a scoop with hemp seeds, bowls and bottles of hemp oil and cannabis leaves on a table
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Hemp may be a fledgling industry in Australia, but it's a rapidly growing market.

Hemp is a versatile plant with many uses. The fibre can be used for textiles and paper, and as a food it’s a high-protein option beloved by gym-goers and vegans.

It’s considered a fledgling industry because hemp was banned in Australia in 1937 due to the film "Reefer Madness," which stigmatised hemp and associated it with marijuana. It is thought that the anti-marijuana movement set the Australian hemp industry back by a century.

Is hemp legal in Australia?

In 1998, Victoria was the first state to allow select farmers to grow hemp, but only for exportation to countries in which hemp was legal. Queensland followed by allowing industrial hemp growing under a licence.

It wouldn't be until November 12, 2018, that the Australia New Zealand Food Standards Code was changed to legalise hemp seed products as food, as well as safe for human consumption.

Now that hemp products have been legalised, hemp seeds, hemp hearts and hemp seed oil are all popular health products with high levels of protein and omega-3, and they are used in products such as health food bars, supplements, cereal and even beer.

Today industrial hemp is legal to grow in all of Australia's states and territories, providing the THC content is below 1 percent in New South Wales, Queensland and South Australia. In other states and territories, the level of THC must be below 0.35 percent.

The leading state for growing hemp is Tasmania, with an estimated 2,500 hectares of farmland being used for hemp growing — up from 185.5 hectares in 2011.

What are the uses of hemp?

As mentioned, hemp is suitable as a textile for clothing, linen, rope and canvas.

Hemp is also very efficient for carbon sequestration; according to the European Industrial Hemp Association, "One hectare of industrial hemp can absorb 15 tonnes of CO2 per hectare." When hemp is turned into the building material “hempcrete,” it will absorb carbon dioxide as it continues to cure.

Hemp can be considered an alternative to textiles like cotton and wool or to available building insulation materials. It’s also been shown to be effective in decontaminating soil in Chernobyl.

What are the options for investing in ASX hemp stocks?

Since Australia's hemp industry is still so young, there aren't many options for those who want to put money into hemp stocks listed on the ASX.

Below are a couple of options to consider; data was collected using TradingView's stock screener, and was accurate as of December 13, 2021. Companies are listed in order of market cap from largest to smallest.

1. Ecofibre

Current market cap: AU$191.9 million

Ecofibre (ASX:EOF) is a biotechnology company that produces and sells hemp-derived products to consumers. In addition to cannabinoid oil and nutraceuticals, the company makes hemp food and textiles.

The company has suffered ups and downs over the past year. According to its annual report, released on August 19, 2021, it recorded a AU$7 million loss after tax and a decrease of 43 percent in revenue.

COVID-19 has had a strong negative impact on Ecofibre's Ananda Hemp pharmacy brand in the US pharmaceutical market. The company has attributed the brand's struggles to a lack of online sales through pharmacies.

Other brands in the Ecofibre family include Ananda Food and Hemp Black, the latter of which is a profitable textiles division. Ecofibre acquired TexInnovate in August 2020 to aid in Hemp Black's commercialisation.

2. Elixinol Wellness

Current market cap: AU$25.27 million

Once a leader in cannabis, Elixinol Wellness (ASX:EXL) withdrew its bid of 9 million euros for the German brand CannaCare Health in June 2021. The company is now focused on manufacturing hemp-derived food, cosmetics and nutraceuticals. It operates in Australia, Latin America, Europe, the US and the UK.

Elixinol's Australian subsidiary Hemp Foods Australia has seen growth over the past 12 months, contributing almost 40 percent of the company's total revenue.

Elixinol plans to expand into pet wellness and also aims to target the zero-THC consumer. After its Good Night capsules made it into the 2021 Oscars swag bags, this brand's star power might brighten in the future.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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