hemp farm business plan

Hemp Farm Business Plan Template

Written by Dave Lavinsky

Hemp Farm Business Plan

You’ve come to the right place to create your Hemp Farm business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Hemp Farms.

Below is a template to help you create each section of your hemp farming business plan.

Sample Hemp Farm Business Plan

Executive summary, business overview.

Abundant Harvest Hemp Farm is a startup hemp farming business located in Boulder, Colorado. The company is founded by Jeffrey and Sharon Moore, a pair of seasoned hemp farmers who have been working together in the hemp industry since it became legal in the state of Colorado in 2014. Now that Jeffrey and Sharon have gained the essential experience and know-how involved in running an industrial hemp production farm they are ready to start their own business. Jeffrey excels in operations management, equipment safety, and the growing process, while Sharon’s expertise lies in finance and budgeting, inventory management, and client relations. Jeffrey and Sharon are confident in their combined abilities to effectively manage a profitable hemp business. The duo plans on recruiting a team of experienced farm hands to perform the essential tasks involved in running a successful hemp farm including cultivating, harvesting, and trimming hemp products (flower, leaves, stems, and biomass) to be sold to other companies who produce CBD oil products.

Abundant Harvest Hemp Farm will provide superior hemp that is harvested by hand to ensure the best quality. The company will be the premier choice in Colorado for CBD businesses looking for quality and value in hemp products. Abundant Harvest Hemp Farm will charge its customers reasonable prices for its hemp products that are on par with competition, but unlike most of the hemp farm businesses that are in direct competition, the company’s hemp will be available year-round.

Product Offering

The following are the products that Abundant Harvest Hemp Farm will provide:

• Hemp flower
• Hemp leaves
• Hemp biomass

Customer Focus

Abundant Harvest Hemp Farm is a B2B business that will target all CBD processing, manufacturing, and extraction companies in Colorado. They will target CBD companies who value high quality, hand-harvested products at fair prices. No matter the client, Abundant Harvest Hemp Farm will deliver the best communication, service, and quality products.

Management Team

Abundant Harvest Hemp Farm will be owned and operated by Jeffrey and Sharon Moore, a pair of seasoned hemp farmers who have been working together in the hemp production business since it became legal in the state of Colorado in 2014.

Jeffrey Moore is a graduate of the University of Colorado with a Bachelor’s degree in Agriculture. He has been working at a local hemp farm since 2014 as a Master Grower. Jeffrey excels in operations management, equipment safety, and the growing process. He will oversee the farm hands, crops, and equipment.

Sharon Moore has a Bachelor’s degree in Business Management from Arizona University. Sharon’s expertise lies in finance and budgeting, inventory management, and client relations. She will manage the company’s finances, inventory, sales, and client relations, while monitoring the global industrial hemp market for fluctuations and changes.

Success Factors

Abundant Harvest Hemp Farm will be able to achieve success by offering the following competitive advantages:

• Potent hand-harvested hemp that is high quality,  free of contaminants, and thoroughly inspected.
• Affordable prices for all customers and extra discounts for long-term contracts.
• Efficient indoor growing techniques using the latest technology to ensure high yields all year-round.

Financial Highlights

Abundant Harvest Hemp Farm is seeking $200,000 to launch its hemp farm business. The funding will be dedicated towards securing the land, building the indoor facility, and purchasing equipment and supplies. Funding will also be dedicated towards three months of operational costs, testing costs, and licensing costs. The breakout of the funding is below:

• Grow facility build-out: $70,000
• Equipment, supplies, and materials: $10,000
• Startup and operational costs: $90,000
• Testing and licensing costs: $2,000
• Working capital: $10,000

The following graph below outlines the pro forma financial projections for Abundant Harvest Hemp Farm.

Company Overview

Who is abundant harvest hemp farm.

Abundant Harvest Hemp Farm is a newly established hemp farm in Boulder, Colorado. Abundant Harvest Hemp Farm will be the most reliable, cost-effective, and efficient choice for CBD buyers in Boulder and the surrounding communities. Abundant Harvest Hemp Farm will provide superior hemp that is harvested by hand to ensure the best quality. The hemp farm will be the premier choice in Colorado for CBD companies looking for quality and value. Abundant Harvest Hemp Farm will charge reasonable prices for its hemp products that are on par with competition.

Abundant Harvest Hemp Farm will be able to manage the entire process of cultivation and harvesting. The owners will employ farm hands who have been working in the hemp business for several years to cultivate and harvest the hemp products. Abundant Harvest Hemp Farm removes all uncertainties and risks of potentially unsuccessful harvests from the buyer by ensuring its hemp products are reliably harvested all year-round while delivering the best customer service.

Abundant Harvest Hemp Farm History

Abundant Harvest is owned and operated by Jeffrey and Sharon Moore, a pair of seasoned hemp farmers who have been working together in the hemp industry since it became legal in the state of Colorado in 2014. Jeffrey and Sharon have gained the essential experience and know-how involved in running a hemp farm they are ready to start their own business. Jeffrey excels in operations management, equipment safety, and the growing process, while Sharon’s expertise lies in finance and budgeting, inventory management, and client relations. Jeffrey and Sharon are confident in their combined abilities to effectively manage a profitable hemp farm.

Since incorporation, Abundant Harvest Hemp Farm has achieved the following milestones:

• Registered Abundant Harvest Hemp Farm, LLC to transact business in the state of Colorado.
• Has selected the location for the facility and has begun negotiations for purchase of the property.
• Reached out to numerous contacts to include experienced farm hands to advise them on their upcoming hemp farm company in order to start recruiting employees.
• Began the licensing process to ensure compliance with all hemp farm regulations.

Abundant Harvest Hemp Farm Services

Industry analysis.

The global market for hemp is an estimated USD $205M (as of 2020) with an expected compound annual growth rate (CAGR) of 6%, increasing to $310M by 2027.  Hemp is produced commercially in over 30 countries around the world. The hemp market is segmented into textiles, hemp seeds, and hemp bio-composites.

The hemp market in North America is expected to reach USD $87.5M by the year 2027. Increased legalization of CBD oil products is boosting demand in the United States.

With segments that range from biomass, flower, extracts, isolates, and distillates, the CBD market offers a diverse set of products. Hemp oil is in high demand for pharmaceutical products, skin care products, topicals, edibles, and more.

Industry operators can maintain a competitive advantage by offering unique cultivation and harvesting techniques. For instance, hand-harvested plants can produce up to 5% more CBD than machine harvested plants, which destroys buds.

Customer Analysis

Demographic profile of target market, customer segmentation.

Abundant Harvest will primarily target the following customer profiles:

• Small CBD processing, manufacturing, extraction companies in Colorado who are looking for premium, hand-harvested hemp.
• Mid-sized CBD processing, manufacturing, extraction companies in Colorado who are looking for premium, hand-harvested hemp.

Competitive Analysis

Direct and indirect competitors.

Abundant Harvest Hemp Farm will face competition from other companies with similar business profiles. A description of each competitor company is below.

Boulder Harvest Hemp Farm

Boulder Harvest Hemp Farm provides premium hemp for CBD oil producers. Located in Boulder, Colorado, Boulder Harvest Hemp Farm is able to provide a local source of hemp flower and biomass that can be used to make a variety of CBD products. The hemp is cultivated and harvested using the latest equipment and technology to ensure efficient production. Boulder Harvest Hemp Farm is also able to deliver its hemp directly to local customers.

Boulder Harvest Hemp Farm’s promise is to provide its customers with high quality hemp products that they can then use to create their signature CBD oils. The hemp farm uses a stringent quality control process to ensure its customers receive only the best of the hemp its crops produce. Any damaged or imperfect product gets thrown out. Boulder Harvest Hemp Farm’s team of experienced hemp farmers assures the quality of the product.

Greeny’s Hemp Farm

Greeny’s Hemp Farm is a Boulder-based hemp cultivation business that provides outstanding raw hemp products for its B2B customers. Greeny’s Hemp Farm provides high quality hemp products harvested from all parts of the plant – the flower, stem, leaves, and biomass. This ensures no part of the plant is wasted. The owners of Greeny’s Hemp Farm are long-time hemp farmers so they understand what goes into cultivating the ultimate crop. Clients can depend on their attention to quality in all of their processes to provide the best hemp possible. By choosing Greeny’s Hemp Farm, customers can rest assured they are getting hand-harvested hemp that has been thoroughly tested and evaluated before being carefully packaged and shipped out.

High Health Hemp Farm

High Health Hemp Farm is a trusted Colorado hemp company that provides superior hemp products to CBD oil brands in Boulder and the surrounding areas. High Health Hemp Farm is able to provide its products at low prices because it operates on a lean overhead model that allows the company to pass on its cost-savings to its customers. The indoor hemp farm uses the most advanced technology and equipment to harvest its product, ensuring high yield with few employees needed.

Competitive Advantage

Abundant Harvest Hemp Farm will be able to offer the following advantages over its competition:

• Potent hemp that is guaranteed to be high quality and free of contaminants due to the company’s thorough inspection process of its hand-harvested crops cultivated by skilled farm hands.
• The company’s efficient production techniques allow for cost-savings that are passed on to customers.
• Efficient indoor growing techniques using the latest technology to ensure high yields and year-round harvests.

Marketing Plan

Brand & value proposition.

Abundant Harvest Hemp Farm will offer the unique value proposition to its clientele:

• Potent CBD hemp available year-round that has been thoughtfully cultivated and thoroughly inspected for quality.
• Affordable prices for all and extra discounts for buyers with long-term contracts.

Promotions Strategy

The promotions strategy for Abundant Harvest Hemp Farm is as follows:

Website/SEO Marketing

Abundant Harvest Hemp Farm will create and maintain a professionally designed website. The website will be well organized, informative, and list all products that Abundant Harvest is able to provide. The website will also contain up-to-date information and informative content on hemp, the industry, CBD trends, and other issues that would be of interest to B2B clients. The company will use SEO marketing tactics so that any time someone types in the Google or Bing search engine “Boulder hemp farm” or “hemp farm near me”, Abundant Harvest Hemp Farm will be listed at the top of the search results.

Social Media Marketing

The company will use social media marketing tactics to expand its reach and gain new customers. Abundant Harvest will maintain an active presence on various social media platforms including Twitter, Instagram, Facebook, YouTube, LinkedIn, and TikTok.

Word of Mouth/Referrals

Jeffrey and Sharon Moore have built up an extensive list of contacts over the years by providing exceptional products and customer service to their B2B clients. Jeffrey and Sharon have reached out to these contacts to let them know about the new hemp farm. Many have already signed commitments to follow the Moore’s to their new company and help spread the word of Abundant Harvest Hemp Farm to their networks.

Professional Associations and Networking

Abundant Harvest Hemp Farm will become a member of professional associations such as the National Hemp Association, Hemp Industries Association, U.S. Hemp Roundtable, and the Colorado Hemp Association. They will attend industry events and focus their networking efforts on expanding their client network.

Print Advertising

Abundant Harvest Hemp Farm will invest in professionally designed print ads to display in programs or flyers at industry networking events, in industry publications, and for direct mailers that will be sent to various CBD companies.

The pricing of Abundant Harvest Hemp Farm will be moderate and on par with competitors so customers feel they receive value when purchasing its hemp products.

Operations Plan

The following will be the operations plan for Abundant Harvest Hemp Farm.

Operation Functions:

• Jeffrey and Sharon Moore will be the Co-owners of the company. Jeffrey will oversee all staff and equipment, while Sharon will manage the finances and client relations. Jeffrey and Sharon have spent the past year recruiting the following staff:
• John Stephens – Sales and Marketing Director who will provide all sales outreach and marketing activities for Abundant Harvest Hemp Farm.
• Maria Johnson – Staff Accountant who will assist Sharon by providing all client accounting, tax payments, and monthly financial reporting.
• Bill Martinez – Quality Control Manager who will oversee the inspection process for all crops throughout the cultivation and harvesting process.

Milestones:

Abundant Harvest Hemp Farm will have the following milestones complete in the next six months.

9/1/2022 – Finalize contract to purchase the land.

10/15/2022 – Begin build-out of the facility.

11/1/2022 – Finalize employment contracts for the management team and farm hands.

11/15/2022 – Begin networking at industry events and implement the marketing plan.

12/22/2022 – Begin the cultivation process for Abundant Harvest Hemp Farm’s first crop.

Abundant Harvest Hemp Farm will be owned and operated by Jeffrey and Sharon Moore, a pair of seasoned hemp farmers who have been working together in the hemp industry since it became legal in the state of Colorado in 2014.

Sharon Moore has a Bachelor’s degree in Business Management from Arizona University. Sharon’s expertise lies in finance and budgeting, inventory management, and client relations. She will manage the company’s finances, inventory, sales, and client relationships.

Financial Plan

Key revenue & costs.

The revenue drivers for Abundant Harvest Hemp Farm are the hemp farm fees they will charge to the B2B CBD oil companies for the hemp products. The company will charge between $150-$250 per pound for its hemp products.

The cost drivers will be the overhead costs required in order to maintain an indoor year-round hemp cultivation and harvesting operation. The expenses will be the payroll cost, equipment maintenance, utilities, supplies, and marketing materials.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials.

• Average number of pounds of hemp produced per year: 10,000
• Average amount in sales per year: $200,000
• Average operational costs per year: $140,000

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Hemp Farm Business Plan FAQs

What is a hemp farm business plan.

A hemp farm business plan is a plan to start and/or grow your hemp farm. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can  easily complete your hemp farm business plan using our Hemp Farm Business Plan Template here .

What are the Main Types of Hemp Farms?

There are a number of different kinds of hemp farms, some examples include: Food-grade Hemp, CBD Hemp, Hemp for Textiles, and Industrial Hemp.

How Do You Get Funding for Your Hemp Farm Business Plan?

Hemp farms are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. This is true for a hemp farming business plan, a cbd oil business plan or a cbd business plan template.

What are the Steps To Start a Hemp Farm Business?

Starting a hemp farm business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Hemp Farm Business Plan - The first step in starting a business is to create a detailed hemp farming business plan pdf or doc that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your hemp farm business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your hemp farm business is in compliance with local laws.

3. Register Your Hemp Farm Business - Once you have chosen a legal structure, the next step is to register your hemp farm business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your hemp farm business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Hemp Farm Equipment & Supplies - In order to start your hemp farm business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your hemp farm business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Additional Helpful Template

Farm Business Plan

Hemp Farm Business Plan Template

Written by Dave Lavinsky

Hemp Farm Business Plan

Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their business. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a hemp farm business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Hemp Farm Business Plan?

A business plan provides a snapshot of your hemp farm as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Hemp Farm

If you’re looking to start a hemp farm, or grow your existing hemp farm, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your hemp farm in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Hemp Farm Businesses

With regards to funding, the main sources of funding for a hemp farm are personal savings, credit cards, USDA/FSA loans, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for a hemp farm is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a hemp farm. They might consider funding a hemp farm company with locations across the country, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.

Finish Your Business Plan Today!

How to write a business plan for hemp farming.

Your business plan should include 10 sections as follows:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of hemp farm you are operating and the status; for example, are you a startup, do you have an existing hemp farm that you would like to grow, or are you operating a network of hemp farms?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the hemp industry. Discuss the type of hemp farm you are running. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of hemp farm you are running.

For example, you might operate one of the following types:

• Food-grade hemp: this type of hemp farm grows hemp for its seeds, which may be consumed in raw or roasted form, or pressed for oil and milk
• CBD hemp: this type of hemp farm grows hemp for the extraction of CBD from leaves and stalks. CBD hemp farms may also manufacture hemp products such as oils, supplements, or personal care products.
• Hemp for textiles: this type of hemp farm sells hemp plants to fabric producers
• Industrial hemp: this type of hemp farm grows hemp for industrial uses such as the production of paper, sanitary items, and biodegradable plastic

In addition to explaining the type of hemp farm you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, plantation acreage, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the hemp industry.

First, researching the hemp industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

• How big is the hemp industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your hemp. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the customers you serve and/or expect to serve.

These are examples of customers segments: Manufacturers, specialty retailers, end consumers, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of hemp farm you operate. Clearly, manufacturers would want different services, and would respond to different marketing tactics than end consumers.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, if you are targeting end consumers, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most hemp farms primarily serve customers living in their same region, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other hemp farms.

Indirect competitors are other options customers may use that aren’t direct competitors. This includes imports and other cannabis cultivators. You need to mention such competition to show you understand that not all fiber or supplement demand will be fulfilled by hemp.

With regards to direct competition, you want to detail the other hemp farms with which you compete. Most likely, your direct competitors will be hemp farms located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What types of product creation do they engage in?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior products?
• Will you provide products or services that your competitors don’t offer?
• Will you make it easier or faster for customers to purchase your products?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a hemp farm, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of hemp farm that you documented in your Company Analysis. Then, detail the specific services you will be offering.

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the products and services you offer and their prices.

Place : Place refers to the location of your hemp farm. Document your location and mention how the location will impact your success. For example, is your hemp farm in a central location that will make transportation easier, etc. Discuss how your location might allow you to serve a greater volume of customers.

Promotions : the final part of your hemp farm marketing plan is the promotions section. Here you will document how you will drive customers to your business. The following are some promotional methods you might consider:

• Advertising in trade magazines
• Attending trade shows
• Advertising in local papers and magazines
• Social media marketing
• Local radio advertising

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your hemp farm, such as tilling, planting, growing, and harvesting the crop, maintaining equipment, staying abreast of new technology and/or regulatory developments, processing paperwork, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to plant your 100 th acre, or when you hope to reach $X in sales. It could also be when you expect to purchase additional acreage, or when you expect to launch a new location.  

Management Team

To demonstrate your hemp farm’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in agriculture. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in hemp or farming in general and/or successfully running small businesses.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you plant 40 acres or 400? Or will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $250,000 on building out your hemp farm, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a manufacturer approached you with a $500,000 contract for hemp fiber, that would cost you $350,000 to fulfill. Well, in most cases, you would have to pay that $350,000 now for inputs such as seed and soil amendments, employee salaries, equipment, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a hemp farming business:

• Location build-out including land preparation fees, construction of barns and production facilities, etc.
• Cost of equipment
• Payroll or salaries paid to staff
• Business and liability insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your hemp farm design blueprint or location lease.  

Putting together a business plan for your hemp farm company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the hemp industry, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful hemp farm.  

Hemp Farm Business Plan FAQs

What is the easiest way to complete my hemp farm business plan.

Growthink's Ultimate Business Plan Template  allows you to quickly and easily complete your Hemp Farm Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of hemp farm business you are operating and the status; for example, are you a startup, do you have a hemp farm that you would like to grow, or are you operating multiple hemp farms.

Don’t you wish there was a faster, easier way to finish your Hemp Farm business plan?

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How to Start a Hemp Farm

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on May 30, 2023 Updated on June 5, 2024

Investment range

$45,800 - $1,077,300

Revenue potential

$200,000 - $400,000 p.a.

Time to build

12 – 18 months

Profit potential

$40,000 - $80,000 p.a.

Industry trend

Hemp is a versatile and relatively easy to grow plant that can be made into a variety of products, including rope, textiles, clothing, biofuels, and more. It can also be grown for CBD production. Hemp farming is also a rapidly growing industry, worth nearly $1 billion in the U.S. alone. If you have some land and want to try your hand at farming, hemp could be a great profit maker.

But before you start planting, you’ll need to understand the business. Luckily, this step-by-step guide details all you need to know to start a successful hemp farm.

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

• Rapidly growing market
• Good for the environment
• Relatively easy crop to grow
• Regulated industry
• Hemp farming for fiber takes many acres to make a substantial profit

Hemp farming industry trends

Industry size and growth.

• Industry size and past growth – The U.S. industrial hemp production industry is worth $938.6 million in 2023 after growing 46.5% annually for the last five years.(( https://www.ibisworld.com/united-states/market-research-reports/industrial-hemp-production-industry/#:~:text=Industrial%20hemp%20production%20revenue%20is,expected%20to%20account%20for%207.8%25. ))
• Growth forecast – The U.S. industrial hemp production industry is projected to grow 2.7% in 2023.
• Number of businesses – In 2023, 9,410 industrial hemp production businesses are operating in the U.S.
• Number of people employed – In 2023, the U.S. industrial hemp production industry employs 36,026 people.

Trends and challenges

• Most hemp in the U.S. is grown for CBD oil because it’s the most profitable produce.
• Many USDA programs are available now for hemp farmers.
• The THC levels of hemp grown must stay within legal standards.
• Labor costs for hemp planting and production are extremely high, reducing the profit margins of hemp farms.

