Feasibility Study of Hemp for Building Materials in Washington

Greene Team
5 days ago
4 min read

Updated: 3 days ago

Lush green hemp (cannabis) plants with pointed leaves. — Washington-grown hemp could play a central role in green construction. Photo: WSDA

Greene Economics partnered with the Washington State Department of Agriculture to explore how industrial hemp can drive green building, create jobs, and help Washington meet its climate goals.

Following years of regulatory shifts and unmet market expectations, Washington’s industrial hemp sector is at a crossroads. The Washington State Department of Agriculture (WSDA) launched the state’s Hemp Program in 2014 as a research-only initiative. After the 2018 Farm Bill federally legalized the commercial cultivation of industrial hemp, participation surged—peaking in 2020 with more than 220 licensed growers. However, by 2024, only 37 licenses remained active, primarily due to economic and regulatory barriers. Most producers now focus on floral hemp for CBD extraction, with limited investment in fiber or grain production.

In response, and recognizing hemp’s potential to support sustainable development, the Washington State Legislature funded a feasibility study on building a viable market for hemp-based construction materials. WSDA selected Greene Economics to lead the study—examining barriers, opportunities, and strategies to support sector growth.

Benefits of Hemp for Building Materials

Industrial hemp offers significant environmental and economic benefits as a sustainable alternative to conventional building materials. Hemp-based products—including hempcrete—are fire-resistant, non-toxic, vapor-permeable (which helps prevent mold), carbon-sequestering, and energy-efficient. Hemp cultivation improves soil health, uses minimal water and pesticides, and supports rural communities through fast-growing, low-impact crop cycles.

In residential, commercial, and industrial construction, hemp-based materials could help Washington meet sustainability and housing goals—reducing emissions, improving indoor air quality, and creating jobs.

Highland Hemp House: Washington’s first permitted hempcrete home. (Video: Hempitecture)

Barriers to Growth in Washington’s Hemp Sector

The current WSDA hemp program requires a $1,200 annual license, mandatory background checks, and THC testing aligned with federal guidelines. If a hemp crop tests above 0.3% THC by dry weight—even due to irregular conditions such as intense summer heat waves—the entire harvest must be destroyed under federal law, resulting in significant financial losses for farmers.

Federal policy changes, such as the proposed 2024 Farm Bill, could ease these burdens by classifying hemp for fiber or grain separately from cannabinoid hemp—reducing testing requirements and removing background checks. While these changes are not guaranteed in the final 2025 Farm Bill, they could create a more favorable environment nationally and in Washington State—if the state adapts its program and makes strategic investments.

Through stakeholder interviews and focus groups, our team identified four primary barriers to industry development:

Barriers to Farmer Participation: High licensing fees, fear of THC testing failures, and a lack of educational support have discouraged growers.
Processing Infrastructure Gap: Washington lacks the processing and manufacturing capacity needed to support a robust hemp industry—particularly for fiber and construction materials.
Building Sector Hesitancy: Builders lack experience with hemp materials, and restrictive codes, permitting uncertainty, and workforce training gaps further limit adoption.
Lack of Consumer Awareness: Public understanding of the environmental and structural benefits of hemp remains low. Its alignment with state goals—such as affordable housing and greenhouse gas reduction—is still underleveraged.

Our Approach

To assess how—and whether—Washington could support a viable hemp-based building materials sector, Greene Economics led a three-part study combining research, outreach, and economic modeling:

Literature review: Analysis of hemp policy, production, and market trends at the state, national, and international levels.
Stakeholder engagement: Interviews, focus groups, and virtual office hours with farmers, processors, builders, researchers, and educators.
Economic Modeling: A 20-year forecasting model and an annual input-output model estimating potential job creation and regional output under varying policy and market conditions.

Recommendations

Based on identified barriers and opportunities, Greene Economics developed six targeted recommendations to bolster Washington’s industrial hemp industry:

Develop a Regional Seed Bank: Partner with Washington State University (WSU) to improve access to regionally adapted hemp varieties and increase crop reliability.
Expand Crop Insurance: Create a hemp-specific crop insurance program to reduce grower risk.
Invest in Processing Capacity: Support the development of a processing facility to anchor the supply chain and attract grower participation.
Advance Education and Outreach: Provide targeted materials and training for farmers, builders, and consumers to increase understanding and demand for hemp-based building products.
Align Hemp with State Goals: Position hemp as a strategy to meet goals for sustainable housing, rural economic resilience, and climate mitigation.
Create a Statewide Hemp Roadmap: Inspired by models in Colorado and other states, define goals, roles, and priority products in a coordinated plan.

WSDA’s next steps should be guided by the outcome of the 2025 Farm Bill. If favorable provisions are not enacted, WSDA should consider transferring regulatory authority to the USDA to reduce administrative burdens and support industry growth. In either case, Washington can look to national leaders—including New York, Colorado, Pennsylvania, and Oregon—as well as international models like France for guidance on successful industry development.

Economic Potential of Hemp for Building Materials

Greene Economics developed three scenarios to estimate how different levels of investment and policy support could influence the annual regional economic impact of using industrial hemp in building materials. These estimates were generated using an input-output economic model, which captures both direct effects and ripple effects across related sectors in the supply chain.

The table below summarizes projected annual job creation and economic output over a 20-year horizon for each scenario:

A comparison chart shows projected annual economic impact of hemp in Washington. Scenarios: Mainstream, Niche, No Progress, with jobs/output data. — Estimates reflect regional ripple effects of industrial hemp for building, modeled by Greene Economics.

Overall, the results suggest that with supportive policies and favorable market conditions, industrial hemp has the potential to generate significant economic benefits for Washington’s rural communities and green construction industry.

Conclusion

Washington is well-positioned to establish a sustainable and competitive industrial hemp industry that contributes to economic resilience and environmental health. With strategic investment and coordinated policy action, Washington could become a national leader in the industrial hemp market, while addressing the state’s housing crisis. Embracing this climate-smart crop could fuel rural economies, support green construction mandates, and advance our climate goals.

But realizing this potential will require strong buy-in from farmers, policymakers, and the public—along with sustained financial investment and supportive policy frameworks. Without coordinated financial and political support across all parts of the hemp ecosystem, meaningful progress will remain out of reach.

To explore the full findings and strategic recommendations, read the final report: