Hemp Prepares for Prime Time Spot as Weed’s Sober Cousin: Retail – Businessweek



Mike Fata figures hemp could be the perfect food — if only people would stop snickering.

Fata, the 37-year-old co-founder of Manitoba Harvest, has worked for the past decade on transforming the sober cousin of marijuana from the butt of jokes into a supermarket staple.

The effort’s paying off. Costco Wholesale Corp. (COST:US), Safeway Inc. (SWY:US) and Whole Foods Market Inc. (WFM:US) now sell his products and hemp is on the cusp of a breakthrough, thanks to looser cultivation bans and the food industry’s hunger for nutritious plants. Even the stoner stigma is slowly abating as hemp gets recognized for its ability to deliver protein, rather than psychoactives.

“Our customers are bright enough to know that it does not have dope in it if Costco’s selling it,” says Jim Taylor, a founding partner of Avrio Capital, a Calgary-based venture capital company and one of Manitoba Harvest’s backers. “It’s more than a fad. We believe we can build a brand here.”

Hemp is not a drug. It’s a variety of the cannabis plant with less than 0.5 percent of the mind-bending compound tetrahydrocannabinol, or THC. Earlier this year the U.S. government finally recognized hemp as distinct from its seedier cousin, though a federal ban on commercial cultivation remains in place.

The ban hasn’t stopped imports flowing in from Canadian companies like Manitoba Harvest, which plans to hand out 2 million samples of its hemp hearts — the soft, nutty-flavored inner kernel of hemp seeds — this year.

Salad Sprinkle

Hemp is woven into American history. George Washington grew it, and the nation’s first flags were made from it. It’s easily digestible and packs more protein than chia or flax. It’s also a versatile food: Hemp hearts can be sprinkled on cereal, yogurt or salads, or processed into powders, flour or oil to make everything from bread to beer. Hemp is pricier than, say, chickpeas, but it provides a more complete protein, with all nine amino acids that the human body cannot produce.

“We have our eye on it,” says Colleen Zammer of Bay State Milling Co., who has worked with food and beverage companies like Kellogg Co. (K:US) and PepsiCo Inc. (PEP:US) to develop and promote healthy ingredients for the past 25 years. “It’s THC-free, similar to chia in nutrition, and better tasting.”

Hemp’s resurgence comes amid a broader shift in climate, crops and consumer preferences. Other protein-rich plants — think peas and quinoa — enjoy booming sales, global warming is scrambling the cultivation map from Argentina to Canada and environmental concerns kindle demand for local produce.

Hemp Diet

Amid this landscape, opposition to hemp is softening. Fourteen U.S. states have removed barriers to its cultivation, and the farm bill Congress passed in February will allow hemp growing for research purposes in those states. Restrictions have eased as even marijuana gains acceptance, and Democrats and Republicans alike support the economic lift hemp could provide industries ranging from textiles to home building.

“Without realizing it many Americans already use hemp in their soaps, automobile parts, or even in their food,” says Representative Jared Polis, a Democrat from Colorado (where private consumption of pot is legal), and one of the legislators behind the farm bill’s hemp amendment. “The potential for a billion-dollar-plus domestic industry is very realistic.”

Hemp growing has been legal since 1998 in Canada, opening the door for entrepreneurs like Fata. As a teenager in Winnipeg, Fata weighed over 300 pounds and tried countless fad diets until a friend turned him on to hemp. The mix of protein and fiber curbed his appetite for junk food, and he’s now a walking advertisement for healthier living through hemp, practicing yoga and eating a plant-based diet.

‘Snicker Factor’

Fata and two friends started Manitoba Harvest soon after legalization, yet the lingering association with pot made it hard to gain traction early on -– something Fata calls “the snicker factor.” Others in Canada’s nascent hemp sector say they faced the same stigma. “Some people looked at me and turned right around like they had seen the devil,” recalls Shaun Crew, chief executive officer of Hemp Oil Canada.

Fata persisted, handing out samples of his hemp hearts at trade shows, in yoga studios, and on the street. A few natural-food stores took the product, then in 2001 Fata’s big break came when Loblaw Cos. (L), Canada’s biggest food retailer with 2,300 stores, signed on.

“A lot of consumers would not give us time of day because of all the misinformation out there,” Fata says. “As we stepped up from natural food stores to mainstream stores, the stigma started to go away.”

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