How much does it cost to start a hemp farm business?

Startup costs for a hemp farm if you already have the land are about $50,000, the bulk of which is a labor and operating budget. If you’re going to purchase land, your costs could be upwards of $1 million.

You’ll need a handful of items to successfully launch your hemp farming business, including: 

• Transplanter
• Irrigation system

How much can you earn from a hemp farming business?

When you grow hemp for CBD, you can probably make about $20,000 per acre per year in revenue. Your profit margin after labor and operating costs should be about 20%. 

In your first year or two, you could farm 10 acres, bringing in $200,000 in revenue. This would mean $40,000 in profit, assuming that 20% margin. 

As you gain traction, you might farm 20 acres. With annual revenue of $400,000, you’d make a tidy profit of $80,000.

What barriers to entry are there?

There are a few barriers to entry for a hemp farm. Your biggest challenges will be:

• Having or purchasing adequate land
• Learning the process of hemp farming

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Step 2: hone your idea.

Now that you know what’s involved in starting a hemp farm, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research hemp farms to examine their products, price points, and what sells best.

• Make a list of hemp farms that offer similar products. 
• Review your competitors’ products – their features, pricing, and quality – and marketing strategies
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the local market is missing a hemp farm that grows for seed production, or a hemp farm with a hemp processing facility.

You might consider targeting a niche, such as CBD oil.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products

You’ll need to decide what type of hemp you want to grow and get the right hemp seeds . You could grow for the fiber that will be used for textiles, etc., for seeds, or for CBD oil.

How much should you charge for hemp?

Your prices should depend on market prices, but also on your production costs.

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will likely be companies that make CBD products. You can connect with business owners on LinkedIn, or you can call them directly.

Where? Choose a hamp farm location

If you don’t have land, you’ll need to engage with a real estate agent to find suitable land that meets zoning requirements. Choosing a hemp farm location involves considering various factors to ensure the growth of healthy and productive plants. Here are the important factors to consider:

• Climate : Hemp thrives in a mild climate with adequate rainfall (25-30 inches annually). Check local weather data for consistency.
• Soil Quality : Opt for well-draining soil with a pH of 6-7.5. Sandy loam is ideal. Conduct soil tests to check nutrient levels and potential contaminants.
• Topography : Flat or gently sloping terrains are best for machinery access and efficient water drainage.
• Water Access : Ensure a reliable water source for irrigation, especially during dry periods.
• Sunlight : Choose a location with maximum sunlight exposure, as hemp requires at least 12-14 hours of daylight during its growing season.
• Local Regulations : Verify that hemp cultivation is legal in the chosen location and understand local regulations concerning THC levels, seed sourcing, and reporting.
• Pest & Disease Pressure : Check the history of the land. Previous crops can indicate potential pest or disease issues. Rotate crops to prevent soil-borne diseases.
• Proximity to Markets : Consider transportation costs and choose a location near potential buyers or processing facilities to reduce expenses.
• Neighboring Crops : Avoid cross-pollination issues, especially if you’re growing hemp for CBD. Ensure there’s a buffer between your hemp farm and potential pollen sources, like marijuana farms or other hemp varieties.
• Infrastructure : Ensure easy access to roads, storage facilities, and other necessary infrastructure.

Step 3: Brainstorm a Hemp Farm Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “hemp” or “CBD hemp”, boosts SEO
• Name should allow for expansion, for ex: “GreenFuture Farms” and “EarthBounty Enterprises” over “HempHarvest Haven” and “PureHemp Fields”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

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Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Hemp Farm Business Plan

Here are the key components of a business plan:

• Executive Summary: Provide a concise summary of your hemp farm business, including its purpose, location, and anticipated growth.
• Business Overview: Describe your hemp farming venture, highlighting the types of hemp products you plan to cultivate, such as CBD oil, fiber, or seeds.
• Product and Services: Detail the specific hemp products you will produce, along with any additional services like processing or distribution.
• Market Analysis: Analyze the hemp market, considering factors like demand for hemp-based products, legal regulations, and potential customer demographics.
• Competitive Analysis: Identify other hemp farms or suppliers in your region, emphasizing what differentiates your farm, such as organic farming practices or unique strains.
• Sales and Marketing: Explain your strategies for selling hemp products, including distribution channels, partnerships with retailers, and online marketing efforts.
• Management Team: If applicable, introduce key team members, such as agricultural experts, cultivators, and business administrators, showcasing their qualifications.
• Operations Plan: Describe the day-to-day operations of your hemp farm, from planting and harvesting to quality control and compliance with hemp regulations.
• Financial Plan: Present financial projections, including startup costs, crop yields, pricing models, and revenue expectations based on product sales and distribution.
• Appendix: Include any relevant certifications, licenses, or affiliations with agricultural organizations, as well as test results for hemp products if available.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to hemp farms. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your hemp farm will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company ( LLC ) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.  Here’s how to form an LLC .
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.  Read how to start a corporation here .
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have. 

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like  Kickstarter  and  Indiegogo  offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like  Fundable  and  WeFunder  enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Your best bet may be to check the USDA website for programs you may be eligible for. 

Step 8: Apply for Licenses/Permits

Starting a hemp farm business requires obtaining a number of licenses and permits from local, state, and federal governments.

You’ll need either a state issued hemp license or be licensed with the USDA. Check with your state for specific requirements.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your hemp farm business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as  AgCode , farmbrite , or FarmLogic , to manage your planting records, crop care, and sales.

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now” or “Order”. This can sharply increase purchases. 

Here are some powerful marketing strategies for your future business:

• Educational Workshops and Events: Host workshops or events to educate the community about the benefits of hemp, its various uses, and sustainable farming practices; this positions your farm as a knowledgeable and trustworthy source.
• Local SEO  — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
• Partnerships with Health and Wellness Stores: Forge partnerships with local health stores, gyms, and wellness centers to distribute your hemp products, tapping into an existing customer base interested in natural and holistic remedies.
• Social Media Challenges and Giveaways: Leverage social media platforms by organizing challenges or giveaways that encourage users to share their experiences with your hemp products, creating buzz and user-generated content.
• Farm Tours and Open Houses: Open your doors to the public through farm tours and open houses, offering a firsthand look at your cultivation process and fostering a connection between consumers and your brand.
• Community Sponsorships: Sponsor local events, sports teams, or community initiatives to enhance brand visibility, build trust, and showcase your commitment to the local community.
• Environmental and Social Responsibility Campaigns: Highlight your commitment to sustainability and social responsibility in your marketing campaigns, appealing to environmentally conscious consumers who align with eco-friendly practices.
• Collaboration with Influencers: Partner with influencers in the health, wellness, or sustainability niche to authentically promote your hemp products, reaching a wider audience and gaining credibility through trusted voices.
• Product Bundles and Loyalty Programs: Introduce product bundles that showcase the versatility of hemp and create customer loyalty programs to incentivize repeat purchases, fostering long-term relationships with your consumer base.
• Local Farmers’ Markets and Festivals: Set up stalls at local farmers’ markets and festivals to directly engage with potential customers, allowing them to sample and purchase your hemp products while enjoying community events.
• Customer Testimonials and Case Studies: Showcase success stories and testimonials from satisfied customers or even conduct case studies, providing evidence of the effectiveness and quality of your hemp products to build trust among potential buyers.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your hemp farm meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your hemp farm business could be:

• Promoting environmentally friendly practices and producing high-quality hemp using organic and sustainable farming methods
• Cultivating hemp strains with high levels of cannabidiol (CBD) to meet the increasing demand for CBD-based products in the market
• Providing full traceability throughout the cultivation and production process, ensuring customers know the origin and quality of the hemp products they purchase

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a hemp farm business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in hemp farms for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in hemp farms. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a hemp farm business include:

• Laborers – plant and tend to crops, harvest hemp
• Salesperson – sell hemp products
• General Manager – manage crops, accounting

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Hemp Farm – Start Making Money!

Since hemp farming became legal in 2018, the industry has taken off and is worth nearly $1 billion. It could be a great time to get in on the action by starting your own hemp farm. It’s a great way of life, and you can make a nice living. As the market continues to grow, you could expand your farm and build a hemp empire.

You’ve got the business know how now, so you’re ready to plant your seeds and get your successful hemp farm up and running!

• Hemp Farm Business FAQs

Yes, a hemp farm can be profitable. The profitability of a hemp farm depends on several factors, including the market demand for hemp and its derived products, the quality of the crops produced, the efficiency of the farming operations, and the ability to navigate regulatory requirements. Hemp is used in various industries, such as CBD products, textiles, food, and construction, presenting opportunities for revenue generation.

During a typical day at a hemp farm, various tasks are carried out to ensure proper cultivation and maintenance of the crops. These activities may include preparing the soil, planting and transplanting hemp seedlings or clones, irrigating the fields, applying fertilizers or nutrients, monitoring plant health, controlling pests and weeds, harvesting mature plants, and drying and curing the harvested hemp.

The growth potential of a hemp farm can be significant. As the demand for hemp and its derived products continues to rise, the market presents opportunities for expansion. Factors such as increasing consumer awareness, the legalization of hemp cultivation in various regions, and the development of new applications for hemp contribute to its growth potential.

A hemp farm can be classified as an agricultural business. It involves the cultivation and production of hemp plants for various purposes, such as CBD extraction, fiber production, seed harvesting, or other hemp-derived products.

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Hemp Farm Name
• Create a Hemp Farm Business Plan
• Register Your Business
• Register for Taxes
• Fund your Business
• Apply for Licenses/Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Run a Hemp Farm - Start Making Money!

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How to Create a Business Plan for Hemp Farming

Interest in industrial hemp farming continues to build as more states follow the federal Farm Bill of 2018's lead and approve expansion of hemp production. But as the industry grows, many farmers will inevitably face some of the industry's unique challenges.

Whether you're considering hemp farming or have already incorporated it into your business, navigating these challenges can be tricky. But with some thoughtful planning and the help of an experienced hemp banker, you can better prepare for potential hurdles your business may face.

Set a business plan for hemp farming

Before clearing a field or turning over soil, you'll need to understand the costs of starting a hemp farm, along with the potential for future profit. A business plan for industrial hemp farming is often a necessity for those seeking a loan or other funding.

"In addition to the importance of having a strong business plan to help guide your day-to-day business decisions, business plans are an important component of establishing a lending relationship with most financial institutions," says Ryan Palmquest, Director of Hemp Business at First Citizens. "In fact, having a business plan or financial forecast in place before applying for a loan can help expedite the approval process."

Business plans generally include standard items, such as market information and financial projections. Not only is this information useful for investors or hemp-focused bankers, but it can also help you map out your new agricultural business and provide guidelines for spending and growth to keep you on track over the first several years.

Write a mission statement

Why are you starting a hemp farm? What are you hoping to achieve with this new opportunity? Writing a short mission statement allows you to narrow your focus and set goals for your new hemp farm.

Your final mission statement should communicate to others why you're in the hemp business, why you believe you can be successful and what you hope to accomplish in the industry. It can also help define your target customer. Will you sell hemp to textile companies, smaller businesses or both?

Develop a hemp business summary

In addition to a mission statement, your business plan should include a longer, more detailed description of your hemp farm. Describe your location, the size of your farm, how much hemp you intend to grow each year and any agriculture business or farming experience that will help you be successful. It may be helpful to read over the US Department of Agriculture, or USDA , Checklist for New Farms ( PDF ) to make sure you fully understand what you need to set up an agriculture business, such as agribusiness insurance , a business license or certificate, and the necessary equipment.

Your hemp business summary should also provide information about the local market for hemp. List some of your potential customers or local hemp buyers, and provide information on any established business relationships you intend to rely on as you start out. You may also want to discuss local competitors and point out any competitive advantage between your farm and theirs.

You also may want to include information on how you intend to set up your farm to comply with federal and state regulations, as well as how you plan to stay informed on the latest research. The USDA regulates hemp production under the US Domestic Hemp Production Program , while research into hemp farming is funded by its National Institute of Food and Agriculture to uncover best practices and new uses for the plant.

Plan your financial projections

The final component of your business plan will contain multi-year profit and loss projections. List out the anticipated costs of starting a hemp farm, and project your expected profit over the first 5 years. Your projections should include the following key items.

• Startup costs: Generally, these costs are one-time expenses, such as the land purchases, storage facilities and business software to help you maintain your finances. You'll also need to decide if you want to purchase or lease farm equipment .
• Ongoing expenses: These are the annual costs of operating your farm, such as seed, irrigation, fertilizer and labor.
• Projected income: As you begin to harvest, process and sell hemp, you'll make money from crop sales. Develop a projection to show how much you expect to produce and sell each year for the first 5 years.

Creating a business plan for hemp farming will ensure you're following a clear path and have a firm understanding of what it takes to start an agriculture business. A business plan is also required when applying for a farm loan.

As you progress through your first season of hemp farming, don't forget to review your plan periodically and update the document with new information and financial projections. It's also important to establish and maintain a solid banking relationship so you're financially prepared for anything that comes your way.

As a hemp-friendly bank, our market specialists have a deep understanding of the financial challenges you face in the business of hemp, including the complex nuances of the current regulatory environment. Learn more about our hemp expertise or connect with a hemp banker to get started.

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Creating A Business Plan For Hemp Farming: A How-To Guide

Welcome to the fascinating world of hemp farming! In this how-to guide, we’ll dive into the process of creating a business plan for hemp farming.

Thinking about starting your own hemp farm? Look no further – we’ve got you covered!

From navigating the legalities to understanding market demand, we’ll walk you through each step of the process to ensure your hemp farming venture is a resounding success. So, let’s get started on this exciting journey together!

Whether you’re an aspiring farmer, a hemp enthusiast, or simply curious about the industry, this guide will equip you with the knowledge and tools needed to cultivate a thriving hemp farm. Get ready to unlock the secrets of hemp farming and turn your agricultural dreams into reality!

Market Analysis: Understanding the Outlook for Hemp Farming

Before diving into the intricacies of your business plan, it is crucial to conduct a thorough market analysis. Understanding the current and projected demand for hemp products is key to determining the potential profitability of your venture. Start by researching the various segments of the hemp market, including CBD products, textiles, and biofuels. Take note of trends and consumer preferences to identify opportunities for differentiation and market penetration.

In addition to examining the demand side of the equation, it is equally important to assess the supply side. Look at existing hemp farms and their production levels, as well as any regulatory restrictions or licensing requirements in your area. Analyzing the competitive landscape will help you understand your positioning and develop strategies to gain a competitive advantage.

Lastly, consider the overall economic and legal environment for hemp farming. Stay up to date with legislation and regulations related to the cultivation, processing, and sale of hemp products. This knowledge will help you anticipate future challenges and identify any potential risks that may impact your business.

Farm Infrastructure: Planning Your Cultivation Operations

Once you have a clear understanding of the market and regulatory landscape, it’s time to plan your cultivation operations. This section of your business plan should outline the specific infrastructure and equipment needed to grow hemp efficiently and sustainably. Assess factors such as soil quality, water availability, and climate suitability for hemp cultivation. Consider whether you will be growing hemp outdoors, in greenhouses, or using a combination of both.

Next, determine the quantity and quality of hemp you plan to produce. This will depend on your target market and sales projections. Calculate the acreage needed, as well as the number of plants or seeds required. Additionally, outline the pest and weed control measures you will implement to ensure optimal crop health and yield.

Don’t forget to address labor needs in your business plan. Determine the staffing requirements for your hemp farm, including cultivation, harvesting, and processing roles. Consider whether you will need to hire full-time employees or rely on seasonal workers during peak harvesting seasons. A detailed labor plan will help ensure smooth operations throughout the year.

Financial Projections: Assessing Costs and Revenue Potential

A crucial aspect of any business plan is the financial projections . This section should detail the estimated costs of starting and operating your hemp farm, as well as the revenue potential based on expected yields and market prices. Begin by calculating the expenses associated with land acquisition or lease, infrastructure setup, equipment purchase or rental, and licensing fees.

Include ongoing operational costs such as labor, utilities, irrigation, fertilizers, and pest control. Be sure to incorporate any overhead expenses related to administrative tasks, marketing, and distribution. Additionally, factor in the costs of complying with regulatory requirements and maintaining necessary certifications.

On the revenue side, estimate the income you expect from selling hemp biomass, flowers, seeds, or extract. Research current market prices and adjust your projections accordingly. Consider diversifying your revenue streams by exploring value-added products like CBD oils, topicals, or edibles. Remember to account for seasonality and potential fluctuations in market demand when developing your financial projections.

Key Takeaways

• A business plan is crucial for success in hemp farming.
• Identify the target market and understand its demand.
• Calculate your startup costs and create a budget.
• Choose the right location and plan your crop rotation.
• Research regulations and licensing requirements in your area.

Frequently Asked Questions

In this section, we will explore the essential aspects of creating a business plan for hemp farming. Learn how to navigate the process and set yourself up for success in the hemp industry.

1. Why is a business plan important for hemp farming?

A business plan is crucial for hemp farming as it serves as a roadmap for your venture. It outlines your goals, strategies, and financial projections, giving you a clear direction to follow. A well-crafted business plan can also attract potential investors and lenders, showing them that you have a solid plan in place. Additionally, a business plan helps you identify any potential obstacles or risks, allowing you to proactively address them.

Without a business plan, you may find yourself making decisions on the fly, which can lead to wasted resources and missed opportunities. By creating a comprehensive business plan, you can increase your chances of success in the hemp farming industry.

2. What should be included in a business plan for hemp farming?

A business plan for hemp farming should include several key components. Firstly, it should outline your business concept and mission statement, highlighting what sets your hemp farm apart from others. Next, it should include an analysis of the market, including target customers, competitors, and trends.

Financial projections and budgeting are also critical elements of a hemp farming business plan. This includes an estimate of startup costs, revenue forecasts, and a timeline for achieving profitability. Moreover, it’s important to include a marketing and sales strategy to promote your hemp products and ensure their success in the market. Lastly, your business plan should include an overview of your team, describing their qualifications and roles in the company.

3. How do I estimate the startup costs for a hemp farming business?

Estimating startup costs for a hemp farming business involves considering several factors. Firstly, you need to identify the size of your desired operation, including how many acres of land you plan to cultivate. This will determine the number of seeds, equipment, and labor required.

Additionally, you should factor in the costs of obtaining licenses and permits, purchasing or leasing land, acquiring farming equipment, and testing your hemp crops for compliance. It’s also essential to consider ongoing expenses such as water, fertilizers, pest control , and marketing. By researching and gathering quotes from suppliers and service providers, you can create a realistic estimate of your startup costs.

4. How can I ensure profitability in a hemp farming business?

To ensure profitability in a hemp farming business, careful planning and strategic decision-making are crucial. Start by identifying your target market and understanding its demand for hemp products. This will help you tailor your cultivation and production to meet market needs.

Furthermore, focus on maximizing efficiency in your operations, optimizing the use of resources, and minimizing waste. Invest in high-quality genetics, as superior hemp plants can yield higher returns. Consider diversifying your product offerings, such as extracting CBD oil or producing hemp-based products, to expand your revenue streams. Additionally, building strong relationships with buyers, distributors, and retailers can help secure consistent sales and long-term profitability.

5. How can I attract investors to fund my hemp farming business?

Attracting investors to fund your hemp farming business requires presenting them with a compelling business plan and demonstrating the potential for a high return on investment . Start by showcasing your expertise and knowledge in the hemp industry, as this will instill confidence in potential investors.

Highlight the market demand for hemp products and the potential for growth in the industry. Discuss your unique selling points and competitive advantages, such as sustainable farming practices or partnerships with established brands. Provide detailed financial projections and explain how the investment will be utilized to achieve business milestones and generate profits. Networking and building relationships with investors , attending industry events, and leveraging online platforms can also help you connect with potential investors who are interested in the hemp sector.

So, to summarize, creating a business plan for hemp farming is essential if you want to succeed in this industry. First, you need to do your research and understand the market demand for hemp products. Then, you should consider factors like land, equipment, and regulations before setting up your farm. Next, develop a marketing strategy to reach your target customers and identify potential sales channels. Don’t forget to include financial projections and a budget to ensure your business is sustainable. Finally, regularly review and update your business plan to adapt to changes in the market. Good luck with your hemp farming venture!

In conclusion, creating a winning business plan for your hemp farm involves thorough research, careful planning, and strategic thinking. By following the steps outlined in this guide, you’ll be well-prepared to navigate the challenges and maximize the opportunities in the hemp industry. Remember, success comes to those who plan and execute their vision. So go ahead and start crafting your business plan today!

