Economics of Colorado Hemp

Capitol Investment

Industry                  Start-up Costs



Lumber Products           low          - can use existing machinery



Textile Products          low          - can use existing machinery



Paper Products            medium       - mills need to be remodeled, but

                                       not rebuilt



Textile Processing        high         - no existing hemp textile mills

Estimated Economic Impact of Hemp on the Colorado Economy

• Farm Industry

  This estimate assumes hemp cultivation on 5% of the land currently devoted to wheat, corn, or lying fallow. (170,000 acres of hemp harvested at $514 per acre)

  Impact on Farm Economy: $87 million

• Non-Farm Industry

  This estimate assumes a 5% or less increase in the number of people employed in these industries in Colorado.

  
                                         New Jobs           Personal Income Gain
  
  Textile Production                     200                $3.6 million
  and Manufacturing
  
  
  Trade in Hemp Products                 300                $5.4 million
  (retail, wholesale, mail order)
  
  
  Paper and Allied Products              200                $3.6 million
  (cardboard containers)
  
  
  Lumber and Wood Products               400                $7.2 million
  (particle board)
                                                            ------------------
  
  Impact on Non-Farm Economy             1100               $20 million
  
  
  
  
  Total Impact on the Colorado Economy                      $107 million
  
  

• Sources:

  • Census of Agriculture. U.S. Census Bureau, 1992.
  • Colorado Business Economic Outlook Forum, 1995. University of Colorado, Boulder: Business Research Division, Graduate School of Business Administration.
  • Colorado Employment and Wages. Third Quarter 1993, Department of Labor and Employment.
  • Costs of Production - Colorado. Colorado State University, Agriculture Department, 1993.
  • Costs of Production - 1987. United States Department of Agriculture, Economic Research Division.
  • Kentucky Hemp: An Overview. Kentucky Governor's Task Force on Hemp & Related Products, 1995.
  • State Personal Income: 1929-1987: Estimates and a Statement of Sources and Methods, U.S. Department of Commerce, July 1989.

Economic Impact of Hemp in Colorado

It is hard to estimate how much hemp production and industry would impact the economy of Colorado, but it is safe to say the impact would be considerable.

Hemp is profitable to grow because it has high yields and low production costs.

Even more important than that is the fact that hemp is a value-added crop. This means that hemp can be processed from a raw material into other products before it is sold to the consumer. Every step of processing adds value to the crop.

For instance, hemp fabric is spun, woven, and sewn into a garment before it is sold to a consumer. Therefore, the spinning, weaving, and clothing industries all profit from hemp. Crops like corn, on the other hand, are generally sold as is directly to the consumer, with no processing to add value to the crop.

Because of the many uses of hemp, value can be added to it in many ways. Thus, hemp production would have a ripple effect through-out the Colorado economy where many industries would benefit.

SHOW GRAPH?

The impact on the farm economy alone would be enormous. According to estimates from the Governor's Task Force in Kentucky and our own estimates, hemp would be worth 7 times as much as either corn or winter wheat. This is the net returns, after production costs are subtracted from a crop's value.

SHOW CHart?

Hemp cultivation of 170,000 acres a year, which is only 5% of the land that is currently in corn or wheat production, would have a net worth of $87 million.

Hemp would also have a huge impact on the non-farm economy. If hemp production in Colorado increased the business of the following industries as little as 5%, that would produce close to $20 million in income to the people of the state.

The combined impact on the Colorado economy from farming and other industries would be over $100 million a year.