales of popular hemp items like non­dairy milk and shelled seed, protein powders and even hemp granola are on the rise.

“We are going to see more US hemp seed food sales going forward,” predicts Seenstra. Industry experts agree that this trend is poised to accelerate, as the increased acceptance of the cannabis plant in the United States leads to increased domestic supply. A 2004 court ruling struck down a Drug Enforcement Administration (DEA) rule banning imports of hemp food products containing even trace amounts of THC.

Since then, mirroring developments in the recreational drug cannabis sector, 28 US states have passed measures legalising industrial hemp production, which had been effectively banned since 1970. Production has also been allowed, for research purposes, within 2014 federal Farm Bill legislation. The HIA estimates that approximately 3,997 acres of hemp crops were planted in seven states during 2015 in the US.

Despite this progress, there are “still some barriers to the farming side of the food equation when it comes to hemp,” says 8/22/2016 Hemp food sales in the US set for growth http://www.just-food.com/pap.aspx?ID=133852 2/2 Seenstra.

For starters, a great many producers in the US states which have moved to allow hemp production are holding back because of federal restrictions that still exist, particularly the Food & Drug Administration’s (FDA) inclusion (in effect since 1970) of both hemp and marijuana on its list of Schedule I drugs (along with heroin) that are said to have no redeeming medicinal value, effectively prohibiting domestic production and at the same time imposing additional tax burdens and making it difficult for producers to secure financing.

Richard Rose, founder and president of HempNut Inc, says that a major barrier is acceptance from regulatores and legislators including the “FDA, US Customs, USDA [the US Department of Agriculture], a variety of departments at the state and local level”.

Another issue is acceptance at a retailer and consumer level. Rose says consumers are concerned about food quality and safety while “the notoriously conservative food distribution and retail industry” has been slow to take up hemp­based foods.

But Rose’s experience at HempNut, a California­based food company specialising in researching, developing and marketing hempseed foods since 1994, has made him optimistic about the young industry. This could particularly be the case given some of the significant shifts in the US food sector that has seen people increasingly look to healthier products

“Acceptance really is one bite at a time and will come when people realise how good hemp is to them as well as for them,” he says.

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About Ed Zwirn

Ed Zwirn is a journalist/editorial professional with a focus on financial trends and practices. He lives out in the woods in Bethel, NY, not far from where the Woodstock Music and Arts Festival was held in 1969. As a financial writer, his work has appeared in The Wall Street Journal, The New York Post, CFO Magazine and news services including Dow Jones Newswires and Informa Global Markets. Ed also spent three years in Ukraine, where he ran an English-language news service. He now divides his time between his freelance journalism, song and poetry writing, and barbequing and lawn-mowing on his 2.5 acre property.