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How To Write a Business Plan for Hemp Farm in 9 Steps: Checklist

By henry sheykin, resources on hemp farming.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan
• SWOT Analysis
• Business Model
• Marketing Plan
• Bundle Business Plan & Fin Model

Are you looking to start a business in the fast-growing hemp industry ? With the legalization of hemp in many parts of the world, the demand for products made from hemp is skyrocketing. According to the Hemp Business Journal, the global market for hemp products is estimated to reach $5.7 billion by 2020.

If you're interested in starting a hemp farm business, you need a solid plan. A business plan will help you define your objectives, set realistic goals, and identify potential challenges. In this article, we'll provide you with a 9-step checklist to guide you through the process of writing a business plan for a successful hemp farm.

Whether you're planning to produce hemp for paper, insulation, cosmetics, textiles or biofuel, these steps are essential to starting and running a successful hemp farm business. Keep reading to find out what it takes to get started in the hemp industry!

Conduct Market Research

Before investing resources into a hemp farm, it is critical to conduct thorough market research to identify potential customers and competitors. By understanding the current state of the market, you can better position your hemp farm to take advantage of opportunities and avoid potential pitfalls.

Here are some key areas to focus your market research:

• Identify the specific industry sectors that use hemp as a raw material for their products. These might include industries such as textiles, paper, building materials, cosmetics, and food and beverage.
• Determine the demand for hemp-products within these industries. Is there a growing trend towards using hemp instead of synthetic or other natural fibers? How much growth is projected in these industries and specific product lines?
• Understand the regulatory situation - is there a clear pathway to licensing for hemp farms in your region? What restrictions and regulations exist around the growing and processing of hemp? Is there a clear demand for locally grown hemp?
• Research your competitors - identify other hemp farms, both locally and nationally, and assess their products, pricing, marketing strategies, and any gaps that may exist in the market that your hemp farm could fill.
• Join online forums and social media groups related to the hemp industry.
• Attend industry trade shows and conferences to network and get an overview of industry trends.
• Seek out government and regulatory agencies that govern the hemp industry for up-to-date legislation information.

Conducting thorough market research will help you to better understand the potential for success in the hemp industry and to make informed decisions about the best way to position and market your hemp farm.

Determine Target Market and Industry Trends

Before starting a hemp farm, it is important to determine who your target market is for the hemp products you will be producing. This will help you understand what type of hemp to grow and how to market your products. The hemp market can be segmented into multiple categories such as paper, insulation, cosmetics, textiles, and biofuel. Identify which of these categories are most popular in the market and which have the most potential growth.

Next, research the industry trends for hemp products. Are there any new uses for hemp that are gaining popularity? Are there any companies developing new hemp products or changing the processing of hemp? Understanding these trends will help you create a business plan that is relevant and up-to-date with the industry.

• Conduct market research by reading trade publications and attending industry conferences.
• Identify your core customers and make sure your products meet their needs and expectations.
• Consider partnering with other businesses to maximize distribution and promotion of your hemp products.

By researching your target market and industry trends, you will gain valuable knowledge that will help you make informed decisions about the type of hemp to grow, the products to produce, and the marketing strategies to adopt. Keep in mind that the hemp industry is constantly changing and evolving, so stay on top of the latest trends and news to ensure your business remains competitive and successful.

Assess Startup Costs

Before starting a hemp farm, it is important to have a clear understanding of the startup costs involved. This will help you determine how much funding or investment you will need to secure before starting the business.

One of the most significant expenses will be the cost of the land and equipment required for cultivating, harvesting, and processing hemp. You will also need to budget for labor costs, transportation costs, insurance, and marketing expenses.

To assess your startup costs, consider the following:

• Land and Equipment: The cost of purchasing or leasing land and equipment can vary based on location and scale of the operation. Make sure you research the local property values and prices for farming equipment to get a better understanding of what you will need to budget for.
• Labor Costs: Determine how many employees you will need to hire and what their salaries will be. It is also important to factor in the cost of benefits and taxes.
• Transportation Costs: You will need to transport hemp from the farm to the processing facility and then to the customer. Budget for fuel, maintenance, and other expenses associated with transportation.
• Insurance: Protect your investment and business by purchasing adequate insurance coverage for your farm and products.
• Marketing Expenses: Develop a marketing plan and budget for marketing and advertising expenses such as website development, search engine optimization, content creation.
• Be realistic and conservative when assessing your startup costs. It is better to overestimate than underestimate and be caught short later on.
• Consider using a business plan template or software to help you organize and estimate your costs more accurately.
• Seek advice from experienced hemp farmers and industry experts to get a more realistic estimate of the costs involved in starting a hemp farm.

Assessing your startup costs will give you a clearer understanding of the funding or investment you will need to get your hemp farm business off the ground. Be thorough in your research, and ensure you have realistic estimates for all the costs involved.

Secure Funding or Investment

Starting a hemp farm business requires a significant amount of capital. A substantial investment is needed to secure a suitable property, purchase equipment, and hire knowledgeable staff. Therefore, it is crucial to secure adequate funding or investment to ensure a successful launch of the business.

Here are important steps to follow:

• Research potential funding sources: Research potential funding sources and identify the ones that are relevant to the hemp industry. There are various financing options, including bank loans, grants, venture capital, angel investors, and crowdfunding. It is essential to choose a funding source that aligns with your business needs and goals.
• Create a detailed business plan: Create a detailed business plan that presents a clear overview of the business, including financial projections, marketing strategies, and operational plans. The business plan should be comprehensive enough to convince potential investors that your business is a worthy investment.
• Look for investors: Look for investors who are interested in investing in the hemp industry. Attend industry events, seminars, and conferences, and network with potential investors. Also, consider partnering with other businesses that use hemp to create mutually beneficial relationships.
• Explore government funding: Look for government-funded programs that support agricultural businesses. Check for grants or loans that are specifically targeted towards growing hemp.
• Consider crowdfunding: Consider crowdfunding as another option for financing your hemp farm business. Crowdfunding platforms enable entrepreneurs to reach out to a large pool of potential investors who are interested in supporting innovative businesses.
• Be prepared to provide detailed financial statements to potential investors.
• Ensure that your business plan addresses all the key aspects of your hemp farm business.
• Be realistic about your financial projections, and don't overestimate your revenue potential.
• Build relationships with potential investors and investors already in your circle.
• Stay informed about trends and regulations within the hemp industry.

Securing adequate funding or investment is a critical step towards launching a successful hemp farm business. It is important to explore all potential funding options, create a detailed business plan, network with potential investors, and stay informed about industry trends and regulations.

Gather Necessary Permits And Licenses

When starting a hemp farm business, it is crucial to obtain the necessary permits and licenses to operate within your location legally. The regulations around hemp farming and production vary from state to state, so it is essential to consult with local government agencies to make sure you are complying with all requirements.

• Apply for a hemp license: Before starting your hemp farm business, you will need to obtain a license to grow hemp. This includes submitting an application to the state or the Department of Agriculture and paying any relevant fees.
• Comply with zoning and land-use regulations: Check with the municipal government to ensure that your location is zoned for agricultural use and that the land is suitable for hemp farming. Be sure to adhere to any regulations regarding pesticide use, water extraction, waste management, etc.
• Obtain necessary certifications: Depending on what kind of hemp products you plan to produce, you may need to obtain specific certifications or permits. For example, if you want to produce hemp for food, you may need to obtain a food processing license or a Good Agricultural Practices (GAP) certification.
• Apply for permits to transport and sell: You will also need to apply for permits to transport and sell your products. This will involve registering your business with the state, obtaining a tax ID number, and securing a permit to sell agricultural products.

Tips for Obtaining Permits and Licenses

• Do your research early on to determine which permits and licenses you will need to operate legally in your area.
• Be sure to give yourself plenty of time to obtain permits and licenses before starting your business. The process can be time-consuming, so it's best to start early.
• Consider hiring an attorney or consultant who is familiar with hemp farming regulations and can guide you through the process.

Once you have received all required permits and licenses, you can begin the process of creating your hemp farm business plan and preparing to launch your business.

Choose The Location Of The Farm And Assess Land Suitability

Choosing the right location for your hemp farm is crucial for its success. The ideal location must have good soil quality, access to water, proper drainage, and ideal weather conditions. Assessing the suitability of the land is a critical step that needs to be taken before making a final decision on the location. Here's what you need to do:

• Conduct a soil test: The first step in assessing the suitability of the land is to conduct a soil test. This test will determine if the soil has the right pH level, nutrient content, and texture suitable for growing hemp.
• Check for water accessibility: Access to water is crucial for any farm, but it's especially important for a hemp farm. Hemp plants require a lot of water during their growing phase, so it's important to ensure that there's a reliable source of water nearby.
• Assess drainage: Hemp plants can't sit in water for long periods, so it's essential to assess the drainage capacity of the land. Excess water can cause the roots of the hemp plant to rot, leading to stunted growth and crop failure.
• Consider the weather conditions: Hemp plants require a lot of sunlight for optimal growth, so it's important to consider the weather patterns in the area. Look for locations with long days and plenty of sunshine. Also, make sure to choose an area that's not susceptible to extreme weather conditions like severe winds, hailstorms, or flooding.
• Consider investing in a Geographic Information System (GIS) to analyze the quality of the land and identify suitable areas to grow hemp.
• Leasing land could be a better option for new farmers since it means lower costs, and it allows them to test their farming skills without making a significant investment.

Assessing the suitability of the land for your hemp farm is critical in ensuring the success of your business. Always seek the advice of experts like agriculture extension agents, county officials, and local farmers when assessing the land to ensure that you're making an informed decision.

Decide On The Types Of Hemp Products To Produce

One of the most critical decisions you'll make in starting a hemp farm is what types of products to produce. Hemp has a variety of uses, from textiles and paper to building materials and fuel - and that's only scratching the surface. Your decision will determine the direction of your business, target audience, and branding strategy.

The first step in making this decision is to conduct market research to determine the demand for different hemp products. Identify which products are in high demand, and also consider which products fit your strengths and expertise. Take note of product pricing, as well as production and distribution costs

Consider offering different types of hemp-based products to capture a wider market range . This could include products such as CBD oil, fabric, paper products, and hemp milk. Assess which products are the most profitable and can be realistically produced at your farm.

• Partner with other companies to produce specialized hemp products, such as building materials and fuel.
• Keep in mind that producing a wider range of products can also mean a more extensive distribution network, which can increase costs.

As you research the market and consider product options, consider what kind of brand image you want to portray. Are you going to focus on environmentally-friendly products? Or do you want to be known for a specific type of hemp product, such as high-quality CBD oils?

In conclusion, deciding on the types of hemp products to produce requires a careful balance of market research, cost analysis, and branding strategy. By offering top-quality products and establishing a unique presence in the industry, you'll have the foundation for a successful hemp farm business.

Develop A Marketing And Branding Plan

A strong marketing and branding plan is necessary to differentiate your hemp farm and products from competitors in the marketplace. This plan should outline your target audience, the benefits of your hemp products, and how you plan to promote and sell them.

• Identify your target market: Determine who your ideal customers are. Are you targeting businesses that utilize hemp in their products? Or are you focusing on consumers looking for natural and sustainable products?
• Highlight the benefits of your hemp products: Showcase the benefits your hemp products offer compared to traditional products. For example, hemp paper is more sustainable and environmentally-friendly than traditional paper.
• Create a strong brand identity: Develop a memorable name, logo, and tagline that speaks to your target audience.
• Establish an online presence: Create a website that showcases your products, mission, and values. Utilize social media platforms to engage with your audience and promote your products.
• Create a promotional strategy: Develop a plan to promote your hemp products to your target audience. Consider attending industry conferences and events, creating targeted ads, and building relationships with businesses that use hemp.
• Partner with influencers or bloggers who are passionate about sustainability and natural products to promote your brand.
• Include educational content on your website to educate your audience about the benefits of hemp-based products.
• Find unique ways to showcase your hemp products, such as hosting events or partnering with local businesses.

By developing a strong marketing and branding plan, your hemp farm and products will be able to stand out in a competitive market and attract both businesses and consumers looking for sustainable and natural products.

Create A Production Plan And Timeline

Once you have determined the types of hemp products you will produce, it's time to create a production plan and timeline. This plan will outline the steps you need to take to produce your products efficiently and effectively.

The production plan should include the various stages of hemp cultivation, harvesting, processing, and storage, and how long each stage will take. Consider the following factors when creating your plan:

• Availability of labor and equipment
• Seasonal changes and weather patterns
• Harvesting and processing techniques
• Quality control measures
• Storage and packaging requirements

Once you have a detailed production plan, you can create a timeline for each stage of production. This will help you identify any bottlenecks or areas where improvements can be made to increase efficiency and productivity.

Here are some tips to consider when creating your production plan:

• Make sure you have enough manpower, equipment, and supplies to handle production efficiently.
• Use technology and automation wherever possible to speed up the production process.
• Set realistic targets for each stage of production, and monitor progress regularly.
• Ensure that quality control measures are in place at all stages of production to maintain consistent quality.
• Plan for contingencies, such as weather disruptions or equipment breakdowns, to avoid delays in production.

By creating a detailed production plan and timeline, you can ensure that your hemp farm operates efficiently and produces high-quality products that meet customer needs. Regularly reviewing and updating your production plan will help you identify areas for improvement and maintain a competitive edge in the market.

Starting a hemp farm business requires an in-depth business plan to succeed. By following these 9 steps, you can write a comprehensive plan that incorporates industry research, startup costs, location selection, product development, marketing, and production plans. Investing time and effort into building a solid plan is crucial for attracting investors, securing necessary licenses and permits, and differentiating your hemp farm business from the competition.

Hemp Farm Financial Model

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How to Start a Hemp Farm in 14 Steps (In-Depth Guide)

Updated:   January 17, 2024

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The global industrial hemp market hit over $5 billion in 2023. an over 10-fold increase. Strong growth will come from hemp-derived CBD products as consumer acceptance increases and more retail distribution channels carry hemp products. Opportunities also exist on the cultivation side. Hemp farming itself is rising with the demand for quality biomass.

As more states draft legislation for hemp production programs, now could be an ideal time to explore starting a licensed hemp farm. You can sell harvested material to processors extracting CBD oil, produce your own CBD products, or break into niche markets like hempcrete building materials.

This guide will walk you through how to start a hemp farm. Topics include sourcing hemp seeds and equipment, analyzing competing hemp farmers in the area, forming a hemp farm business plan through market research, forming an LLC, obtaining business insurance, and more.

1. Conduct Hemp Farm Market Research

Market research is essential to starting a hemp crop business. It offers insight into the best hemp plants, market saturation for licensed hemp producers, the best methods to grow hemp, and details on your target market.

Some details you’ll learn through hemp seed and farming market research include:

• A key driver of growth comes from the rising demand for hemp-derived CBD.
• Consumer adoption continues rising as CBD becomes more mainstream and trusted for wellness benefits backed by a growing body of research.
• More retail channels now carry CBD too, even pharmacies have added CBD topicals.
• While the lucrative opportunity seems to be in downstream products like CBD oil, opportunities in hemp cultivation and biomass production are expanding too.

That market price, along with yield size, will determine potential hemp farming revenues. Certain variables like genetics, planting density, harvesting timelines, and cultivation environment (outdoor, greenhouse, indoor) impact yields. So maximizing per acre output is vital for profitability.

2. Analyze the Competition

Analyzing the competition is critical for those looking to start a hemp farm business. This includes evaluating nearby brick-and-mortar farms producing similar crops and assessing the online presence of leading farms across your state and the country.

Some methods of getting to know industrial hemp farming competitors include:

• Identifying all operations within a 50-mile radius then use the USDA’s Ag Census data to compare acres in production, total revenues, number of employees, and other attributes.
• Driving by each farm and observe factors like growing/drying/storage facilities and environmental control equipment that impact yields.
• Talking to local wholesale CBD processors and determine which farms supply them currently.
• Evaluating online competition is equally important nowadays.
• Searching for highly rated CBD brands then work backwards to identify their supplying farms.
• Analyzing social media and website content of leading farms to set competitive benchmarks for positioning, photography/videography, content strategy, and more.
• Regularly monitoring competitor posts and SEO rankings to assess website traffic, follower growth, and engagement levels.

See which are rapidly gaining traffic and trace back to inform your inbound marketing and SEO approach. The most successful hemp farms today combine robust online visibility with high-quality cultivation practices. Doing competitive analysis on both fronts will set your future farm up for success.

3. Costs to Start a Hemp Farm Business

Starting a profitable hemp farm requires an extensive upfront investment to secure land, equipment, infrastructure, genetics, and staff. Based on my decades of experience assisting agricultural entrepreneurs. Here is an overview of typical startup and ongoing costs most hemp farmers encounter starting a hemp program.

Start-up Costs

• The first major startup cost is securing adequate acreage of prime farmland conducive to hemp production. Plan on a budget of $2,500 – $7,000 per acre to purchase or long-term lease property.
• Most successful CBD-focused farms start with at least 50 acres which would require around $150,000 upfront even if leasing.
• Essential farm equipment like tractors, tillers, planters, and irrigation systems can run $50,000 or more depending on acreage and level of automation.
• Drying/curing facilities are equally critical; high-capacity modular options run $200,000.
• Factor in another $25,000 for supplies like planting containers, soil amendments, pest control, and fertilizer.

Ongoing Costs

• Ongoing agronomy testing will be necessary too, about $1,000 per field test.
• Access to superior genetics can dictate yields; cloned seedlings from plant nurseries often start around $5 per plant with large farms planting 2,000 plants per acre.
• Licensing fees cost up to $3,000 annually
• Business insurance runs around $5,000 per year, and legal consultation of up to $3,000 initially.
• Simple field employee labor averages $15 per hour.
• Even basic drying barns require cement floors and climate controls representing at least a $50,000 project.

All said the first-year startup costs can easily exceed $500,000 growing hemp professionally. Breaking even may take 2 or 3 growing cycles demanding deep pockets and a long-term perspective.

This business does require higher investment levels than some others in the agriculture space (e.g. orchards or greenhouses ) and takes longer to start raking in some profits, but in the long term, it can be incredibly profitable.

4. Form a Legal Business Entity

When starting a hemp farm, choosing the right business structure is critical – this decision impacts taxes, legal liability, raising capital, and more. Here’s an overview of the pros and cons of each entity, a hemp farmer might consider before investing in commercial production:

Sole Proprietorship

A sole proprietorship is the simplest as it constitutes a single individual running the business without any legal separation between personal and business assets. However, the owner assumes unlimited liability – meaning creditors can seize personal assets like their home if the business fails. Also, sole proprietors pay higher self-employment taxes.

Partnership

Partnerships allow multiple owners to jointly operate the business but each partner assumes full liability for debts and lawsuits against the company. Partners must pay self-employment tax on their proportionate share of income which can be substantial in good years. Adding or removing partners also proves more complex.

Corporation

A corporation offers liability protection as shareholders are only financially responsible for their equity investment. But “C corps” face double taxation of both corporate income and dividends. Complex annual reporting is required and corporations can be more costly to establish and administer. Raising equity financing may be easier, however.

Limited Liability Company (LLC)

For most hemp farms, a limited liability company (LLC) is best. LLCs provide legal and tax flexibility along with liability protection similar to a corporation. Profits pass through to members avoiding double taxation and annual paperwork is minimal. Expanding ownership via adding members is simpler than with partnerships and personal assets are generally shielded.

5. Register Your Business For Taxes

Before selling any products or hiring employees, every hemp farm must obtain an Employer Identification Number (EIN) from the IRS, even if operating as a sole proprietor. An EIN serves as your business’s tax ID number for federal tax purposes.

Unlike your Social Security Number which connects to your tax returns, an EIN uniquely identifies your business’s tax obligations. It also enables opening a bank account, applying for licenses and permits, and hiring workers.

The EIN application only takes minutes on the official IRS website . Simply select “View Additional Types, Including Tax-Exempt and Government Organizations” then choose “Agricultural” as the type of business. Provide basic information like name, address, and ownership structure along with Social Security numbers of owners with more than 25% control.

After submitting online, your EIN will display immediately. The IRS does not charge any fees for obtaining or renewing an EIN. Just be sure to print the assignment confirmation letter for your records.

Additionally, visit your state government’s website to register for sales tax collection, as retail sales of hemp products would require paying state sales tax. The Small Business Administration’s website outlines state-level licensing in detail. Following proper registration procedures from the start will ensure full legal compliance.

6. Setup Your Accounting

Proper financial record keeping and accounting are critical when starting a hemp farm to accurately track expenses, manage cash flow, and remain IRS audit-ready. There are many options for business accounting, let’s walk through a few of them.

