Both hemp oil and hemp fibers are highly valuable to the manufacturing industry. This is evident in hemp’s country-wide acceptance compared to its less favorable sister crop, marijuana: hemp production is currently legal in 46 states, outpacing recreational cannabis legalization with only 19 states.
While market disruption due to the COVID-19 pandemic resulted in a shrinking share of hemp buyers, the industry continues to position itself for growth. Like the cannabis industry, the manufacturing industry also shuttered during the global pandemic, further deepening the decades-long trend of employment decline due to trade and technological advancement.
When the nation outsourced manufacturing to countries like China, U.S. employees left to pursue higher education and diversified employment opportunities, leaving many manufacturing facilities vacant. But the escalating trade tensions between the U.S. and Asian countries, combined with the newly emerging hemp industry’s lack of infrastructure, have made former manufacturing facilities new havens of opportunity for hemp producers and processors.
Hemp Manufacturing Repurposing Empty Factories
One of the top three companies producing hemp is located in the U.S., with the other two being located in Canada. However, it's not just large-scale producers that are making waves in the manufacturing industry. According to the 2021 National Hemp Report, 58% of hemp growers are new farmers, and while large, well-established companies in the hemp space may contract these growers under their umbrella, the patchwork of growers across the country allows buyers diversity of quality, price, and production location. This is where smaller hemp producers can get in on the action and position themselves for corporate contracts.
Bast Fibre Technologies (BFT), a Canadian hemp and flax paper products company, recently bought North Carolina-based Lumberton Cellulose LLC from Georgia-Pacific. And the company is not just buying real estate in the U.S.; BFT also acquired German-based Faser Veredlung Tönisvorst, a textile processing facility. The reason behind this expansion? Demand is high. And as demand grows, markets looking to integrate hemp will find fully operational producers and suppliers right in their own backyards – part of what BFT CEO Noel Hall says is the company’s “core mission of grow local, process local, sell local.” And BFT President, Jim Posa, agrees, “Europe will become increasingly important for the production of truly sustainable nonwovens in wipes, hygiene products, and more.”
Another cannabis company, Mile High Labs, is expanding from its specialized production of CBD isolates with its acquisition of a state-of-the-art pharmaceutical facility. The facility is a 400,000 square-foot, Colorado-based campus outfitted with ready-to-use land, labs, and manufacturing equipment. The company’s CTO and founder, Stephen Mueller, expresses that this is part of Mile High Lab’s “plan to leverage this tremendous infrastructure to build the global center for CBD products manufacturing.” It’s a strategic move for the company as it ramps up to begin producing private label products.
Neither of these companies is stopping at acquiring production space and technologies. BFT is vying for a position as a significant player in an emerging market as it perfects its ability to create a farm-to-shelf framework, while Mile High Labs aims to establish a 'Silicon Valley' for CBD as an innovation hub for the hemp industry. And with pharmaceutical technology integration, the prospect of setting quality standards is closer than ever.
Filling the Gaps
One question that these recent acquisitions answer is that of infrastructure, both physical and logistical. Companies like these have the resources to purchase facilities and the needed technology for processing, allowing them to facilitate and control every step of the process from seed to branded product ready to put on shelves.
But what about smaller players? If small producers aren’t able and willing to scale the entire process to a manageable level, they may be better off specializing in one or just a few steps or services of the process.
Undoubtedly, acquisitions of manufacturing facilities are disrupting both the cannabis and manufacturing markets. But the disruption is not that of driving out the competition or replacing vital manufacturing labor force, infrastructure, and services. The hemp industry is filling in holes that have long been ready for the taking. The resurgence and restoration of manufacturing facilities across North America could produce jobs, drive technological innovation, and offer cheaper, more environmentally-friendly manufactured goods and inputs, such as CBD oils, textiles for clothing and furniture, building materials, and more!
One question remains…will there be enough skilled workers to meet this new demand and supply chain gaps?
