Industrial Hemp Market Size, Share & COVID-19 Impact Analysis, By Source (Organic and Conventional), By Type (Hemp Seed, Hemp Seed Oil, Hemp Fiber, and Others), By Application (Food [Dietary Supplements and Functional Foods], Beverages, Personal Care & Cosmetics, Textiles, Pharmaceuticals, and Others), and Regional Forecast, 2023-2030

The global industrial hemp market size was valued at USD 6.63 billion in 2022 and is projected to grow from USD 7.90 billion in 2023 to USD 31.98 billion by 2030, exhibiting a CAGR of 22.11% during the forecast period.

Industrial hemp is a botanical class of Cannabis sativa and is defined based on its tetrahydrocannabinol (THC) content. Versatility and increasing demand in different applications such as food and beverages, dietary supplements, textiles, and foods accelerate product demand.

Thirty countries that have legalized the medical use of cannabis include Argentina, Australia, Brazil, Canada, Colombia, Denmark, Germany, Greece, Ireland, Italy, Mexico, and the Netherlands. The increasing use of hemp cannabidiol (CBD) oil to cure anxiety, stress, and chronic pain triggers product adoption.

COVID-19 IMPACT

COVID-19 Pandemic Caused Product Demand to Plunge 

The COVID-19 crisis led to a significant downturn in several industries worldwide. Numerous retail businesses and service providers were temporarily or permanently shut down during the pandemic. However, hemp cultivators, processors, and retailers continued operating in the pharmaceutical space.

Industrial hemp fibers, extensively manufactured in China, are used as raw materials across the textiles, paper, cosmetic, and food industries. Trading restrictions in and from China impacted this industry in 2020. However, the novel COVID-19 pandemic triggered mental health issues among the population, increasing the dependency on medications as users sought ways to calm their anxiety amidst the lockdown, increasing the demand for hemp cannabidiol (CBD) oil products in various countries.

LATEST TRENDS

Introduction of Innovative Products to Create Lucrative Business Opportunities

Lime Hemp Concrete (LHC), fiber-board insulation, and hemp wool are major products used in the construction industry. The increasing need for reduced energy consumption and greenhouse gas emissions triggers the demand for carbon-neutral or sequesters construction materials and practices. Hemp concrete is a carbon sequester owing to the amount of carbon stored in the material being greater than the emissions generated during the manufacturing. It continues to store carbon throughout the building's useful life and makes buildings improve energy efficiency.

The number of government programs to improve processing and manufacturing facilities is rising owing to the need for more infrastructure worldwide. Government programs offer subsidies to manufacturers to bear high manufacturing costs. In this respect, hemp companies can apply for a grant to start and expand their business. For instance, in September 2021, the National Hemp Association, a non-profit organization, proposed a USD 1 billion amendment to accelerate hemp grain and fiber production in an upcoming infrastructure bill.

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DRIVING FACTORS

Increasing Legalization and Rising Government Support to Favor Market Expansion 

The industry benefits from the increasing legalization of industrial hemp cultivation through government support across countries. Furthermore, the rising number of legal industrial hemp cultivation countries favors hemp cultivation worldwide. According to the United Nations Conference on Trade and Development, approximately 40 countries produced raw or semi-furnished hemp in 2021. Governments across various countries are introducing laws on legalizing the cultivation of hemp and increasing the tetrahydrocannabinol (THC) level to increase industrial hemp production. For instance,

• In July 2022, the Minnesota government legalized the sale of hemp-derived tetrahydrocannabinol (THC) edibles containing up to five milligrams of delta-8 and delta-9 THC levels per serving, with a maximum of fifty milligrams per package.


• In December 2021, under the new Common Agricultural Policy (CAP) 2023, the European Parliament increased the tetrahydrocannabinol (THC) level to 0.3% from 0.2% for industrial hemp crops.

Rising International Trade of Hemp & Hemp-derived Products to Trigger Product Demand

The growing product demand across countries where hemp has not been legalized favors its international trade. Furthermore, the increasing popularity of hemp and hemp-based products in various applications such as textiles, pharmaceuticals, and food, due to the growing demand for sustainable products worldwide, creates significant global industrial hemp market growth opportunities. Additionally, the need for more processing facilities for hemp fiber processing in various countries triggers hemp exports from Asian countries such as China.