Accounting Software

Platforms like QuickBooks seamlessly integrate with bank/credit card accounts to import and categorize transactions, generate invoices, send payment reminders, and more. This eliminates manual entry and reduces human error risk. Customized reporting provides real-time visibility into income, expenses, account reconciliation, and taxes owed.

Hire an Accountant

While the software does the heavy lifting on categorization and reporting, hiring an accountant is still recommended. Expect fees of $100-150 per month for bookkeeping services like payroll, accounts receivable/payable, fixed asset tracking, and inventory management. Reconciling bank and credit accounts also ensure transactions are properly coded.

Open a Business Bank Account

Separate personal and business finances are essential for hemp farmers. Open a dedicated small business checking account and apply for a basic credit card. Provide your EIN, company financial statements, and ownership documentation when applying online. This establishes a business credit history independent of your SSN and personal profile.

7. Obtain Licenses and Permits

Operating a compliant hemp farm is critical. You’ll need a hemp production license and other permits to avoid penalties and maintain eligibility for federal crop insurance and disaster relief. Find federal license information through the U.S. Small Business Administration . The SBA also offers a local search tool for state and city requirements.

At a minimum, you must apply for a U.S. Domestic Hemp Production Program through your state’s Department of Agriculture. This requires submitting a site registration application outlining the legal description, geospatial location details, and acreage dedicated to hemp cultivation along with license fees often exceeding $1,000.

Common secondary permits and licenses include obtaining an agricultural or greenhouse building permit for any new drying/storage structures, applying for a commercial feed, pet food, or fertilizer production license if selling hemp byproducts or oil and completing state-specific food safety certifications.

Documentation should be readily available on-site for inspection at all times. Any transport of plant materials or biomass over state lines requires accompanying manifests and THC potency certificates. Insurance brokers specializing in crop and agriculture businesses can also advise tailored coverage for potential risks.

8. Get Business Insurance

Operating an uninsured hemp farm exposes the business to massive financial perils, even existential threats, should an unforeseen catastrophe unfold. Insurance protects equipment investments and safeguards your livelihood.

Imagine a fire sparked by malfunctioning electrical wiring destroys your drying/storage facility along with 50% of inventory and processing machines. Or an infestation of spider mites damages 30 acres of crops days before harvest.

In both scenarios lacking insurance, you single-handedly bear the full cost of repairs, lost product, and operational disruption. For small farms, this could necessitate expensive loans, bankruptcy, or closing entirely.

Alternatively, comprehensive business insurance policies cover expenses related to property damage, inventory losses, equipment replacement, cleaning, and more from accidents, natural disasters, disease, theft, or vandalism. Common options recommended for hemp producers include:

• Crop insurance protecting against weather, pests, and low yields
• Commercial property coverage for buildings, machinery, and inventory
• General liability insurance covering bodily harm and associated legal claims

Work with an independent insurance agent familiar with hemp to access specialty providers and optimize coverage. Be prepared to provide details on operations, compliance documentation, inventory value projections, and risk management protocols on facilities. Premiums vary based on history, revenue, and exact perils covered but expect annual costs exceeding $10,000.

Business insurance is a crucial aspect of any floral business or one that involves plants of any kind due to weather volatility and overall protection coverage.

9. Create an Office Space

Operating a hemp farm requires dedicated office space to run the “business behind the business”, areas like sales, marketing, accounting, compliance, inventory, and order management. While much time is rightly spent outdoors cultivating, having an administrative home base enables professionalism and scale.

Home Office

A basic home office can provide cost savings and convenience for sole proprietors. Expect $2,000-5,000 to dedicate a room including a desk, file storage, computer, phone system, and supplies. Meetings with partners may prove trickier but remote collaboration tools help. Ensure proper permitting/zoning allowance for commercial activity at a residence.

Coworking Office

Coworking spaces like WeWork offer more flexibility to rent temporary offices, meeting rooms, and desks for $300-800 monthly depending on location and access needs. This allows meeting clients yet enables getting back to the fields quickly. However, privacy could be limited among other companies and storage access may necessitate upgrades.

Commercial Office

Long-term, leasing Class B/C generic office space in business parks or stand-alone buildings nearby offers the most professional setup while averaging $15-30 per square foot annually. Expect 1,000-3,000 square feet to be sufficient including private offices, conference capabilities, and kitchenette, with room for safe product storage. Having a more complete facility positions better for company growth too.

10. Source Your Equipment

Launching a hemp farm requires extensive equipment like tractors, soil amendments, irrigation systems, storage containers, and more. While buying new enables customization, significant cost savings can come from used purchases, rentals, or leases. Here are the top sources to acquire essential materials:

Purchasing new gives you warranty protections and confidence in full working order but tends to be the costliest. Specialized platforms like Farm Equipment USA along with dealerships offer the latest cultivators, dryers, and harvesting technology. Expect to pay 10-40% above used pricing but some new equipment financing can ease costs long-term if expanding rapidly.

Buying used equipment through auctions and classifieds often delivers major discounts, sometimes 50% or more. Farmers routinely upgrade machinery so functional, quality used inventory abounds. Check sites like TractorHouse for local availability. And don’t overlook Facebook Marketplace , Craigslist , and eBay for smaller accessories and tools.

Leasing major gear through dealers and finance providers also spreads payments over 3-5 years. This preserves capital for other startup costs. Some leases enable buying equipment at fair market value afterward – essentially a rent-to-own approach. Compare all options but buying well-maintained used goods is often optimal for most.

11. Establish Your Brand Assets

Establishing a professional brand builds credibility and earns customer trust in an increasingly competitive hemp marketplace. This requires strategic decisions on logo design, websites, signage, and other visual assets that cohesively express your farm’s identity and quality promise.

Get a Business Phone Number

An official business phone line like RingCentral also enables projecting legitimacy and providing responsive support. Toll-free numbers and advanced call routing to cell phones keep you connected in the field.

Design a Logo

Your logo merits thoughtful consideration as a recognizable farm emblem. While classic fonts and imagery like wheat graphics seem intuitive, more modern, minimalist crop-focused concepts could differentiate. Sketch ideas then create digital mockups at sites like Looka to finalize an iconic brand mark.

Print Business Cards

From logo files, order glossy business cards and aluminum signs for your office, storefront, or billboards through convenient online print shops like Vistaprint . These visual impressions build awareness and reputability with every client touchpoint.

Buy a Domain Name

Secure a branded domain name aligning with your farm identity. Check availability by searching sites like Namecheap before someone else claims your company’s ideal web address.

Design a Website

Building a custom responsive website to share your story, capabilities, products, and contact options is equally important. User-friendly site builders like Wix offer templates for showcasing farm imagery, blogging on topics like organic practices, and driving online orders. Or hire a freelancer from Fiverr if wanting advanced eCommerce.

12. Join Associations and Groups

While hemp farming requires extensive physical labor and agronomy expertise, connecting with fellow local growers and industry associations can provide invaluable mentoring, technical knowledge, and future partnership opportunities.

Local Associations

The California Hemp Association , Colorado Hemp Association , and state-level groups like them offer research on optimal seed varieties for local climates, updates on changing regulations, and collective lobbying for favorable farming policies. Tapping their expertise and being visible within the community sets you up for success.

Local Meetups

Sites like Meetup also enable finding hemp-focused networking events, conferences, and trade shows nationwide to exchange insights with peers and industry experts through panels, workshops, and mixers both virtual and in-person.

Facebook Groups

And don’t underestimate the power of niche social media communities relevant to hemp producers like the Hemp Farmers Co-Op and Hemp And Cannabis investors group on Facebook. Fellow growers frequently discuss solutions to crop threats, drying techniques, harvest/processing/storage best practices, and more within the groups.

13. How to Market a Hemp Farm Business

Distinguishing your hemp farm amid mounting competition requires thoughtful digital and traditional marketing outreach to drive customer acquisition and retention. While leveraging your network is the most affordable initial tactic, implementing ongoing paid advertising and referral incentives will prove essential to viable growth.

Referral Marketing

Satisfied buyers who organically endorse your operation after pleasant purchasing experiences can influence friends and other farmers more than any ad. Offer modest discounts for referrals that result in new sales – this mobilizes your first customers to become brand advocates.

Digital Marketing

• Run Google and Facebook ads geotargeting local searchers and those interested in hemp or CBD based on browsing habits
• Launch a YouTube channel documenting your cultivation techniques, farm history, and product offerings to build visibility
• Blog regularly about topics like hemp oil extraction methods, soil management, seed genetics, pest control, and other educational themes to attract visitors
• Foster reviews on Google Business Profile and platforms like Trustpilot to reinforce your reputation
• Engage audiences by sharing seasonal farm imagery on Instagram
• Enable email signups on your website to distribute harvest updates, specials, and other newsletters

Traditional Marketing

• Attending farmer’s markets and industry trade shows to sample products and connect personally
• Distributing flyers and brochures to health food stores and dispensaries selling hemp products
• Running radio spots on local stations aligning with your target rural demographic
• Sponsoring local events to gain brand exposure and goodwill

14. Focus on the Customer

Providing an incredible customer service experience is pivotal for hemp farms to drive referrals and repeat purchases in this burgeoning industry. With so many new brands and products flooding the CBD market, standing out through exceptional service (or faltering here) can dictate your company’s long-term viability.

Consumers today hold high expectations, fast inquiry response times, transparent ordering and shipping confirmations, proactive harvest/production updates, and lightning-fast issue resolution if any defects arise.

Farmers must internalize that they are not just selling hemp material, but an entire experience stretching from initial website discovery through to product delivery and beyond. Service touches encompass your email writing style, phone etiquette, shipment packaging, and post-purchase follow-up practices.

Brands that nail the customer journey at every step earn immense goodwill and word-of-mouth marketing. Enthusiastic buyer reviews, referrals to other grocers/processors, and repeat large bulk purchases are the fruits of getting service right.

In contrast, an impatient email response, unwillingness to customize an order, layers of phone menus, or refusal to address a legitimate quality complaint can immediately lose you a longtime advocate. Guard your reputation fiercely through service excellence. This earns the customer loyalty that is any farmer’s most valuable asset.

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How to Start a Hemp Farm

So, you want to start an industrial hemp farm€”good choice! The 2018 Farm Bill finally made industrial hemp farming legal in the United States. The passage of the bill set off a bonanza of hemp farming, fed by the rabid popularity of CBD oil and the recent, growing interest in CBG oil. According to a market research report , the industrial hemp market could be worth up to $26.6 billion in the United States by 2025. That€™s all to say that hemp may be a highly lucrative crop for farmers.

If you€™re wondering how to start a hemp farm, you have a lot to learn before you plant your first seed. While tales of huge hemp profits are certainly alluring, farmers must make sure they fully understand the hemp market, the regulatory landscape of hemp, and the agricultural requirements of this unique crop before starting a hemp farm. Fortunately, we are here to help. We€™ve been working with farmers for years to help them earn the most from their hemp crop. Consider this your guide to hemp farming 101.

Step 1: Do Your Homework

Planting a new crop is exciting, and you may be itching to start buying seeds, especially if the planting window is quickly closing for the season. Resist the urge to rush into a new endeavor, especially one as complicated as growing hemp. Instead, be patient and do your homework. Learn everything you can about growing hemp and your state and local hemp regulations: Perform research online and speak with local farmers in your state who own hemp farms. Here are some of our favorite online resources for hemp farmers:

• USDA guidelines on hemp production
• The Institute of Cannabis Research at Colorado State University
• Hemp Industry Daily

Additionally, check to see if your state has a hemp grower€™s association you can join. This could be an excellent avenue to network with other local hemp farmers.

Step 2: Clarify Your Industrial Hemp Goals

It€™s best to start out with your goal in mind, then work your way backwards. Begin thinking about which hemp products you want to grow. For most hemp farmers, their hemp crop of choice is CBD oil, but some farmers choose to grow hemp for seeds or fiber.

Step 3: Begin Identifying Potential Customers

Ideally, you€™ll want to have customers lined up before you harvest your hemp crop so you have a fast and easy way to unload your harvest. Unlike with corn and grain, there are no hemp silos where you can drop off your hemp after harvest.

Finding customers early can also help you decide which strains of hemp seeds you should purchase. For example, if you find a CBD manufacturer who wants smokable hemp flowers (also called buds) with a specific terpene profile (the aromatic quality of the flower), you can search out hemp seeds to meet that need. You may also find customers who want a CBG oil supplier€”that could easily be you.

Step 4: Create Your Hemp Farm Business Plan

Yes, you knew this one was coming. Drafting a business plan is challenging, but to help inspire yourself, think of your business plan as a €œproof of concept€ test. It€™s far better to discover problems while in the planning stage of your hemp farm than out in the field when you€™ve already laid down a big investment.

Make sure your business plan includes important sections like:

• A SWOT ( Strengths, Weaknesses, Opportunities, and Threats) analysis
• Local hemp market overview
• Your sales strategy
• Your operating plan
• Your farm€™s organizational structure
• Your financial plan, including a funding analysis and profit & loss forecast

We strongly suggest that you keep your profit estimates modest. Many online articles like to tell stories of farmers clearing $40,000 or more per acre of hemp. While these profits may be attainable by some, it is unlikely that first-time hemp farmers will see this level of return. By keeping your profit estimates reasonable, you can ensure that you€™ll be able to meet your expenses. And if you beat expectations? Icing on the cake.

If you are having trouble developing your hemp farm business plan, reach out to your local hemp farmer€™s association if one exists. You may also want to work with an agronomist who has experience in hemp farming.

Step 5: Develop a Plan for Testing and Compliance

One of the unique challenges of starting a hemp farm is that farmers must abide by the USDA€™s strict guidelines regarding the THC content of their crop. According to these guidelines, your hemp plants must stay below a 0.3% THC threshold. You will be responsible for frequently testing your plants to ensure compliance, which is regulated by your state.

We recommend that you begin testing your plants a month after germination and test every two weeks. You may want to test even more frequently as you get closer to harvest. Search for a reputable testing facility now so that you can ensure that you€™ll be able to consistently and accurately test your plants.

Step 6: Create an Irrigation Plan

Hemp can thrive with a variety of irrigation systems, including surface drip irrigation, subsurface irrigation, pivot irrigation, and flood irrigation. Now is the time to decide what type of irrigation system you want to use, as it will affect your overall costs, especially if you need to purchase a new system.

Step 7: Get Your License/Permit/Registration

The 2018 Farm Bill requires that every state create and submit a €œstate hemp plan,€ which includes information on how the state will actively track industrial hemp farming within its borders. That means each state has its own regulations regarding hemp farming.

You will almost certainly need to request some form of license or permit in order to farm hemp in your state. You may also need to register with your local city or county. Reach out to your state€™s agricultural department to determine what type of permissions you need. You may also want to hire an attorney with industrial hemp experience to make sure all of your paperwork is above reproach.

Step 8: Invest in Equipment and Labor

What new equipment will you need to ensure the best outcome for your hemp crop? For example, if you plan on buying hemp seeds, we strongly recommend that you start them in a greenhouse. (Don€™t have a greenhouse? Try hemp starts instead of seeds.)

Hemp is also a labor-intensive crop, so it€™s a good idea to recruit a crew of experienced workers who can help you cull male plants, watch out for pests, and maintain ideal field conditions. We recommend checking your fields daily.

Step 9: Prep Your Fields

As the day to plant your first hemp crop grows closer, you€™ll want to make sure your soil is in ideal condition to help your plants grow fast and strong. The best way to prep your field will depend on your farm€™s soil conditions and your regional environment.

It€™s a good idea to test your soil for elemental sulfur, potassium sulfate, and rock phosphate to make sure the levels aren€™t too high. You€™ll also want to make sure your soil is well-drained before planting.

Step 10: Buy Your Hemp Seeds

With everything in place and planned out, it€™s time to purchase your seeds. If you€™ve performed steps two and three, then you should know exactly what type of hemp crop you want to cultivate. For example, perhaps you want to grow hemp specifically for CBG production or maybe you want to grow hemp with a fruity terpene profile.

Decide whether you want to invest in hemp seeds or hemp starts. (We don€™t recommend using hemp clones since they will never grow a taproot, which make the plants more fragile.) You may also want to consider purchasing early finishing seeds, which will allow you to stagger your harvest and use your labor more efficiently.

Look for a hemp seed company that has been around for at least a few years and is passionate about the genetics of their seeds. We strongly recommend that hemp farmers invest a little more upfront and purchase feminized seeds to ensure the highest resin yields possible. When male hemp plants pollinate females, resin yields are substantially lower. (Here€™s everything you need to know about feminized hemp seeds .)

Finally, if you find a hemp seed strain you want to try, purchase your seeds from the original company that created that hemp strain, not a seed reseller. The original company will be able to provide you with much more information and personal guidance during the planting, cultivating, and harvesting process.

At High Grade Hemp Seed , we are here to help you as you prepare to start farming hemp. We would be glad to tell you more about our many tried and proven hemp seed strains, including industry favorite Berry Blossom , Cherry Wine , fast-growing Auto Flower, and one of our newest strains, Matterhorn CBG , bred specifically to increase CBG production.

Contact us today €”we€™ll be happy to help you learn more about how to start a hemp farm.

To produce best-in-class hemp cultivars with a proven track record of compliance, feminization, and cannabinoid levels.

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P.O. Box 778

Longmont, CO 80502

[email protected]

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Hemp Farm Business Plan Template

Whether you want to start your own hemp farm business or expand an existing one, you need a business plan. the following hemp farm business plan template lets you know what elements you need to include in a successful hemp farm business plan., fill the form to download business plan templates.

To ensure your hemp farm business success in this highly competitive market, you need a properly structured hemp farm business plan. With over 12 years of experience, we have helped over 5,000 entrepreneurs create business plans to start and grow their hemp farm businesses.If this is your first time writing a business plan, we’ll walk you through these sections and give you some key things to consider.

What kind of Industry is Hemp Farm?

Hemp, a plant species from the Cannabis family, has been used for centuries to manufacture a variety of industrial and consumer products.

As a brand-new industry, Industrial Hemp Production is currently experiencing explosive growth. Industrial hemp, also known as hemp, is a variety of cannabis with only trace amounts of tetrahydrocannabinol (THC).

Prior to 2018, hemp production in the United States was largely illegal.

However, the 2018 Farm Bill legalized hemp growing, on the grounds that the hemp grown contains less than 0.3% THC by weight.

As soon as hemp was legalized, the Industrial Hemp Production industry boomed. Companies flocked to the industry in order to take advantage of the high demand for hemp-based products.

The industry has experienced an immediate boom over the past five years, and companies are expected to settle into a more stable position.

Hemp prices will stabilize as companies expecting to turn a quick profit leave the industry. Thus, over the five years to 2024, industry revenue is expected to increase by 6.6% annually to $0.9 billion.

Among the major products and services offered by this industry are

• Food products
• Hemp-based CBD
• Supplements
• Personal care products
• Consumer textiles
• Industrial applications

Need a Business Plan Writer For Your Hemp Farm Business?

Hire us Now!

Key Success Factors for Hemp Farm Business

Despite the challenges of the Hemp industry, We have identified five factors that can help you boost profitability, efficiency, and ultimately success.

• A high volume, low margin strategy: Operators are reporting a need to expand planted acres to remain price competitive in their market.
• Control of inventory: Operators must ensure their supply chains and inventories are managed so that harvests do not go bad in storage.
• Promoting hemp effectively: Since hemp cultivars are essentially interchangeable, industry players need to work hard to differentiate themselves from their rivals.
• Compliance with government regulations: Farmers must meet federal guidelines regarding the percent content of THC, the active chemical in marijuana, in their hemp harvest. Shipments of more than 0.3% THC are considered illegal.

What is a Hemp Farm Business Plan?

A business plan provides an overview of your hemp farm as it currently stands and outlines your growth strategy for the next five years. It explains your company’s goals and strategy for achieving them. Market research is also included to back up your plans.

A solid, comprehensive plan will serve as a road map for the next three to five years of the hemp farm business. Any bank or investor you approach will require a hemp farm business plan, so putting one together will be critical to securing funding.

In short, writing a business plan can help you succeed if you’re thinking of starting a hemp farm business or pitching to investors or venture capitalists.

Free: Business Plan Examples

Do you need help creating a business plan? Check out these six free, proven business plan examples from different industries to help you write your own.

Why You Need a Hemp Farm Business Plan

You can stay current with market trends by developing a hemp farm business plan. In addition, it lets you track results over time, test lead generation strategies, and develop new marketing approaches.

