Pubdate: Tue, 12 Jun 2012
Source: San Francisco Chronicle (CA)
Copyright: 2012 Hearst Communications Inc.
Contact: http://www.sfgate.com/chronicle/submissions/#1
Website: http://www.sfgate.com/chronicle/
Details: http://www.mapinc.org/media/388
Author: Andrew S. Ross

HEMP INDUSTRY THRIVES AMID BOOM IN NATURAL FOODS

Ten years ago, John Roulac was fighting the U.S. Drug Enforcement 
Administration over a banned shipment of hemp seeds he needed for his 
embryonic health food business in Sebastopol.

This week, Roulac is moving into a 200,000-square-foot building in 
Point Richmond to accommodate his fast-growing company, Nutiva, which 
sells hemp-infused protein powder, shakes and seeds, plus non-hemp 
coconut oil and chia seeds.

"Being in the heart of the organic food industry in Northern 
California is desirable," said Roulac, citing the new space's 
proximity to highways, railroads and ports.

Hemp, in its non-psychoactive cannabis form, has long since entered 
America's food chain, and Nutiva's products are on store shelves all 
over the Bay Area, including Whole Foods, Safeway and GNC's chain of 
vitamin shops. Its Organic Extra Virgin Coconut Oil ranks No. 8 on 
Amazon.com's list of best-selling grocery and gourmet food items.

Helped by praise for its nutritional benefits from Dr. Oz and Martha 
Stewart - "enjoy hemp seeds lightly toasted," Stewart recommends - 
the hemp-based food market was estimated at $40 million in 2010 
(excluding sales at chain groceries such as Whole Foods and Safeway), 
according to Spins, a firm that analyzes the natural products 
industry. Hemp is "one of the fastest-growing trends" in natural 
food, Errol Schweizer, Whole Foods' global grocery coordinator, told 
Bloomberg in March.

Roulac says he is looking to double Nutiva's sales to $80 million 
next year and will add 40 to 50 new employees once the transition 
from its Oxnard (Ventura County) site is completed in September. He 
said the company is profitable but would not disclose numbers.

"The company is doing very well," said Mike Gabriel, lending manager 
at RSF Social Finance, a social enterprise nonprofit in San Francisco 
that's been helping finance Nutiva since 2007. "It's a growing, 
thriving business, and it's aligned with our values," Gabriel said.

Remaining obstacle: The company could do even better if it didn't 
have to import its raw materials from Canada. While importing hemp 
food products is legal - after federal courts overruled DEA diktats - 
hemp farming in the United States is not, despite repeated efforts on 
the state and federal level to make it so.

Two bills written by state Sen. Mark Leno, D-San Francisco, have been 
vetoed - one by ex-Gov. Arnold Schwarzenegger and one in October by 
Gov. Jerry Brown - citing the federal ban.

"Products made from hemp - clothes, food and bath products - are 
legally sold in California every day," Brown said in his veto 
message. "It is absurd that hemp is being imported into the state, 
but our farmers cannot grow it."

Oops! Diamond Foods' new CEO, Brian Driscoll, said he was looking 
forward to taking the troubled company's businesses to "another 
level" when he took over the reins last month.

The prospect of being delisted from the Nasdaq exchange probably 
wasn't what he had in mind. But such is the possibility after the San 
Francisco company blew its Monday deadline to restate two years of 
financial earnings after questions were raised about payments made to 
Northern California walnut growers.

The questions led to the ouster of Driscoll's predecessor and the 
company's then-chief financial officer, the collapse of its $2.5 
billion planned acquisition of Pringles potato chips from Procter & 
Gamble, and the onset of civil and criminal investigations.

Now, much of Driscoll's and other executives' time will be taken up 
responding to Nasdaq's delisting notice, then waiting for Nasdaq's 
decision, a process that will take several months.

"Diamond and its auditors have devoted significant resources and are 
working diligently to complete the restatement for fiscal years 2011 
and 2010 and file our delayed fiscal year 2012 quarterly reports as 
soon as possible," said Mike Murphy, the company's new CFO.

Diamond's stock closed Monday at $18.63, down 7.6 percent, a new 
52-week low. "It raises concerns that something else is wrong at 
Diamond," said Thilo Wrede, an analyst with Jefferies & Co. in New York.

"It's not very serious," countered Timothy Ramey, a food industry 
analyst at D.A. Davidson & Co. on the likelihood of a delisting. "I'd 
be extremely surprised if they haven't filed the restatements within 
a month or so."

Last month, Oaktree Capital Management, a Los Angeles private equity 
firm, agreed to invest $250 million in Diamond, which said most of 
the money would go to repay term loans and revolving credit bills.

Two months earlier, Diamond's lenders had agreed to extend Diamond's 
credit line until June 18, but at higher interest rates.
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MAP posted-by: Jay Bergstrom