In recent years, governments across countries have launched initiatives to promote the international trade of hemp and manufacturers, focusing on partnerships and collaborations to expand their global distribution. For instance, in December 2022, InterCure Ltd., an Israel-based medical cannabis growing company, entered a definitive licensing agreement with Binske, a U.S.-based cannabis company. According to InterCure Ltd., the deal will grant a multi-year exclusive right to market, distribute, and manufacture Binske-branded products in pharmaceutical markets such as Australia, the U.K., Israel, and Germany.

RESTRAINING FACTORS

Complex Regulations to Impede Market Growth

The companies selling hemp and hemp-deprived products must follow various regulatory guidelines worldwide. Countries worldwide have different levels of legalization for different types of hemp, making it difficult to comply with the standards. Additionally, hemp regulations, including CBD (cannabidiol) and THC (tetrahydrocannabinol), vary widely from state to state, adding to the complexity. Many countries restrict the use of hemp oil in cosmetics and personal care. For instance, hemp-derived CBD awaits approval for industrial use in Spain, Australia, or the Middle East.

The stringent regulations for cultivating, marketing, and selling industrial hemp limit market growth. Governments across countries are introducing strict laws and regulating hemp production. For instance, in January 2023, the Food and Drug Administration (FDA) announced, despite repeated calls for administrative action by legislators, advocates, and stakeholders, that it will not implement rules to allow CBD to be marketed as a dietary supplement or food.

SEGMENTATION

By Source Analysis 

Rising Affordability to Accelerate the Demand for Conventional Hemp

Based on source, the global market is segmented into organic and conventional. The conventional segment dominated the market in 2022 driven by conventional hemp’s affordability compared to its organic counterpart. Furthermore, traditional/conventional hemp does not require the same strict controls and guidelines as certified organic hemp, driving product sales. Increasing deployment in construction and materials, biofuels, furniture, and bioplastics also broadens the product scope.

Organic products will likely witness significant demand in the coming years, backed by the rising consumer preference for clean-labeled, organic, sustainable, and environment-friendly products. Furthermore, the negligible use of chemical and synthetic fertilizers in organic hemp cultivation positively influences consumer preference over its non-organic counterparts.

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By Type Analysis 

Increasing Application Scope to Drive Hemp Fiber Sales

By type, the market is segmented into hemp seed, hemp seed oil, hemp fiber, and others. The hemp fiber segment held a major global industrial hemp market share in 2022 due to the increasing product demand across several industries, including textile, automotive, and paper. The various benefits, such as high strength, thermal insulation, antibacterial properties, and superior dye ability, boost product demand.

The hemp seed oil segment is also expected to grow considerably in the coming years owing to the increasing product adoption in pharmaceuticals backed by its anti-inflammatory properties, pain-relieving benefits, and potential to reduce diabetes risk and treat tumors, epilepsy, anxiety, & chronic pain.

By Application Analysis 

Increasing Adoption of Sustainable Practices to Boost Product Sales in Textiles Sector

By application, the market is segmented into food (dietary supplements and functional foods), beverages, personal care & cosmetics, textiles, pharmaceuticals, and others. The textile segment dominated the global market in 2022. Hemp finds extensive application in the fashion industry owing to increasing consumer awareness regarding environmental and climate change. Furthermore, consumers typically prefer brands that employ eco-friendly and sustainable materials. The global textile industry continues to adopt more sustainable and eco-friendly production practices due to stringent government standards addressing textile pollution and water scarcity issues.

The food segment is expected to witness considerable growth in the coming years. The increasing consumer awareness regarding the benefits of hemp-derived edible products, the growing popularity of veganism, rising health consciousness, and the growing prevalence of celiac diseases trigger the demand for hemp-based food. Furthermore, the expanding vegan population across countries fuels plant-based protein consumption in food products such as cheese, bars, and flour. Hemp is used in food applications due to its environmental and nutritional benefits, such as high protein levels, minerals, vitamins, fatty acids, and omega-3.

REGIONAL ANALYSIS

The market is analyzed across North America, Europe, Asia Pacific, South America, and the Middle East & Africa.