A business plan will help you raise funding and plan the growth of your hemp farm, increasing your chances of success. Your business plan should be updated on an annual basis as your company grows and changes.

Hemp farm business who have a business plan grow 30% faster than those who don’t, and 71% of fast-growing businesses have one.

The following is what a good hemp farm business plan will show you:

• Where you are right now
• What you want to achieve
• How will you get there
• How will you measure your success
• Where and when to make corrections

A hemp farm business plan is a living document that should be updated annually as your company grows and changes.

Funding Sources for Hemp Farm Business

The main sources of funding for a hemp farm are personal savings, credit cards, and bank loans. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay the loan and interest.

To gain this confidence, the loan officer will not only look at your financials. However, they will demand a professional plan. A well-developed business plan will ensure that they are confident that you can successfully run a business.

Other Assistance:  Direct farm ownership loans, Microloans, Direct operating loans, USDA Organic Certification Cost Share Programs, Farm storage facility loans, and Specialty loans for minority and women farmers, beginning farms, native American tribes and others.

Looking to Build Credit for Your Hemp Farm Business ?

Build your business credit quickly with an easy approval net 30 account from Wise Business Plans. Or check out the top 10 net 30 vendors to find the best one for you to help build your business credit .

How to Write a Hemp Farm Business Plan

To write a hemp farm business plan, you don’t need to be an expert. Our step-by-step guide will show you how to write a hemp farm business plan, or you can just download our proven  sample business plans  to get a better idea.

Hemp Farm Business Plan PDF and Word

Download our hemp farm business plan in PDF and Word here.

Executive Summary

The executive summary is the most important part of the document since it outlines the whole hemp farm business plan. Despite the fact that it appears first in the plan, write the executive summary last so you may condense key concepts from the other nine parts.

It’s a part that catches the investor’s eye and provides key information about your company’s overview and upcoming short- and long-term goals.

Tell them what kind of hemp farm business you have and what stage you’re in; for example, are you a startup, do you have a hemp farm company that you want to expand, or do you have a lot of hemp farms?

Finally, an executive summary should provide investors with a preview of what they may expect from the rest of your document.

• Provide a high-level overview of the hemp farm industry
• The name, location, and mission of your hemp farm company
• A description of your hemp farm business, including management, advisors, and a brief history
• Discuss the type of hemp farm business you are operating, Give an overview of your target customers., and how your company differs from competitors in the industry
• Create a marketing plan that describes your company’s marketing strategies, sales, and partnership plans.
• And give an overview of your financial plan

Check out these executive summary examples to help you write a perfect one for your hemp farm business plan.

Free: Executive Summary Examples

An executive summary is the most important part of your business plan, and it need not be challenging to write. This is why we have put together some awesome free Executive Summary examples for you.

Company Analysis

The company analysis follows the executive summary as the second section of a hemp farm business plan. Your company overview will be short and clear, similar to the executive summary.

Even if they just have a few minutes, your reader has to understand what your company does and who your customers are.

The following sections will be included in your business plan’s Company Analysis:

• Company summary: Your company analysis will describe the type of hemp farm business you are running and its future goals. The type of hemp farm business you might be focused on ( Industrial hemp, Hemp for textiles, CBD hemp, Food-grade hemp, etc.)
• Company history: When and why did you start your hemp farm business?
• What milestones have you achieved so far? Your milestones could include served 100th customer, new contracts, etc.
• Legal structure and ownership: Do you have S-Corp status? Is it an LLC ? A sole proprietorship ? Describe your legal structure.
• Mission statement: An overview of your hemp farm company’s guiding principles. Learn how to write a perfect mission statement .

Industry Analysis

You need to include an overview of the hemp farm business in the industry analysis you performed before sitting down to write your hemp farm business plan.

While this research may appear to be unnecessary, it helps you to build strategies that maximize business opportunities while lowering or avoiding the identified risk.

Furthermore, market research can improve your strategy, especially if it identifies market trends.

The third purpose for conducting market research is to demonstrate to readers that you are an industry expert.

Industry analysis can be presented as a 8-step process when written as part of a company’s business plan.

• Give a quick overview of the hemp farm industry. Define the hemp farm business in terms of size (in dollars), historical background, service region, and products.
• Examine previous trends and growth patterns in the hemp farm industry.
• Identify the market’s major competitors.
• Who are the market’s key suppliers.
• Determine the factors that have an impact on the hemp farm industry. These might include government regulatory rules and other businesses’ competitive activities.
• Using research data, the industry forecast expected growth over the next five to ten years. Predictions should be made for both the long and short term.
• Describe how your hemp farm business intends to position itself in the industry. Concentrate on how your hemp farm can benefit from opportunities highlighted in the industry.

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Customer Analysis

The first condition for a hemp farm business is to identify its target customers clearly. Customers can be categorized into the following segments: Pharmaceutical companies, Practitioners of complementary medicine who use, CBD) oil, (CBD) oil distributors and Small-scale businesses that utilize cannabis (CBD) oil as a raw material, end consumers, fabric producers, etc.

The customer analysis section is an important part of any hemp farm business plan since it evaluates the consumer segments that your company serves. It identifies target customers, determines what those customers want, and then explains how the product will meet those requirements.

Customer analysis may be divided into two parts: Psychosocial profiles and Demographic profiles .

With regards to demographics, include information about: the ages, genders, locations, and income levels of your customers. When targeting businesses, describe what kind of business, size, and location your target customers are.

The psychological profiles of your target clients reveal their wants and needs. The better you understand and identify these demands, the better your chances of attracting and retaining customers will be.

Competitor Analysis

Who are the main competitors in your target market, and what makes them your main competition? How will you beat them? Use competitor analysis to:

• Identify the strength and weakness of your hemp farm business competitors.
• Search for opportunities to distinguish your hemp farm business from competitors.

The first step is to determine who your direct and indirect competitors are.

The direct competitors consists of other hemp farm companies.

When it comes to direct competitors, you should describe the other hemp farm business you compete with. It is most likely that your direct competitors will be hemp farm business located nearby.

Customers may use indirect competitors in addition to direct competitors. This includes cannabis imports as well as other cannabis cultivators. You must mention such competition to demonstrate that you understand that hemp will not meet all fiber or supplement demand.

Once you’ve identified the competition, concentrate on the direct, head-to-head competitors, since they are the most threatening to your hemp farm business— but keep an eye on the indirect competition as well, just in case.

Provide an overview of each direct competitor’s business and detail their strengths and weaknesses.

You will be able to position yourself competitively in the market if you perform proper competition research. Perform a SWOT Analysis to learn your competitors’ strengths, weaknesses, and competitive advantages in the following areas:

• Prices – Are they offer cheaper hemp farm products or more costly than you and other competitors, what value do buyers get for that price?
• Quality – Are they offer premium hemp products, the perceived worth in the eyes of the customers
• Customer service – How they respond to their consumers, whether they treat them poorly or well, and the degrees of satisfaction customers show
• Reputation — The sum of everything mentioned above: their credibility, how loved the brand is, and the loyalty of their customers

The final section of your competitive analysis should include a list of your areas of competitive advantage. for example: Are you going to offer premium hemp products? Will you offer unique hemp products that your competitors don’t offer? Will you offer better pricing or will you offer greater customer support?

Consider how you will outperform your competitors and include them in this portion of your hemp farm business plan.

Free: SWOT Analysis Examples

Take advantage of our free SWOT analysis examples. Make your business future-proof by identifying your strengths, weaknesses, opportunities, and threats using this free SWOT Analysis Template.

Marketing Plan

Creating a marketing plan for a hemp farm business involves identifying the target demographic and finding hemp farm products that suit their preferences.

As part of your marketing plan for a hemp farm company, you should include:

Pricing and Product Strategy

Your hemp farm business must offer products that are quality based and different from those of your competitors. Research what your competitors offer and how they price their hemp products. Unique products identifies your hemp farm business as the place to go for unique products and differentiates it from others.

Placing and Promotions

Place refers to the location of your hemp farm. Record your location and explain how it will affect your success. Is your hemp farm, for example, at a central location that will facilitate transportation, and so on? Discuss how your location could allow you to serve a larger number of consumers.

Promoting your hemp farm business is the final part of your marketing plan. In this step, you document how you will drive customers to purchase your hemp farm business. A few marketing methods you could consider are:

• Advertise in the yellow pages (local directories)
• Advertising through relevant business magazines, newspapers, TV and radio stations.
• Introducing the CBD hemp farming company by mailing introduction letters and brochures to businesses that use hemp and cannabis plants and seeds.
• Listing hemp products on yellow pages adverts (local directories)
• Attend relevant international and local expos, seminars, and business fairs.
• Join local chambers of commerce and industries in order to sell hemp products.
• Encourage word-of-mouth marketing from loyal and pleased customers

You should also think about your hemp farm’s Unique Selling Proposition (USP), which should explain why clients should choose you over other hemp farm businesses. Ensure that your USP is reflected in your marketing.

Pro Tips: If your are DIY business plan writer, this guide on how to write a marketing plan in a business plan might be helpful for you.

Operations Plan

While the previous sections described your goals, your operational plan in a business plan discusses how you will achieve them.

An operations plan is helpful for investors, but it’s also helpful for you and employees because it pushes you to think about tactics and deadlines.

Your operations plan should be divided into two individual parts, as seen below.

Everyday short-term processes include all tasks associated with running your hemp farm, such as tilling, planting, growing, and harvesting the crop, maintaining equipment, staying up to date on new technology and/or regulatory developments, processing paperwork, and so on.

Long-term goals are milestones you hope to reach. It may be the date when you expect to finalize lease agreement or when you hope to reach $X in sales. Another example would be when you expect to hire your Xth employee or start a new location.

Management Team

When writing a hemp farm business plan, the management section’ outlines your management team, staff, resources, and how your hemp farm business ownership is structured.

This part may be easily organized by dividing it into the following points:

Ownership Structure

Internal Management Team

External Management Resources

Human Resources

This section outlines your hemp farm business’s legal structure. If your company is a sole proprietorship , it may simply be one phrase. It might be longer if your company is a partnership or a corporation . You should make it a point to clarify who owns what part of the business.

This section should not only outline who is on your management team but also how each person’s skill set and experiences will contribute to the growth of your hemp farm business. Ideally, you and/or your team members have direct expertise in the hemp farm business. If this is the case, highlight your experience and skills.

Think of these external management resources as your internal management team’s backup. Consider forming an advisory board if your team is lacking expertise and experience with hemp farm business.

An advisory board would consist of 3 to 7 people who would serve as mentors to your hemp farm company. They would assist in answering queries and providing strategic direction.

If necessary, search for advisory board members with expertise running hemp farm business.

Describe all of your company’s external professional advisers, such as accountants, bankers, attorneys, IT experts, business consultants, and/or business coaches. 

The final topic to consider in the management area of your hemp farm business plan is your human resource needs.

Recommended Resources: Learn how to write a management team section in a business plan.

Financial Plan

As part of your financial plan, you should present a 5-year financial statement broken down monthly or quarterly for the first year, and then annually. Financial statements include your income statement, balance sheet, and cash flow statement.

Read Later: How to write a financial plan in a business plan.

Income Statement

A profit and loss statement is more commonly called an income statement. It shows your revenue and subtracts your expenses to determine whether you were profitable or not.

As you develop your income statement, you need to develop assumptions. For instance, Will sales grow by 2% or 10% per year? Your choice of assumptions will greatly impact your business’s financial forecasts. Conduct as much research as possible in order to ground your assumptions in reality.

Free: Income Statement Template

Create a financial statement for your business by downloading our free income statement templates.

Balance Sheet

While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities.

The balance sheet shows your hemp farm business’s net value at a specific point in time. It categorizes all of your company’s financial data into three categories:

• Assets: Tangible goods with the monetary worth that the company owns.
• Liabilities: Debt owing to a company’s creditor.
• Equity: The net difference when the total liabilities are subtracted from the total assets.

The equation that expresses the relationship between these financial data elements is Assets = Liabilities + Equity.

Create a pro forma balance sheet for your hemp farm business plan that highlights the information in the income statement and cash flow projections. A balance sheet is normally prepared once a year by a company.

Balance sheets indicate your assets and liabilities, and while they contain a lot of information, they are simplified to highlight the most important things you need to know.

For example, spending $150,000 to build out your hemp farm business will not result in instant revenues. Rather, it is an asset that should help you earn money for many years to come.

Similarly, if a bank write you a check for $100,000, you do not have to pay it back right now. Rather, that is a liability that you will repay over time.

Cash Flow Statement:

Your cash flow statement will help you determine how much money you need to start or grow your hemp farm business. In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a hemp farm business:

• Location build-out costs include land preparation fees, barn and production facility construction, and so on.
• Equipment costs
• Payroll or salaries paid to employees
• Business insurance
• Payroll or salaries paid to staff
• Legal expenses
• Amount spent on advertising

Free: Balance Sheet Template

Create a financial statement for your business by downloading our free balance sheet templates.

List any additional material you cannot include elsewhere, such as resumes from key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit histories.

Attach your full financial projections along with any supporting documents that make your plan more compelling in the appendix.

Bonus Tip: Learn how to write a business plan appendix for your hemp farm business.

Summary of the Hemp Farm Business Plan

A hemp farm business plan is a worthwhile investment. As long as you follow the template above, you will become an expert in no time. By following the template, you will understand the hemp farm business, your competition, and your customers. The plan will help you understand the steps necessary to launch and grow your hemp farm business.

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Wouldn’t it be nice if your business plan could be completed faster and easier?

With wise business plans Business Plan Template , you can finish your hemp farm business plan in just 6 hours or less with a 30-Day Money-Back Guarantee!

Also, you can download our 300+ free business plan templates covering a wide range of industries.

OR, we can create your hemp farm business plan for you

Since 2010, Wise business plans’ hemp farm business plan writers has developed business plans for thousands of companies that have experienced tremendous success.

Get started on your business plan on hemp farm  today!

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We will show you some real-world business plan examples so you may know how to write your own, especially if you are seeking a bank loan or an outside investment and need to use SBA-approved formatting.

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How to Write a Successful Hemp Business Plan (+ Template)

Creating a business plan is essential for any business, but it can be especially helpful for hemp businesses that want to improve their strategy and raise funding.

A well-crafted business plan not only outlines the vision for your company, but also documents a step-by-step roadmap of how you are going to accomplish it. In order to create an effective business plan, you must first understand the components that are essential to its success.

This article provides an overview of the critical elements that every hemp business owner should include in their business plan.

Download the Ultimate Business Plan Template

What is a Hemp Company Business Plan?

A hemp company business plan is a formal written document that describes your company’s business strategy and its feasibility. It documents the reasons you will be successful, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.

Why Write a Hemp Company Business Plan?

A hemp company business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.

Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.

Writing an Effective Hemp Company Business Plan

The following are the key components of a successful hemp company business plan:

Executive Summary

The executive summary of a hemp company business plan is a one- to two-page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.

• Start with a one-line description of your hemp company
• Provide a summary of the key points in each section of your business plan, which includes information about your company’s management team, industry analysis, competitive analysis, and financial forecast.

Company Description

This section should include a brief history of your company. Include a short description of how your company started and provide a timeline of milestones your company has achieved.

If you are just starting your hemp business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your hemp firm, mention this.

You will also include information about your chosen hemp company business model and how, if applicable, it is different from other companies in your industry.

Industry Analysis

The industry or market analysis is an important component of a hemp company business plan. Conduct thorough market research to determine industry trends and document the size of your market. 

Questions to answer include:

• What part of the hemp industry are you targeting?
• How big is the market?
• What trends are happening in the industry right now (and if applicable, how do these trends support the success of your company)?

You should also include sources for the information you provide, such as published research reports and expert opinions.

Customer Analysis

This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.

For example, hemp company business customers may include small farmers who want to use hemp as a rotation crop. In contrast, your retail customers may be people who want to buy natural and sustainable products.

You can include information about how your customers decide to buy from you as well as what keeps them buying from you.

Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or hemp services with the right marketing.

Competitive Analysis

The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.

For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive advantage; that is, in what ways are you different from and ideally better than your competitors.

Below are sample competitive advantages your hemp business may have:

• Hemp is a sustainable resource
• Growing hemp doesn’t require pesticides or herbicides
• Hemp can be used to produce a wide variety of products
• There is a growing demand for hemp products
• Hemp has been used for thousands of years

Marketing Plan

This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.

• Product/Service : Detail your product or service offerings here. Document their features and benefits.
• Price : Document your pricing strategy here. In addition to stating the prices for your products/services, mention how your pricing compares to your competition.
• Place : Where will your customers find you? What channels of distribution (e.g., partnerships) will you use to reach them, if applicable?
• Promotion : How will you reach your target customers? For example, you may use social media, write blog posts, create an email marketing campaign, use pay-per-click advertising, or launch a direct mail campaign. Or you may promote your hemp business via word-of-mouth.

Operations Plan

This part of your hemp company business plan should include the following information:

• How will you deliver your product/service to customers? For example, will you do it in person or over the phone only?
• What infrastructure, equipment, and resources are needed to operate successfully? How can you meet those requirements within budget constraints?

The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.

Finally, and most importantly, in your Operations Plan, you will lay out the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a hemp company business include reaching $X in sales. Other examples include shipping products to customers in all 50 states, having a product featured in a major publication, or partnering with a large retailer.

Management Team

List your team members here, including their names and titles, as well as their expertise and experience relevant to your specific hemp company industry. Include brief biography sketches for each team member.

Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.

Financial Plan

Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix). 

This includes the following three financial statements:

Income Statement

Your income statement should include:

• Revenue : how much revenue you generate.
• Cost of Goods Sold : These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
• Net Income (or loss) : Once expenses and revenue are totaled and deducted from each other, this is the net income or loss.

Sample Income Statement for a Startup Hemp Business

Balance Sheet

Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:

• Assets : Everything you own (including cash).
• Liabilities : This is what you owe against your company’s assets, such as accounts payable or loans.
• Equity : The worth of your business after all liabilities and assets are totaled and deducted from each other.

Sample Balance Sheet for a Startup Hemp Business

Cash Flow Statement

Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include cash flow from:

• Investments

Below is a sample of a projected cash flow statement for a startup hemp company business.

Sample Cash Flow Statement for a Startup Hemp Business

You will also want to include an appendix section which will include:

• Your complete financial projections
• A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
• Any other documentation which supports what you included in the body of your business plan.

Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your hemp company . It not only outlines your business vision but also provides a step-by-step process of how you are going to accomplish it.

A business plan is an essential tool for any hemp company business owner. By having a well-thought-out business plan, you increase the chances of your hemp company being successful.  

Finish Your Hemp Farm Business Plan in 1 Day!

How to Start a Hemp Farm

Hemp farming continues to gain popularity as a high-yield, (relatively) low-maintenance crop that manufacturers can process for a wide variety of commercial applications.

Learn how to start your own Hemp Farm and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services .

Start a hemp farm by following these 10 steps:

• Plan your Hemp Farm
• Form your Hemp Farm into a Legal Entity
• Register your Hemp Farm for Taxes
• Open a Business Bank Account & Credit Card
• Set up Accounting for your Hemp Farm
• Get the Necessary Permits & Licenses for your Hemp Farm
• Get Hemp Farm Insurance
• Define your Hemp Farm Brand
• Create your Hemp Farm Website
• Set up your Business Phone System

We have put together this simple guide to starting your hemp farm . These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas .

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What will you name your business?

• What are the startup and ongoing costs?
• Who is your target market?

How much can you charge customers?

Luckily we have done a lot of this research for you.

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Business Name Generator

If you operate a sole proprietorship , you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name , we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability .

It's very important to secure your domain name before someone else does.

Want some help naming your hemp farm ?

Business name generator, what are the costs involved in opening a hemp farm .

Hemp farming requires land. Buying farmland — along with farming and irrigation equipment — will require a sizable, upfront investment if you aren’t already farming. If you’re already a farmer, your initial costs will mostly focus on seed stock or clones for starting crops. You’ll also need to secure any required state and local licenses as well as insurance. Most costs associated with growing row crops, such as fertilizer and pest control, are already factored in for annual operating costs.

What are the ongoing expenses for a hemp farm ?

Most ongoing expenses include buying seed stock or clones as well as farming supplies, maintaining farm equipment and buildings, paying worker salaries, and purchasing individual and farm insurance.

Who is the target market?

Hemp farming has both commercial and retail markets to consider. As a textile product, hemp’s commercial market includes businesses looking to compete with various products they can now make with hemp. Plastics, paper, building products, and fabrics are all products challenged by hemp.

