According to its new report on industrial hemp, the Agricultural Utilization Research Institute concluded that Minnesota has the potential to be a key producer of the crop as processing and marketing evolve.

The report, “Building an Industrial Hemp Industry in Minnesota,” examined the expanding hemp marketplace while providing history and defining marketing opportunities and challenges with the crop.

Interest and demand for hemp has steadily increased with the identification of new uses in food, cosmetic and beauty products, and the CBD extract market. Hemp’s popularity skyrocketed further upon the passage of the 2018 Farm Bill. The legislation opened the door for growers and processors to more directly engage, participate and profit in the hemp industry.

However, because several decades have passed since the growing and processing of hemp last took place in the U.S., there are significant gaps in knowledge that necessitate education, process and market validation, and innovation in order to build the industry up to its true potential.

The AURI report examined those gaps, taking more than a year and a half of research and networking to develop a thorough report of the hemp industry and identifying how a marketplace for the product may flourish in Minnesota and the upper Midwest.

AURI identified five categories in the report that present the most promising economic development prospects for growers and processors: Feed, food, fuel, fiber and CBD oil. In each sector there are hurdles to overcome and questions to be answered in areas such as supply chain, processing and federal regulation.

Despite these challenges, the possibilities for hemp are exciting and tangible, according to AURI, with Minnesota and the Upper Midwest well positioned to play a key role in shaping the future of the hemp industry.

Among the five sectors, AURI noted:

1. Hemp in feed and pet food. Hemp coproducts such as hemp cake, hemp hulls and the high protein hemp flower and stem can provide an excellent source of protein and energy to help support the livestock industry. Challenges include pricing, regulatory and legal hurdles in animal feed markets. Still, Minnesota is well suited to be a market player in the feed sector.

2. Hemp fiber. Hemp fiber’s low weight and high tensile strength can provide increased performance in products including composites, textiles, insulations and more. Hemp hurd is the inner core of the hemp stalk and can be likened to an absorbent wood chip after processing. It can serve as a substitute or additive in building materials, composites, paper pulp, animal bedding and more.

Additionally, hemp fiber and hurd are biobased materials that can improve performance when used in new and existing products. Long fiber stalks can yield fibers for textiles and high-quality bio-composites, while the shorter fibers are better suited for insulations, paper, supercapacitors and lower quality bio-composites. Market potential of hemp fiber is unknown. Still, the state could be a market player in this sector.

3. Hemp food. Hemp-derived ingredients such as seeds, hearts (the shelled seeds of the industrial hemp plant) and oils are appearing with more frequency in global food markets. FDA has classified these three ingredients as “Generally Recognized as Safe” (GRAS) as food products, or for use in food products. A fourth hemp-derived ingredient, CBD, is gaining popularity as a wellness product and food ingredient, though FDA has communicated that CBD is not legal for use in food and beverage products as of mid-2019.

Consumer demand for CBD oil is driving development and investment. Industry analysts predict that by 2020, CBD oil will be a $22 billion industry in the U.S. for food, supplements, beverages, medicine and tinctures. More regulatory and science-based information is necessary to understand the true market of food products containing CBD, AURI noted. Minnesota is well suited to be a market player in the hemp food sector.

4. Hemp fuel. Hemp coproducts such as the hurd, extracted flower and cake all have high heating values. Hemp seed oil can also serve as a feedstock to make biodiesel with the end product competing with the properties of soy-based biodiesel. Using hemp coproducts as fuel sources are a potential opportunity, AURI said. However, the materials will likely have higher values in other areas. Plus, there are a few hurdles to overcome, such as meeting pellet fuel standards.

5. AURI involvement. The hemp report is one facet of AURI’s involvement and support of the state’s growing hemp industry. The institute will continue to dedicate its applied research and networking to assist entrepreneurs, value-added partners and the hemp landscape at large. Specifically, economic investment in the market requires analysis to determine specific pathways for projects to reach their potential for commercialization. This market and end user analysis, which is a changing and dynamic area, is where AURI can provide essential support, according to AURI.

“This is an exciting time for hemp in the agriculture community in our state. We at AURI encourage entrepreneurs and business sectors to use the knowledge in this report and contact us for assistance,” said Shannon Schlecht, AURI executive director. “Minnesota is well poised to leverage this emerging crop for commercialization with many uses.”

For a full overview of the AURI Hemp Report, visit AURI’s website.

Source: AURI, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.