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Europe will likely hold the largest market share during the forecast period, given hemp is one of the major crops grown across European countries. According to the European Union and Eurostat, the land used for hemp cultivation in Europe has increased significantly from 20 in 2015 to 34 hectares in 2019. In the same period, hemp production also registered an increment of 62.4%. France is the largest hemp producer in Europe, accounting for more than 70% of production, followed by the Netherlands, which accounts for 10% of the total regional production.

The U.S. and Canada dominate the North America’s market share. Industrial hemp's versatility across end-user industries such as textiles, construction materials, cosmetics, food & beverages, and pharmaceuticals fuels its demand in the U.S. and Canadian markets.

Hemp cultivation increased in the U.S. after the passing of the 2018 Farm Bill in all 50 states by the U.S. Department of Agriculture, which excluded hemp from being regulated as a Schedule 1 drug.

The Asia Pacific is witnessing a gradual awareness of industrial hemp uses, aiding in the market growth. China is one of the largest producers and exporters of industrial hemp, followed by South Korea and Japan. Furthermore, the extensive use of industrial hemp for textile and paper manufacturing in the region is driving the market.

Industrial hemp sales across the South America, Middle East, and Africa markets are poised to witness positive growth in the foreseeable future owing to expanding product adoption in industrial and medical applications. South American countries emphasize loosening industrial hemp regulations and legalizing farming & processing, favoring regional market growth. South Africa is likely to emerge as a key player in Africa in the near term, backed by the country’s favorable climate, viable farming conditions, liberalizing regulations, and favorable agricultural experiences. In recent years, manufacturers have focused on product launches to expand their reach across South America, and Middle East & Africa. For instance, in February 2022, Vicunha, a Brazil-based Jeanswear brand, introduced its first jeans featuring hemp.

KEY INDUSTRY PLAYERS

Key Players Focus on Product Launches to Stay Competitive

Key industry participants adopt various competitive strategies, such as new product launches and distribution channel expansion, to gain a competitive edge. Recent years have witnessed various industry participants launching new products to drive product sales. For instance, in December 2022, Blue Sky Hemp Ventures launched its refined hemp seed oil after its Global Food Safety Initiative (GSFI) and Kosher recognition. The new product was launched in Chicago, U.S., at the PLMA (Private Label Manufacturers Association) trade show.

List of Key Companies Profiled:

• Fresh Hemp Foods Ltd. (Canada)


• IND HEMP, LLC. (U.S.)


• Blue Sky Hemp Ventures (Canada)


• Panda Biotech, LLC (U.S.)


• Hemp Republic (India)


• South Hemp Tecno Srl (Italy)


• HEMP FACTORY (Germany)


• East Mesa (U.S.)


• DON Processing, Inc. (U.S.)


• HempFlax Group B.V. (Netherlands)

KEY INDUSTRY DEVELOPMENTS:

• January 2023: Bast Fibre Technologies Inc. (BFT), a Canadian natural fiber manufacturer, acquired Lumberton Cellulose LLC, a North Carolina, U.S.-based natural fiber processing facility. According to the company, the acquisition will help expand its manufacturing operation in North America to cater to the growing sustainable natural fiber demand.


• December 2022: InterCure Ltd., an Israel-based medical cannabis growing company, entered a definitive licensing agreement with Binske, a U.S.-based cannabis company. The deal would help grant a multi-year exclusive right to market, distribute, and manufacture Binske-branded products in pharmaceutically-advanced markets such as Australia, the U.K., Israel, and Germany.


• September 2022: The Thai Industrial Hemp Trade Association (TIHTA) signed a cooperation agreement with twelve manufacturing associations to showcase technology and innovations for the hemp industry. According to the TIHTA, the agreement will allow access to better quality raw materials, promote networking, and promote information in efforts to develop into Asia's hub for hemp industries.


• October 2021: Bast Fibre Technologies (BFT), a Canadian natural fiber manufacturer, acquired Faser Veredlung Tönisvorst, a German ISO 9001-certified textile processing facility. The acquisition would increase its sustainable bast fiber capacity to meet the growing consumer demand for sustainable products.

REPORT COVERAGE

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The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, material analysis, categorization, leading applications of the product, and key distribution channels. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

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