In the retail space, customers buying hemp products tend to be younger and more liberal-minded although hemp fabrics and cannabidiol (CBD) sales reach into a wide range of demographic markets. College-educated people aged 25 to 50 represent a core group of hemp customers.

How does a hemp farm make money?

Hemp farms make money from the sale of their bulk, dried hemp.

Hemp is sold as a commodity so the market dictates the price. Farmers can sell their hemp plants as the fiber, the seeds, or both — with each option priced accordingly. Although prices continue to increase, as a market average, beware of ballooning figures based on speculators. Some in the industry fear hemp’s meteoric rise in popularity may cause a bubble similar to what the technology industry experienced in the early 2000s. Current wholesale prices vary between raw and processed hemp products, ranging from $3 to $3,000 per XXX.

How much profit can a hemp farm make?

Farming is a tricky business. While farmers don’t often turn a huge profit, it’s possible to keep overhead costs low by handling as much of the work as possible with a small crew. Hemp farming has the potential for good profits, but you must temper your expectations with the knowledge that Mother Nature can sometimes be a fickle and difficult partner. Average hemp farming profits typically fall in the range of $200 to $250 per acre.

How can you make your business more profitable?

Currently, hemp farming is experiencing a popularity surge. Offer the general public a chance to see what you do in an effort to destigmatize this plant. Many people will enjoy guided tours and farm visits. You might even consider using your farm as a backdrop for photo shoots. Some individuals would love to be immortalized on film, surrounded by your leafy greens.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship , partnership , limited liability company (LLC) , and corporation .

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your hemp farm is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services . You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website . If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil .

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history , which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a Hemp Farm Business. Learn more about licensing requirements in your state by visiting  SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses .

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance . This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance . If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners , we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended : Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker .

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator . Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a hemp farm

Because you’ll mostly sell to wholesalers, your advertising should feel more like an ad for your entire industry. Create a social media presence and business website to showcase your farming process. Use these platforms to share the final products manufactured from your hemp as well. People really like to see stores and the understanding of how this product can improve daily life is critical.

How to keep customers coming back

Clients will tend to stay with a commercial source as long as it delivers a fair price and a consistent product. Clients stake their businesses on your hemp supply. If you can align your crop rotations and harvests with your clients’ needs, you should also retain those customers.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business .

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

• All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
• Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
• Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended : Get started today using our recommended website builder or check out our review of the Best Website Builders .

Other popular website builders are: WordPress , WIX , Weebly , Squarespace , and Shopify .

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

Is this Business Right For You?

Because hemp farming is, in essence, the same as cultivating other field crops, it’s a potential fit for individuals with experience farming and harvesting acres of crops. Many traditional produce and commodities (e.g., corn, soybean) farmers now include hemp in their crop rotations or transform entire fields for this industrious material. To prosper in this business, you’ll need a solid understanding of crop rotation, waiting and reutilizing strategies, pest prevention, and harvesting and baling.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

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What happens during a typical day at a hemp farm ?

Much like any farm, most days involve monitoring existing farm systems and equipment as well as your crops. Farming often involves waiting for certain times — both for planting and harvesting. With hemp, the growth cycle averages 110 days. Farmers can stagger or “cycle” their fields between planting, growing, and harvesting to generate a larger annual yield and a constant flow of work. After harvesting and baling their hemp, farmers ship it to manufacturing plants around the country. As such, some daily operations may include the logistics of shipping and receiving.

What are some skills and experiences that will help you build a successful hemp farm ?

Farming experience is a great start. Growing crops involves much more than soil, water, and sun. Experience in the tractor saddle really can give you an edge. Understanding the business world and, specifically, the hemp market, also will prove critical to success. 

While this industry is poised to explode in popularity and demand, the structure and legality of hemp products remain subject to sweeping changes. Understanding the political nature of this crop and how to navigate dissenting opinions of your industry also will be essential.

What is the growth potential for a hemp farm ?

With the legalization of hemp farming around the country, many textile and clothing manufacturers now recognize the benefits of hemp fibers. Hemp has been used for thousands of years in numerous products, such as fabrics and rope. Today, modern manufacturing also uses hemp fibers as a biodegradable plastic replacement. Of course, there is the ever-growing cod market, which has been embraced by numerous citizens from all walks of life as a pain reliever and beneficial dietary additive. Overall, industry experts project hemp farming will remain increasingly popular and profitable for the foreseeable future.

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Take the Next Step

Find a business mentor.

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a hemp farm ?

Hemp farming requires a solid demand for your product. Luckily, that demand continues to grow more and more each day. Your business also will need big voices and backers to help share and promote your vision. These include industry leaders in textiles, fabrics, and building materials. The stigma of hemp’s relation to marijuana will continue to turn away some potential clients, but, more than ever, consumer approval seems too positive to ignore.

Align your business with other forward-thinking businesses and act as a voice for environmentally conscious farming. Hemp farming challenges some large industries, such as forestry and fossil fuels, so retaining a market share requires finding allies at all levels. Growing your support team and customer base will be key for growing your overall company.

How and when to build a team

Because of the nature of rotational farming, your team will ebb and flow. For harvesting and baling, your team will swell. But, you won’t need much help during the growing phase. A medium-sized farm may only need two or three people to keep it operating, for example, plus a few more field hands during harvest. A large-scale farm might need three to five equipment operators and a few more field hands to round out its team.

Useful Links

Industry opportunities.

• Business Opportunities Blooming in Hemp Industry

Real World Examples

• Glas Farm Michigan
• The Hemp Train

Further Reading

• USDA Hope for Hemp: New Opportunities and Challenges for an Old Crop
• A Beginners Guide for Growing Hemp

Additional Sources

• Hemp Industries Association

Have a Question? Leave a Comment!

Growing Your Hemp Farming Venture with an Effective Farm Business Plan

As the rapidly developing hemp industry continues growing, farmers are increasingly looking to capitalize on opportunities to cultivate viable hemp crops. An essential first step to building a sustainable and profitable hemp farming operation is creating a comprehensive hemp farming business plan . Use the following key steps to craft your plan and position your venture for funding, strategic partnerships, and operational success.

Outline Your Products and Services

Clarify the specific hemp products you aim to produce – whether CBD oil, fibers for textiles, construction materials, or other derivatives. Detail the steps in your cultivation, harvesting, processing, and distribution process. Conveying expertise across the hemp farming value chain is imperative to demonstrate viability to partners and investors. Include specifics on seasonal workflows based on geography, farm acreage under cultivation, and growth cycles.

Conduct Market Opportunity Analysis

Perform in-depth analysis around the hemp industry, end-consumer CBD and derivatives markets, regulatory considerations, and competitive forces. Use this data to make projections around estimated demand, pricing models, and your total addressable market. A thorough understanding of market dynamics is invaluable for context to project growth trends and target buyers. Constructing an insightful market analysis can set your hemp business pla n apart.

Present Your Business Model and Economics

Detail the core elements bringing your hemp farming business plan operation model to life – your physical farm resources, farming techniques and IP, processing capabilities, sales channels, and partnerships, staffing plan, IT infrastructure, legal/regulatory strategy, etc. Map out a multi-year P&L, balance sheet, cash flow statement, and financing strategy. Model out best-to-worst case investment and profitability scenarios. Investors will scrutinize your assumptions to assess viability and return potential.

Profile Your Management Team

For any venture, the capabilities of founders and management team in executing the hemp farm business plan pdf is critical. Create bios for all key team members highlighting specialized expertise in hemp farming, plant genetics, agronomy, processing, extraction techniques, and industry connections. Conveying unique value-add through your team is key.

Expound on Risks and Mitigations

Address potential risks spanning operational challenges to regulatory changes that may negatively impact your hemp farming business. For each risk, detailed plans to monitor and mitigate to reduce likelihood and impact. Describing key risks upfront and your strategy to address problems shows investors prudent planning.

Detail Your Capital Requirements

Provide specifics on the level of capital you are raising, exact allocation of funds towards assets, operations, and growth activities, proposed investor equity ownership percentages and compensation, timeline to achieve profitability and harvest subsequent funding rounds. Tailor investment terms towards what will incentivize investors to partner with your hemp farming venture given industry benchmarks.

By following these planning best practices tailored to the hemp sector, your hemp business plan will command authority and address the information needs of prospective partners, lenders, and investors. For support creating polished, investor-ready business plans perfect for hemp ventures or any agricultural endeavor, visit https://planwriters.com/ today. Our experts can help put your bold business vision on paper and provide the tools connected with capital sources to transform hemp dreams into reality.

Business Plan Paves The Way For Hemp Businesses

Your perfect guide to start a hemp business, 7 reasons to have a cbd business plan.

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Hemp Farming Business Plan Template

Explore Options to Get a Business Plan.

Are you interested in starting your own Hemp Farming Business?

Introduction

Global market size, target market, business model, competitive landscape, legal and regulatory requirements, financing options, marketing and sales strategies, operations and logistics, human resources & management.

Hemp Farm Business Plan Template [Updated 2024]

Hemp Farm Business Plan Template

If you want to start a Hemp Farm business or expand your current Hemp Farm, you need a business plan.

The following Hemp Farm business plan template gives you the key elements to include in a winning Hemp Farm business plan.

You can download our business plan template (including a full, customizable financial model) to your computer here.

Hemp Business Plan Example

I. executive summary.

You can download our Business Plan Template (including a full, customizable financial model) to your computer here.

Business Overview

[Company Name], located in [insert location here], is a hemp farm that grows high-quality hemp products. Located on over 160 acres, the farm grows cannabigerol (CBG) strains and cannabidiol (CBD). The Company has some of the latest farming tools and equipment that will help it grow these plants in commercial quantities.

Products Served

[Company Name] will be able to provide customers with high-quality hemp, which includes:

• Food-grade hemp
• CBD (which is extracted from leaves and stalks)

Customer Focus

[Company Name] will serve manufacturers and regional distributors, as well as end consumers. The company will reach end consumers via their ecommerce platform.

Management Team

[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a hemp farm operations manager for the past [xx] years.

[Company name] will also employ an experienced sales manager to sell to manufacturers and regional distributors. This will be a skilled salesperson trained in farm sales by [Founder’s Name]. An assistant manager will manage the day-to-day operations of the farm.

Success Factors

[Company Name] is qualified to succeed due to the following reasons:

• There is currently a high demand for good-quality hemp products in the community. In addition, the company surveyed the local population and received highly positive feedback pointing towards an explicit demand for the products, supporting the business after launch.
• The Company’s location is within 100 miles of numerous potential customers and contains hundreds of acres of arable land.
• The Company has the latest farming tools and equipment that will help it grow these plants in commercial quantities with less stress.
• The management team has a track record of success in the hemp farming business.
• The Hemp business is a proven business and has succeeded in communities throughout the US.

Financial Highlights

[Company Name] is currently seeking $400,000 to start the company. Specifically, these funds will be used as follows:

• Land and Equipment: $250,000
• Working capital: $150,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even

Top line projections over the next five years are as follows:

II. Company Overview

Who is [company name].

[Company Name], located in [insert location here], is a new, independent hemp farm focusing on producing high-quality products for its clients. Located on over 160 acres, the farm grows cannabigerol (CBG) strains and cannabidiol (CBD).The farm-grown hemp contains no THC, but the plant can be used for its CBD properties, which provide pain-killing, anti-inflammatory and digestive help without producing a high. [Company Name] is fully equipped with the latest technology and equipment used in the hemp farming industry.

[Company Name]’s History

[Founder’s Name] is an entrepreneur with a passion for hemp farming who seeks to cater to the needs of people through modern hemp farming. [Company Name] will become a recognized hemp farming company in [Location] offering high-quality hemp produce.

[Founder’s Name] has selected an initial location and is currently undergoing due diligence on each property and the local market to assess the most desirable location for a hemp farm.

Since incorporation, the company has achieved the following milestones:

• Developed the company’s name, logo, and website
• Determined equipment and inventory requirements
• Began recruiting key employees with experience in the hemp farming industry

[Company Name]’s Products

• Food-grade hemp (which may be consumed in raw or roasted form, or pressed for oil and milk)

III. Industry Analysis

[Company Name] competes against large-scale hemp producers and companies in the US. Since the legalization of hemp, over 30 states have licensed hemp farms, nearly 17,000 state hemp licenses have been issued, and more than 500,000 acres of hemp have been licensed nationally. The US industrial hemp market was estimated at $1.9 billion and will grow at a CAGR of 21%.

The market is gaining high momentum as several application industries are adopting the use of hemp products owing to its benefits. Players involved in the market produce variable quantities and qualities of industrial hemp as well as variants, in terms of seed size and oil composition.

IV. Customer Analysis

Demographic profile of target market.

[Company Name] will primarily serve manufacturers, and regional distributors, along with end consumers of hemp products. Distributors and manufacturers of hemp produce in the region see growth in interest in hemp products and need such ingredients for suppliers. These businesses typically gross from $5 million to $50 million in annual revenues and source their supplies from within a 100-mile radius of their facilities.

Customer Segmentation

The Company will primarily target the following customer segments:

• Regional Distributors: Regional distributors source hemp products from small and medium hemp farms, and sell them to manufacturers who process, package and sell the products.
• Manufacturers: Small manufacturers that process hemp produce work directly with local farms to keep costs low whenever possible.
• End-consumers: The Company will sell it products to this segment, who have a valid hemp license and reside within 100-mile radius of the farm.

V. Competitive Analysis

Direct & indirect competitors.

Hemp Farms USA Hemp Farms USA is one of the large-scale hemp producers in the US, owning a 12,000 ha area for agriculture. It has long-standing partnerships with leading FMCG and pharmaceutical companies and has thrived in the business for the past 10 years. It also has automated equipment and machines, which helps in improving its operations and reducing costs. Hemp Farms USA has many contracts with large manufacturers and wholesalers.

Hemp Land Hemp Land was established in 1995 and is a very well-known company that provides good quality hemp products to companies. It majorly targets local companies and retailers. Moreover, it has a very good brand value, and its product packaging is second to none. Hemp Land is located in [location], and it has a very effective distribution and supply chain network.

Hempalot Hempalot has been a CBD hemp producer for over 10 years. Hempalot is now one of the ten largest Hemp producers in the US. The Company’s packaging and processing units are located in [location]. It has recently acquired two hemp farms with a very high production capacity. With this acquisition, Hempalot has also joined the elite hemp produce club, which has already made its foray into the hemp plantation business. However, Competitor 3 does not produce other hemp products and focuses on CBD only.

Competitive Advantage

[Company Name] enjoys several advantages over its competitors. These advantages include:

• Management: The Company’s management team has xx years of business and marketing experience that allows them to market and serve customers in an improved and sophisticated manner than the competitors.
• Relationships: Having lived in the community for xx years, [Founder’s Name] knows all of the local leaders, media, and other influencers. As such, it will be relatively easy for [Company Name] to build brand awareness and an initial customer base.
• Quality products at affordable pricing: The Company will provide quality products at affordable pricing, as it has high-quality equipment and uses the latest techniques.
• Location: [Company Name] will be able to service the entire metropolitan area of [company location] and its surrounding areas.

VI. Marketing Plan

The [company name] brand.

[Company name] seeks to position itself as a respectable, upper-middle-market competitor in the hemp production industry. Customers can expect high-quality raw products with affordable pricing and excellent packaging.

The [Company Name] brand will focus on the Company’s unique value proposition:

• Efficient and Effective Delivery network
• Good Packaging
• Quality products at affordable pricing
• Providing excellent customer service and customer experiences

Promotions Strategy

[Company Name] expects its target market to be distributors, manufacturers and end-consumers. The Company’s promotions strategy to reach the audience includes:

Advertisement Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The Company will advertise its company offerings in popular magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.

Public Relations [Company Name] will hire an experienced PR agency/professional(s) to formulate a compelling PR campaign to boost its brand visibility among the target audience. It will look to garner stories about the company and its services in various media outlets like television stations, radio shows, etc.

Social Media Marketing Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content in terms of various forms and technologies of hemp farming and post customer reviews that will increase audience awareness and loyalty.

Yellow Page Marketing The Company shall announce details about its presence and services in the yellow pages and other local directories to keep readers informed about the company’s various products. The purpose of yellow pages is to maintain a directory of the business records in alphabetical order.

Pricing Strategy

[Company Name]’s pricing will be moderate, so customers feel they receive great value when availing of the hemp products. Pricing will be about 50% lower than retail prices to allow wholesalers and retailers to earn their margins.

VII. Operations Plan

Functional roles.

The assistant manager will run the day-to-day operations of the farm, including scheduling and assigning the work of farmhands, sourcing and purchasing supplies and basic equipment, keeping the company’s books, maintaining legal licenses, handling insurance, and ensuring that the company meets government regulations.

Additional roles required include farm hands, packaging and maintenance personnel.

VIII. Management Team

Management team members.

[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a farm operations manager for the past [xx] years. [Founder] graduated from the University of ABC, where he majored in Arts.

[Company name] will also employ an assistant manager to manage operations. This will be an experienced operations manager who will be trained in farm operations by [Founder’s Name]. Furthermore, a sales manager will be hired to focus on marketing, sales, and customer service to distributors, manufacturers, and end-consumers for [Company Name] products. These two individuals will either have undergraduate business degrees or years of relevant operations or sales experience.

Hiring Plan

[Founder] will serve as the CEO. To launch the hemp farm, the company will need to hire the following personnel:

• Farmhands [Number]
• Logistics and Supply Chain Manager [Number]
• Assistant Manager [Number]
• Sales Manager [Number]

IX. Financial Plan

Revenue and cost drivers.

[Company Name]’s revenues will come from the sale of hemp products to its customers. The major costs for the company will be the cost of land and equipment, as well as staff salaries. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market.

Capital Requirements and Use of Funds

[Company Name] is currently seeking $400,000 to launch its company. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses, and working capital. Specifically, these funds will be used as follows:

Key Assumptions

  5 Year Annual Income Statement

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Hemp Farm Business Plan

Written by Elma Steven | Updated on January, 2024

Executive Summary

Overview: Rex Morgan CBD Hemp Farms, LLC is a registered and licensed CBD hemp farm based in Sioux Falls, South Dakota, United States of America. We will sell our products in and around South Dakota because we know our products will be in great demand owing to the state’s demographic makeup. Governor Dennis Daugaard of South Dakota signed Senate Bill 95 into law on March 17, 2017. The bill added cannabidiol to the list of Schedule IV banned narcotics and exempted it from the classification of marijuana, but it stipulated that the CBD must come from a product that has been certified by the US Food and Drug Administration (FDA). We will be producing a special variety of the plant species Cannabis sativa L for medical and lawful recreational use at Rex Morgan CBD Hemp Farms, LLC.

Mission:” Our Mission is to begin full-time commercial production of hemp and other similar nursery plants and flowers that will not only be sold in the United States but also exported to other countries.

Vision:  “Our Vision is to become one of the top ten CBD hemp farms in the world, not only in the United States of America”

Industry Overview: The CBD hemp farming industry is part of the Plant & Flower Growing industry, which grows nursery plants like trees and shrubs, as well as flowering plants like cannabis, foliage plants, cut flowers, flower seeds, and ornamentals, as well as short-rotation woody trees like Christmas trees and cottonwoods.

Financial Overview:

Financial Highlights:

Fund Usage:

Industry Analysis:

The industry analysis section of the hemp farm business plan will help you get better insights into competitors, market growth, and overall industry prospects. You can order a custom market research report for your hemp farm business.

Overview: Due to the legalization of hemp production and need for biodegradable and renewable natural materials in various consumer products, the global industrial hemp market is worth over USD 205 million in 2020 and is expected to increase at a CAGR of over 6% between 2021 and 2027. There are various environmental and nutritional advantages to industrial hemp. Hemp seeds are in high demand due to the rising demand for dietary supplements, foods, and beverages, as well as growing consumer health awareness. Hemp oil is used in personal care and cosmetics because of its high antioxidant content. The expansion of the industrial hemp market is being fueled by rising demand for dietary supplements, foods, and drinks, as well as rising consumer health awareness. Cannabidiol (CBD) and CBD oil, which are found in hemp, have a variety of therapeutic characteristics and have the potential to treat cancer, diabetes, and pain, including chronic pain, which is predicted to be a major market driver. The global industrial hemp market is predicted to increase at a compound annual growth rate (CAGR) of 16.8% from 2022 to 2030, with a market value of USD 4.13 billion in 2021. The market is being driven by an increase in demand for industrial hemp from businesses such as food and beverage, personal care, and animal care all around the world. As a result of the economic slump induced by the COVID-19 pandemic, which has resulted in a drop in manufacturing operations, the worldwide market is seeing limited growth. As a result, the stock market has suffered a severe setback. The market, on the other hand, is predicted to develop at a quicker rate due to the high rate of global economic recovery.

While working on the industry analysis section of the hemp farm business plan make sure that you add a significant number of stats to support your claims and use proper referencing so that your lender can validate the data.

The CBD hemp farming business, which includes both employer and non-employer facilities that cultivate hemp for medical and recreational use, thrived throughout the five years to 2018, according to recent research published by IBISWorld. Recent legalization victories, most notably during the 2016 election cycle, demonstrated that the cannabis business is one of the fastest expanding in the US. Eight states passed marijuana legalization proposals in 2016. According to New Frontier Data, almost a third of the population of the United States now lives in states where marijuana is legal. Consumer views are also propelling state-level legalization attempts. According to Gallup, 80.0 percent of Americans support the legalization of CBD hemp.

The federal legality of industrial hemp production does not supersede state, county, or local restrictions, in addition to the regulatory vibe. Simply said, it means that a state, county, or city can impose stricter regulations than the federal government. Currently, roughly 15 states have passed pro-hemp legislation; the remaining states are either silent or vaguely neutral. Many states, counties, and localities are included in this list.

Marketing Plan:

A key part of the marketing plan in a hemp farm business plan is the marketing budget. The growth in the number of customers is proportional to the budget and dependent on the CAC .

We are well aware that the incapacity of certain CBD hemp farming enterprises to sell off their farm produce on time is one of the main reasons for their lack of profitability. Our sales and marketing team will be hired based on their extensive expertise in the CBD hemp growing sector, and they will be trained regularly to ensure that they are well-prepared to fulfill their goals and Rex Morgan CBD Hemp Farms, LLC’s overall business objectives.

Social Media : To advertise our business, we should use the internet and social media platforms such as Instagram, Facebook, Twitter, YouTube, Google+, and others.

List our CBD hemp farm in local phone books and directories. Promote our CBD hemp farming business on our official website and use traffic-driving techniques.

Events and Programs: fund events/programs that are important to the community

Join local chambers of commerce and industries to promote our goods.

Direct Marketing : Distribute our fliers and handbills in targeted regions using a direct marketing strategy.

Advertisement: Send introductory letters with our brochure to firms that use hemp and cannabis plants and seeds to introduce our CBD hemp growing business. Advertise our company in business journals, newspapers, and television and radio stations that are relevant to our industry. Install our billboards in high-traffic areas in Sioux Falls, South Dakota.

Branding: Ensure that all our staff members wear our branded shirts and all our vehicles and trucks are well branded with our company logo et al.

Organogram:

Financial Plan:

T his s ection of th e hemp farm business plan helps your lender figure out whether you will be able to pay off the loan, whether the business is sustainable, what are the growth prospects, etc.

Break-Even Analysis :

Income Statement:

Cash Flow Statement:

Balance Sheet:

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Hemp Research Needs Roadmap

USDA and Oregon State University’s Global Hemp Innovation Center jointly held a National Hemp Industry Research Needs Workshop in November 2022, to identify the gaps, challenges, and opportunities for research to support development of a globally competitive U.S. hemp industry. Based on stakeholder input from the workshop and feedback from leaders and constituents of the hemp industry, the Hemp Research Needs Roadmap was developed and identifies the greatest four areas of need.

Read the Roadmap (PDF, 23.6 MB)

This Roadmap provides guidance and information for many different audiences. Below is a one-pager with examples of how different audiences can use the information provided.

Read the Audience Uses One-pager (PDF, 158 KB)

As part of the 2022 National Hemp Industry Research Needs Workshop, videos were pre-recorded by experts addressing the following topics and are still available to view:

• Genetics and Plant Breeding
• Sustainable Agricultural Production
• Harvest and Materials Processing
• Products Manufacturing and Supply Chains
• Economics and Markets
• Regulations, Exports, and Trade
• Testing and Compliance

Important Information

The Agriculture Improvement Act of 2018 (2018 Farm Bill) authorized the production of hemp and removed hemp and hemp seeds from the Drug Enforcement Administration’s (DEA) schedule of Controlled Substances. It also directed the U.S. Department of Agriculture (USDA) to issue regulations and guidance to implement a program to create a consistent regulatory framework around production of hemp throughout the United States. The establishment of hemp as a regulated commodity also paves the way for U.S. hemp farmers to participate in other USDA farm programs.

The U.S. Domestic Hemp Production Program establishes federal regulatory oversight of the production of hemp in the United States. The program authorizes the U.S. Department of Agriculture (USDA) to approve plans submitted by states and Indian tribes for the domestic production of hemp and establishes a federal plan for producers in states or territories of Indian tribes that choose not to administer a State or Tribe-specific plan provided also that the state or Tribe does not ban hemp production.

Continue reading for information about hemp production plans, guidelines for sampling and testing procedures, disposing of plants not meeting necessary requirements and licensing requirements.

Learn More Read the Regulation

The Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS), and Risk Management Agency (RMA) are enabled to provide guidance on eligibility for farm programs including hemp. Once production plans are approved and licenses are issued, hemp producers may be eligible for many USDA programs, including:

• Whole-Farm Revenue Protection (WFRP)
• Noninsured Crop Disaster Assistance Program (NAP)
• NRCS-administered conservation programs, including the Environmental Quality Incentives Program, Conservation Stewardship Program, Regional Conservation Partnership Program, and Agricultural Conservation Easement Program
• Farm loans, including operating, ownership, beginning farmer, and farm storage facility
• The National Weekly Hemp Report is issued by USDA AMS Specialty Crops Market News.
• The ARS Plant Genetic Resources Unit (PGRU) developed a Hemp Phenotyping and Descriptor Handbook .
• AMS launched the Hemp eManagement Platform (HeMP) for USDA producers, states, tribes, testing laboratories, and sampling agents.
• The ARS Cotton Structure and Quality lab is working on developing characterization methods for industrial hemp fiber and hurd ( 2022 Annual Report ).

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Hemp: A Sustainable Plant with High Industrial Value in Food Processing

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In the era of SDGs, useful plants which provide valuable industrial outputs and at the same time pose less impact on the environment should be explored. Hemp seems one of the most relevant gluten-free crop plants to meet such requirements. Its high nutritional value is comparable to soy. Moreover, almost the whole body of the hemp plant has a wide array of utility: industrial production of food, fiber, and construction materials. In view of environmental sustainability, hemp requires less pesticides or water in cultivation compared to cotton, a representative fiber plant. This short review investigates hemp’s sustainability as a plant as well as its utility value as a highly nutritional material in the food industry. Recent application research of hemp protein in food processing includes plant milk, emulsifiers, fortification of gluten-free bread, plant-based meat production, as well as membrane formation. These studies have revealed distinctive properties of hemp protein, especially in relation to disulfide (S-S)/sulfhydryl (-SH)-mediated interactions with protein from other sources. While its cultivation area and industrial use were limited for a while over confusion with marijuana, the market for industrial hemp is growing rapidly because it has been highly reevaluated in multiple areas of industry. Conclusively, with its sustainability as a plant as well as its distinctive useful property of the seed protein, hemp has promising value in the development of new foods.

1. Introduction

The industrial revolution has rapidly enhanced the standard of living. However, large-scale factory production as well as modernization of agriculture have caused serious environmental problems which now threaten the existence of human beings [ 1 ]. Global warming has raised water deficiency problems [ 2 ]. Long-term use of pesticides in agriculture brought severe environmental pollution [ 3 ]. Moreover, the explosive growth of the world population and increasing number of meat-eaters not only imbalanced the supply/demand of livestock meat but also accelerated the food crisis [ 4 ]. Thus, in 2015, the United Nations adopted the 17 Sustainable Development Goals and quoted that development must balance social, economic, and environmental sustainability. Moreover, the prevailing COVID-19 situation and the Russia–Ukraine conflict remind us of the importance of food security [ 5 , 6 , 7 ]. Now, the food industry seeks protein sources from plants rather than from livestock animals as the plant cultivation poses less impact on the environment [ 8 , 9 ]. Hemp and its industrial products look to be one of the prospective keys in developing sustainable and resilient food systems [ 10 ]. In the viewpoint of cultivation, hemp has a short cropping period [ 11 ] and needs less pesticide or water compared to cotton [ 12 ], a representative fiber material plant. Moreover, the whole body of the hemp plant—its leaves, stalks, roots, and seeds—are utilizable without waste [ 13 ]. Furthermore, hemp seeds are comparable with soybeans in terms of nutrition [ 14 ].

Hemp has historically close relations with humans. Industrial hemp has long been used in various civilizations and religions since ancient times to the present day [ 15 ]. In Japan, a Shinto priest uses cannabis leaves to purge and bless the worshippers in a shrine where thick ceremonial hemp ropes are displayed. In the practical viewpoint, hemp played outstanding roles, especially in the Age of Exploration, as an essential material to make durable canvas and ropes for sailing ships. Later, in the World Wars era, the United States made full use of hemp as a reliable material to cover a shortfall of essential fiber products such as military uniforms and shoelaces, as well as parachutes while fully engaged in combat [ 16 ]. However, for a period of time, confusion with marijuana has limited the cultivation area and industrial use of hemp. Now, due to its sustainable growth characteristics as well as its versatile industrial usability, hemp is reevaluated as a promising crop in the era of SDGs [ 11 ]. The stalk is for fiber production, the leaves/roots for medicine, and seeds for oil until nothing is left. Moreover, its high nutritional value is comparable to soy and its unique characteristics in food processing appear to be high-profile in the food industry. Moreover, with its gluten content as low as 4.78 ppm, it is attracting attention as a gluten-free (<20 ppm) food material [ 17 ]. Oil meal, a residual material of hemp seed after expression of hemp oil, is a useful protein-rich material [ 18 ]. Recent application of hemp protein in food processing reveals its unique properties. Especially, in recent studies, its cysteine-rich amino acid composition and high sulfhydryl (-SH)/disulfide (S-S) ratio offer a glimpse of its distinctive features useful in food processing [ 19 ]. This short review verifies the usefulness of hemp focusing on its sustainability as a plant as well as its usability as a versatile food material. The authors also briefly introduce the historical relationship between human and hemp.

2. A Brief History of Hemp Cultivation in the World

A recent study based on genome-wide phylogeography supports the leading hypothesis that Cannabis sativa was first domesticated in East Asia in the early Neolithic era [ 20 ]. Ren et al. [ 20 ] demonstrated that all current hemp and drug cultivars diverged from an ancestral gene pool currently represented by feral plants and landraces in China. Cannabis sativa , or “useful hemp” in Latin, is categorized into non-drug type hemp and drug type marijuana depending on the content of psychoactive compound delta-9-tetrahydrocannabinol (THC) [ 21 ]. Industrial hemp contains only about 0.3–1.5% of THC, whereas marijuana contains 5–10% or more of THC. Hemp contains cannabidiol (CBD), a non-intoxicating phytocannabinoid, which has high medicinal potential in some conditions, such as difficult-to-treat seizures in children and adults [ 22 ].

The history of hemp and human society is long and complex—from being an essential commodity fiber crop in the Age of Discovery to its widespread prohibition under the umbrella of marijuana in the 20th century. The oldest known fossil pollen record compatible with cannabis was found in rocks 19.6 million years old (Early Miocene) from the north-eastern Tibetan Plateau (presently China), which has been proposed as the center of origin of cannabis [ 23 ]. There, hemp has been grown for 4000 and 6000 years for the production of textiles and fiber. However, in 1985, China banned the production of hemp after it ratified the UN Convention on Psychotropic Substances [ 24 ]. Hemp production became legal again in 2010, and now the Chinese government encourages the textile industry, such as the Youngor Group, to manufacture hemp fiber products [ 25 ]. Although official data for China’s hemp cultivation and production are unavailable, industry estimated China’s hemp planted area at around 66,700 hectares (165,000 acres) in 2019. China’s hemp market value was also estimated at USD 1.7 billion in 2017 [ 24 ].

Hemp is also grown across Europe. The cultivation area in the EU has increased significantly from 19,970 to 34,960 ha between 2015 and 2019. The production of hemp increased from 94,120 to 152,820 tons in the same period. France is the leading hemp cultivator, making up for more than 70% of the overall EU production, followed by the Netherlands (10%) and Austria (4%) [ 26 ]. In the UK, in 1533, King Henry VIII mandated every farmer to cultivate hemp, a useful source of tough fiber to produce naval equipment such as rope, canvas, and sails to protect the land surrounded by the ocean [ 27 ]. However, in 1961, the Single Convention on Narcotic Drugs banned all forms of cannabis in the US and in Western Europe (except France) because of the confusion between hemp and marijuana. Note, as an aside, that Boris Johnson mentioned climate protesters as “hemp-smelling bivouacs” [ 28 ].

Hemp has played critical roles in American history. The Declaration of Independence was drafted on hemp paper. George Washington, the first president of the US, was to be found exhorting his head gardener to: “Make the most of the Indian hemp seed…and sow it everywhere” [ 29 ]. Federal restrictions on use or sale of cannabis first occurred with the passage of the Marihuana Tax Act of 1937 (“the Act”) following the repeal of the National Prohibition Act that prohibited the production, importation, transportation, and sale of alcohol from 1920 to 1933. The Marihuana Tax Act imposed registration requirements and a tax on growers, sellers, and buyers of marijuana [ 30 ]. However, during wartime, the US government relied on hemp to make twine, tarred cordage, nets, shoelaces, carpets, and parachutes. After World War II, hemp has been cultivated in very small amounts and eventually found itself “unjustly imprisoned” [ 16 ] under the negative influence of its sister plant, marijuana. In 2018, the Federal Farm Bill has legalized hemp as an agricultural commodity and removed it from the controlled substances list [ 31 ]. Now, as of 2020, the US seems to be the world’s largest producer of industrial hemp with a licensed area of 465,787 acres [ 32 ].

The world market of industrial hemp was estimated to be USD 4.13 billion in 2021 and is expected to grow by a 16.8% compound annual growth rate (CAGR) between 2022 and 2030 [ 33 ]. Growing demand for industrial hemp from a wide variety of application industries drives the market [ 34 ]. While the global market is undergoing limited growth under the influence of the COVID-19 pandemic, it is expected to grow at a faster rate with the high recovery rate of global economies [ 33 ].

3. Reevaluation of Hemp for Its Sustainability

Hemp has received a lot of attention because of its multipurpose usability, short production cycle, and low capital demand in cultivation, possibility as a carbon-negative material [ 11 ]. Here, recent examples are introduced to show how hemp is excellent as SDG-applicable materials.

3.1. Cellulose Gap: Applications in the Textile Industry

During the Age of Exploration, hemp was a critical crop in Europe for the production of strong fiber suitable for canvas and ropes for sailing vessels. However, around the 18th century, cotton had become popular and had taken over the role as the principal fiber plant. Cotton fiber has a soft and comforting touch because cellulose of high crystallinity and purity compose the cell wall [ 35 ]. Now, the “cellulose gap”, an excessively high demand for natural fiber not being met by cotton production, encourages textile manufacturers to seek substitutes for cotton [ 12 , 36 ]. Moreover, while cotton is grown on only 2.4% of the cropland in the world, its cultivation uses 11% of the world’s pesticides [ 37 ]. Industrial hemp is one of the most relevant substitutes for cotton because it requires less pesticides and water in cultivation [ 12 ]. Duque Schumacher et al. [ 38 ] has demonstrated that hemp requires only one-third of the land area occupied by cotton to produce the same amount of fiber while cotton needs 2.5 times more water than hemp per unit cultivation area. Duque Schumacher et al. [ 38 ] concluded that in terms of agricultural activities for fiber production, hemp costs only one-twelfth of the cost for cotton. Especially, the ‘Henola’ variety has a shorter growing period as well as higher seed productivity, and thus looks preferable for introduction and cultivation [ 39 ].

Meanwhile, hemp fiber is known as coarse and stiff. It also has poor spinnability in the ring spinning system [ 40 ]. The blended use of cotton/hemp fibers for denim fabrics improved the thermo-physiological comfort as well as the soft-feeling nature. Moreover, higher air ventilation, higher water-absorbing property, and faster drying behavior were observed in the mixed fabrics compared to a pure cotton fabric [ 41 ].

3.2. Hempcrete

Hemp concrete or “hempcrete” is made of lime, water, and hemp shives, a by-product of fiber processing from hemp stalk. It is a bio-composite material used as an alternative to concrete for construction and insulation. Hempcrete is “carbon-negative” or “better-than-zero-carbon” because hemp plant absorbs more carbon from the air during growth than it yields during its production. Moreover, it continues to absorb carbon after being employed in construction, storing more carbon over the building’s lifetime than was emitted during construction [ 42 ]. In 2021, Pierre Chevet Sports Centre was built in France as the first public building using hemp concrete as the main construction material [ 43 ]. Moreover, preliminary 3D-printing research shows that hempcrete is printable with a density as low as 660 kg/m 3 , with adequate buildability and compressive strength for printing individual walls [ 44 ]. Such technical progress will widen the uses of hemp and the possibility to alleviate the negative impact of the construction industry on the environment.

3.3. Biofuels

Human activities in industry and transportation have resulted in an extensive use of fossil fuels, negatively affecting the environment causing climate change, as well as global warming. Bioenergy is a green alternative for diverse energy needs. Thus, novel technology realizing effective conversion processes must be developed to enhance affordable biofuel production [ 45 ]. Marrot et al. [ 46 ] investigated the influence of the thermochemical conversion processing parameters on energy production as well as electrical conductivity. Two distinct scenarios of hemp biomass valorization were proposed, depending mainly on the selective pyrolysis temperature. Hemp biochar carbonized at 400–600 °C was classified as a lignocellulosic material with good potential for solid biofuel applications due to its high heating value. In contrast, hemp biochar carbonized at 800–1000 °C developed a graphite-like microstructure and displayed interesting electrical conductivity, opening doors for its use in electrical purposes.

3.4. Bioplastics

Petroleum-based plastics cause many environmental problems, such as marine pollution, human health problems, and greenhouse gas emissions. On the other hand, bioplastics are drawing attention as alternatives to conventional ones [ 47 ]. Short hemp fiber is used to recycle polypropylene from textile wastes into wood plastic composites [ 48 ]. Cast hemp paper is laminated with bio-based plastics for sustainable packaging [ 49 ]. Hydrothermal and mechanically generated hemp hurd nanofibers are utilized for sustainable barrier coatings/films [ 50 ]. Hemp-based fiber is being applied even to the interior of high-end vehicles [ 51 ]. Hemp-reinforced natural fibers have been used in the interior components of the Mercedes-Benz E-Class. A significant portion of the Lotus ECO Elise’s body panels are manufactured using hemp fiber-reinforced polyester composite.

4. Nutrition

4.1. overview.

The nutritional value of hemp is attracting attention [ 14 ]. Hemp seed is composed of a white kernel and brown hull ( Figure 1 ). The kernel is rich in protein, unsaturated fatty acid, and dietary fiber [ 52 ]. Hemp shares a unique high-protein, low-carbohydrate nutritional composition with soybean, distinctively different from other representative food materials such as rice and wheat, the protein/carbohydrate (%, w / w ) content of which is 7.17/77.55 [ 53 ] and 10.6/73.2 [ 54 ], respectively. Hemp and soy are also rich in dietary fiber and unsaturated fatty acids ( Table 1 ). Hemp oil is popular and the oil meal, a by-product of oil processing, is utilized in many protein-rich foods as well as animal feeds [ 55 ].

Whole ( a ) and dehulled hemp seed ( b ). Hemp flour ( c ).

Comparison of nutritional components between hemp seed and soybean.

This table was made using data from Teleszko et al. [ 39 ] and Kan et al. [ 56 ].

4.2. Protein

4.2.1. composition of hemp protein (globulin, albumin, and others).

The major protein in hemp kernel is edestin, accounting for around 70% of hemp protein. Edestin is a hexamer of identical subunits and belongs to the globulin family [ 57 ]. Each subunit consists of the acidic (−34 kDa) and the basic (18–20 kDa) chains [ 58 ]. An original single protein is cleaved into these two chains post-translationally at the Asn-Gly site [ 57 ]. An edestin subunit has five cysteine residues, two of which form a single intermolecular disulfide bond between basic and acidic subunits. The acidic subunit has one intramolecular disulfide bond. The remaining cysteine has a free sulfhydryl (SH) group. Edestin is less soluble in water or buffer with neutral or acidic pH, but soluble in a basic buffer [ 59 ]. As solubility in water and content of free SHs increases by sonication or pH adjustment of the edestin solution, control of the protein structure/function may be possible in food processing [ 60 ]. Despite its less solubility, edestin is known for its high digestibility [ 61 , 62 ].

The second major hemp protein is albumin, which has fewer disulfide bonds compared to edestin (globulin), thus having a flexible structure with higher protein solubility and foaming capacity [ 59 ]. Another noteworthy protein is rich in Met and Cys, and 20 mole % of the total amino acids contain sulfur [ 63 ]. It consists of two subunits made of 27 and 61 amino acid residues, respectively, which are held together by two intermolecular disulfide bonds [ 63 ].

4.2.2. Extractability/Solubility

Recently, reverse micelles (RMs) technology has been applied for protein extraction as it is convenient and cost-effective [ 64 ]. Protein extraction by RMs is achieved via two steps: “forward and backward” extractions. In the forward extraction, soluble proteins are encapsulated in the inner aqueous core of RMs, which are then recovered in the backward extraction by disrupting the RMs. Protein extraction from hemp flour using RMs did not require prior defatting in terms of extraction performance [ 65 ]. Hemp protein isolates obtained from non-defatted and defatted hemp flour shared similarities in proximate composition, subunit structure, as well as principal properties of protein including solubility, isoelectric point, emulsifying/foaming abilities, and thermal stability. Meanwhile, protein from non-defatted flour exhibited higher β-sheet content and surface hydrophobicity. Furthermore, higher least gelling concentration and higher gel strength were observed in the gel formed by protein from non-defatted hemp flour [ 65 ].

4.2.3. Digestibility/Allergenicity

In vitro digestion tests demonstrated that hemp protein has a high degree of digestibility [ 61 ]. Moreover, most hemp allergens, such as the major thaumatin-like protein and lipid transfer protein, were eliminated in the protein-isolation or digestion processes. Mamone et al. [ 61 ] concluded that hemp protein is usable as an ingredient for hypoallergenic foods.

4.2.4. Disulfide Structure

Hemp protein has a unique feature in view of the disulfide structure. It shows much higher free sulfhydryl content than soy protein [ 66 ]. The cysteine content of hemp protein is 1.6–1.4 g cysteine/100 g protein [ 32 , 67 ], higher than pea (1.0 g cysteine/100 g protein) and broadbean or soybean (1.1–1.3 g cysteine/100 g protein) [ 68 ]. Moreover, at pH 8, while the free sulfhydryl content of soy protein is 1.6 × 10 6 mol/g protein, the counterpart of hemp is as high as 3.9 × 10 6 mol/g protein [ 66 ]. Tang et al. [ 66 ] discussed that the poor functional properties of hemp protein seems mostly ascribed to the formation of intermolecular disulfide bonds between individual proteins and subsequent aggregation at neutral or acidic pH, because it has a high free sulfhydryl content. Meanwhile, exchange reactions between disulfide (S-S) and free SH play critical roles in the cereal biology [ 69 ] as well as food processing [ 70 , 71 ]. In the preparation of microparticles made from soy protein isolate and egg white, the egg white protein serves as a free sulfhydryl “donor” to accelerate intermolecular S-S linkage with the soy protein [ 72 ]. Thus, hemp protein with a high free SH content should have unexplored unique processing characteristics. Heat-dependent formation of the envelope made of hemp and soy protein is just a glimpse of this attribute [ 73 , 74 ].

5. Applications of Hemp Protein to the Food Processing Industry

5.1. hemp milk.

Increasing demand for plant-based milk has enlarged its industry due to lactose intolerance, cow’s milk allergy, and vegan lifestyles [ 75 ]. The principal predictor of dairy consumption in the acceptance of dairy products was “Nice”, relative to the other 3Ns, that are, Natural, Necessary, and Normal. “Taste” was the most relevant keyword in consumers’ selection of dairy products [ 76 ]. Hemp milk, with its highly nutritional value and low allergenicity, looks to be an attractive alternative to dairy, soy, and nut milks. Comparison of milk products in the market reveals hemp milk as a better source of minerals than other dairy and plant milks. Hemp milk does not taste that different but has a “nuttier” flavor in comparison to soy or rice milk [ 77 ]. High pressure homogenization following pH adjustment realized non-thermally processed hemp milk, which is remarkably stable, showing negligible phase separation in storage for 3 days at 4 °C [ 78 ].

5.2. Emulsifier

Stabilization of emulsion-based colloidal structures by food ingredients has attracted attention in the food and pharmaceutical, as well as cosmetic, industries [ 79 ]. In the Pickering emulsion [ 80 , 81 ], solid particles are adsorbed onto the interface between the two distinct phases, such as oil and water, and inhibit emulsion droplets from coalescence ( Figure 2 ). Stabilizing the oil/water boundary by plant-based materials such as proteins and organelles is useful in exploring emulsion systems in developing new foods [ 82 ]. Examples include egg-free mayonnaise [ 83 ], barley-based non-dairy milk [ 84 ], probiotic encapsulation [ 85 ], as well as additive-free, gluten-free rice bread [ 86 ]. However, these bio-based emulsions tend to be unstable due to gravity-induced separation (creaming/sedimentation), flocculation, and coalescence ( Figure 2 ).

Formation of oil/water emulsion and its four major destabilization patterns.

Hemp protein is considered a novel emulsifier in food systems. Dapčević-Hadnađev et al. [ 87 ] compared the behavior of two types of hemp proteins in the sunflower oil-in-water emulsions. Salt extracted “micellar” hemp protein (HMI) with a less-denatured structure exhibited higher solubility as well as slightly higher surface/interfacial activity than alkali-extracted and isoelectric-precipitated hemp (AIH) protein. HMI formed emulsions composed of relatively small droplets with enough static repulsion between droplets. Individual droplets were covered by protein film. However, low viscosity of HMI-stabilized emulsions facilitated fast droplet movement and eventually led to increased creaming and coalescence at lower protein concentrations (0.25–0.75% w / w ). Meanwhile, AIH exposed hydrophobic sites as well as sulfhydryl groups due to pH-induced unfolding of protein structure. In AIH-stabilized emulsions, bridging flocculation occurred during emulsification by the formation of protein-connected droplet aggregates. However, interestingly, emulsions stabilized with 1.5% ( w / w ) AIH showed creaming and coalescence stability much better than emulsions with lower AIH concentrations. Formation of a weak transient network of floccules as well as higher continuous phase viscosity suppressed the movement of the droplets, resulting in the improvement of the emulsion’s stability.

Feng et al. [ 88 ] sought to make complexes of pectin and hemp protein through electrostatic force. Monodisperse features of hemp protein in the aqueous phase improved by the increase of surface charges as well as the blockage of free SH groups. The presence of pectin inhibited the coalescence and provided substantial physical strength to ensure stability during the storage test. On the other hand, Li et al. [ 89 ] sought to stabilize hemp protein-mediated oil/water emulsion by high-intensity ultrasonic treatment. The emulsifying properties were improved, showing a more uniform particle distribution with small and well-dispersed particles. With its unique behavioral attribute in the oil/water interface, hemp protein is expected as a promising competitor against zein [ 90 ], well-used in the Pickering-based food systems.

5.3. Gluten-free Bread

Due to the world-wide prevalence of celiac disease and wheat allergy, demand for gluten-free foods, especially for bread, is increasing [ 73 ]. However, most gluten-free breads are starch-based and thus generally low-protein and high-carbohydrate. Therefore, researchers are trying to improve the nutritional value of gluten-free breads by fortification of nutrients [ 91 ]. Hemp is one of the ideal food materials because of its high protein content, low content of saturated fats, and high content of unsaturated fatty acids such as ω3 and ω6 [ 92 ].

Addition of hemp protein concentrate significantly improved the nutritional value of the starch-based gluten-free bread [ 93 ]. It also changed the rheological characteristics of the gluten-free dough and reinforced the structure. Moreover, sensory acceptance on color and flavor was confirmed for the bread. Limited amylopectin recrystallization as well as limited hardening of the crumb were observed during storage.

Evaluation of the effect of hemp seed flour addition and following sourdough fermentation on the aroma of gluten-free bread was conducted [ 94 ]. By a metabolomic approach, production of volatile organic compounds of flavoring and health benefits were identified. Among them, 1-heptanol is a food flavor generally used to confer a musty, pungent leafy and green nuance [ 95 ]. The odor of 2-heptenal is described as a pleasant almond flavor. 2-pentanone-3-hydroxy has a caramel-sweet, buttery, and hay-like aroma [ 96 ]. On the other hand, hexanoic and octanoic acids with unpleasing odor were also identified. Therefore, strategic adjustment of the dough composition as well as baking conditions are the challenges for future studies for a balanced flavoring of the bread.

We are so accustomed to the fresh aroma of wheat bread. Thus, in developing bread without using wheat flour, exquisite formation of its aroma is critical for it to be accepted by consumers. Nissen et al. [ 94 ] proposed the utilization of hemp flour as a vehicle to carry the flavor and bioactive compounds in bakery products. Volatilomics appears to be a useful technical tool in designing the organoleptic characteristics of gluten-free breads.

5.4. Hemp Meat

Demand for high quality vegan meat made of plant materials is increasing based on the shortage of animal stock due to the global increase of human population, as well as in view of animal welfare [ 97 , 98 , 99 ].

5.4.1. Hemp as a Nutrient Feed Stuff

Hemp cake, a residual material of oil expression from the hemp seed, has long been utilized for livestock feeds [ 100 , 101 ]. It is a highly nutritive as well as sustainable feed stuff for cows [ 102 ], quails [ 103 ], cockerels [ 104 ], pigs [ 105 ], and broilers [ 106 ]. Now, research is in progress to utilize hemp protein “directly” as a material for plant meat.

5.4.2. Vegan Meat Made of Hemp/Soy Proteins

The commercially available vegan meat products, represented by high moisture meat analogues (HMMAs), are made mostly from soy. In the production of HMMA, protein-rich materials, such as soy protein isolate, are subjected to a twin screw co-rotating extruder. Thermomechanical stresses are applied to the material at a high-water content (>40% w / w ) followed by forcing through a cooling die [ 107 ]. Soy-based HMMAs have a desirable chewy meat-lite texture. However, cultivating soy in colder climates such as in northern Europe is challenging. Thus, Zahari et al. [ 108 ] sought to investigate whether and to what extent soy protein isolate could be replaced by hemp protein concentrate in the production of HMMAs. A rapid visco analyzer (RVA) and differential scanning calorimeter (DSC) were used to investigate pasting features and melting temperature of the raw materials. They found that hemp protein absorbed less water and requested higher temperature for denaturation compared to soy protein. However, replacement of soy protein with hemp protein was possible up to 60% to yield layered and fibrous meat-like extruded products. Based on the DSC and RVA results, a higher cooking temperature and longer retention time are recommended for the extrusion of hemp/soy meat, as hemp protein needs a higher temperature for denaturation. Furthermore, to develop a more laminar fiber structure, the interior structure of the extruder should be equipped with more complicated kneading elements such as screws to hold the material longer in the extruder. Zahari et al. [ 108 ] concluded that while future studies are needed to optimize the condition of the extrusion process and the formulation matrix, it is possible to substitute soy protein with hemp protein without sacrificing the quality in meat analogue formulation.

5.4.3. “Meaty” Hemp Meat: Anisotropy and Fibrousness

To develop plant-based meat with a realistic “meaty” texture, anisotropy and fibrousness are among the most critical factors [ 109 , 110 ]. Anisotropy is the property of a material expressing different behaviors depending on the directions from which the external pressure is applied [ 111 ]. Meat structure is highly directional. On the molecular scale, actin and myosin form well-ordered and parallel arrays of filaments. On the macroscale, those filaments form into the muscle fiber bundles [ 112 ].

During a high-moisture extrusion of plant protein-based materials, the dynamics of protein aggregation and phase separation are the keys for the formation of meaty fibrous structures. The fibrousness is expressed during migration from the die to the cooling zone through a “sub-layer transformation” cross-linking [ 113 ]. The desired anisotropic structure of plant-based meat analogues has been accomplished by extrusion at high water content (>40%) and at elevated temperatures (>100 °C) followed by passing through a cooling die which prevents expansion of the matrix at the ejection from the extruder [ 114 ]. Interestingly, there are two distinct hypothetical mechanisms to explain how the anisotropic structure is made in the extruded plant meat. One is the “cross-linking” mechanism in which the anisotropic structure is explained as being formed by the alignment of protein and the subsequent stabilization at the molecular level. Protein molecules are unfolded and align along the direction of flow, followed by stabilization of the aligned proteins by way of interactions between/among proteins newly developed by disulfide or hydrophobic interactions.

The other is the “multiphase” mechanism in which formation of the anisotropic structure is explained due to the existence of multiphase systems [ 114 ]. Thermodynamic immiscibility of the biopolymers involved triggers the occurrence of phase separation in the extrusion process. The dispersed phase is deformed in the extruder die, then directed along the flow. The subsequent cooling process solidifies the material resulting in the anisotropic structures of the plant-meat products. In the case of extrudates using soy protein isolate solely as a protein source, the formation of anisotropic structures are derived from a multiphase system. Cryo-imaging and X-ray analysis of the extrudates revealed a water-rich dispersed phase surrounded by a continuous protein-rich phase with less moisture. Meanwhile, significant changes of protein–protein interactions were not observed [ 114 ]. Thus, in this model system, multiphase systems rather than cross-linking of proteins seemed to be the primary factor of the anisotropic structure.

On the other hand, during high-moisture extrusion processing of meat analogues made of pea protein and fatty acids, protein–protein interactions played key roles in the product structure [ 115 ]. Micromorphology analysis demonstrated that formation of anisotropic fibrous structures in the cooling die was disturbed by the coalescence of fatty acids of an unsaturated type, such as oleic and linoleic acids. Meanwhile, saturated stearic acid dispersed uniformly in the protein matrix, facilitating formation of disulfide bonds and promoting the generation of anisotropic fibrous structures along the extrusion direction [ 115 ]. Moreover, in the case of plant meat made by high-moisture extrusion processing of pea protein, amylopectin, and stearic acid, its anisotropic fibrous structures have been explained by the “anchor orientation and flexible cross-linking” mechanism [ 116 ]. In the cooling zone, stearic acid played the role of anchors, preventing the unfolded protein structure from refolding. In contrast, amylopectin facilitated the rearrangement, disulfide formation, and polymerization of the protein molecules. Thus, amylopectin and stearic acid synergistically mitigated the interaction between proteins. These aggregates with loose and flexible structures aligned along the extrusion direction and successfully formed anisotropic and fibrous structures in the extruded products.

Nasrollahzadeh et al. [ 67 ] compared the structure of plant meat made of hemp protein with the counterpart made of pea proteins. The proteins were respectively mixed with maize starch and were subjected to high moisture extrusion. The extruded pea meat was soft and isotropic while hemp meat was hard and anisotropic. The protein structure was investigated using SDS-PAGE in the presence or absence of a reductant, dithiothreitol (DTT). In the case of the hemp meat sample, some protein bands derived from edestin appeared only in the presence of DTT. In contrast, less-intense protein bands of pea meat appeared regardless of the presence or absence of the reductant. The results demonstrate a higher contribution of disulfide cross-linking in the polymerization of hemp protein during the extrusion process than in the case of pea protein. As mentioned above, hemp protein contains more cysteine (1.6–1.4 g cysteine/100 g protein) than pea protein (1.0 g of cysteine/100 g protein). Thus, in the case of hemp meat, protein–protein interactions played critical roles in the formation of anisotropy and fibrous-like mesoscale structures. More recent studies support the view by demonstrating that addition of cysteine controls the texture of plant meat. Addition of cysteine changed both the physical and chemical properties of extrudates made from soy protein isolate and wheat gluten [ 117 ]. The SH-containing amino acid promoted the fiber structure formation and affected the degree of texturization and rheological properties, as well as microstructures of the extrudates by rearranging the disulfide-mediated cross-linking among protein molecules [ 117 ]. Meanwhile, addition of L-cysteine or L-ascorbic acid on the material of the pea protein/wheat gluten blend altered the fibrousness and the mechanical properties of the meat analogue obtained by the high-temperature shear cell [ 118 ]. Cysteine accelerated protein polymerization through the disulfide–sulfhydryl exchange reactions in the heating process, yielding a continuous protein network upon cooling.

Conclusively, the alternative mechanism of the generation of fibrousness and anisotropy in the plant meat, whether cross-linking or multiphase, depends on the protein species, extraction process of the protein, and the subsidiary materials such as starches and fatty acids. In the case of hemp protein, its high content of free sulfhydryl groups is expected to produce the unique “meaty” texture of the products.

5.4.4. Membrane Formation

Recently, it was reported that a dough made of egg white and soy protein isolate was baked into a high-protein, low-carbohydrate bread [ 73 ]. Egg white protein and soy protein formed heat-dependent elastic air-cells which work to confine enlarging gas in the baking process. Intermolecular S-S bonds contribute to the formation of the cell membranes in which egg white protein works as a donor of SHs to soy proteins [ 72 , 73 ]. Similarly, a dough made of hemp protein/soy protein is baked into a hollow ball ( Figure 3 ) [ 74 ].

A “roly-poly” wiggle ball made from soy/hemp protein complex. ( a ), protein-rich outer shell; ( b ), fiber-rich inner bottom part. Reprinted/adapted with permission from Ref. [ 74 ]. Copyright 2022, NARO.

The outer shell is made of the mixture of soy/hemp proteins which are linked with intermolecular disulfide bonds. Dietary fiber, isolated from the protein complex, is located in the bottom of the ball. Thus, the ball has a low center of gravity and behaves like a “roly-poly” wiggle ball. In this case, hemp protein, rich in free SHs [ 63 , 66 ], is considered to work as a SHs donor, as egg white protein worked as a donor of free SHs in the bread made of egg white/soy protein isolate [ 73 ]. Electron microscopic observation of the protein-rich outer shell ( Figure 3 a) and fiber-rich inner bottom part ( Figure 3 b) reveals distinct structures. The former has a dense structure while the latter has a reticulated structure with small void spaces. Contribution of the unique structure to the ball’s texture is being investigated by sensory evaluation in our lab. Conclusively, application of hemp protein on food processing will broaden the variation of the food products.

6. Comparative Summary of Hemp, Cotton, and Soybean

The industrial utility of hemp, cotton, and soybean is outlined in Figure 4 and Table 2 . Hemp is usable as both a fiber and food material ( Figure 4 a). Cotton is used mostly for fiber production, while soybean for food processing ( Figure 4 b,c). As all seeds are available for oil expression, and the residues are utilized as a highly nutritional food material (hemp and soybean) or for fiber production (hemp and cotton), they are all deemed sustainable. However, as hemp is more sustainable than cotton or soybean in view of cultivation and utility, ++ was marked only for hemp in the sustainability row ( Table 2 ).

Examples of the industrial application of hemp ( a ), cotton ( b ), and soybean ( c ).

Comparative summary of hemp, cotton, and soybean in view of sustainability as a plant, as well as industrial applications.

++, Very applicable; +, applicable; -, not applicable.

7. Conclusions

Hemp is a sustainable plant requiring less water or pesticides in cultivation compared to cotton. It has a short growth period and almost its whole plant body has versatile utility value. Hemp seeds are high-protein, low-carbohydrate, and rich in dietary fiber and unsaturated fatty acids. After expression of oil from the seeds, the residual mass is a useful protein-rich material for food processing. Moreover, hemp seed protein has distinctive characteristics suitable for developing new foods such as an emulsifier, plant-based meat, and gas-retaining membrane. The cysteine-rich protein feature realizes unique disulfide-mediated interactions with protein from other sources and is thus expected to facilitate development of new food materials. Meanwhile, hemp protein is reported to be less soluble, and a higher temperature is needed for processing compared to other plant protein. Therefore, suitable reaction conditions should be investigated for future application in the food industry. Further scientific understanding will facilitate expanded use of this less-investigated protein compared to soy protein. Conclusively, hemp is a suitable plant with versatile utility in this SDGs era. Hemp seeds and the protein are expected to be promising food materials in the food industry.

Acknowledgments

The authors appreciate Rika Tanaka for her technical assistance in preparing this review.

Funding Statement

This study was partly supported by the Public Foundation of Elizabeth Arnold-Fuji.

Author Contributions

Conceptualization, H.Y.; investigation, H.Y. and W.F.; writing—original draft preparation, H.Y. and W.F.; writing—review and editing, H.Y. and W.F.; funding acquisition, H.Y. All authors have read and agreed to the published version of the manuscript.

Data Availability Statement

Conflicts of interest.

The authors declare no conflict of interest.

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