Economic feasibility and risk analysis of industrial hemp production: a comparative assessment of floral, fiber, and grain enterprises in North Carolina, USA

This study evaluates the economic viability of industrial hemp production in North Carolina, focusing on three production systems: floral, grain, and fiber. Enterprise budgets were developed to assess costs and returns per hectare. Risk-based investment metrics, including net present value (NPV), internal rate of return (IRR), and benefit–cost ratio (BCR), were projected over a five-year horizon. Results indicate that floral hemp has the highest estimated production costs but also offers the greatest potential, while fiber and grain hemp present more moderate but stable outcomes. Estimated IRRs for all three systems exceeded the 5.5% discount rate, and BCRs were above one, suggesting that revenues can cover costs under baseline conditions. Sensitivity analyses highlight the influence of yield and market price variability, particularly for floral hemp, which shows higher upside potential, but greater risk compared to grain and fiber. Monte Carlo simulations reinforce these findings, demonstrating that profitability is possible across all hemp types but subject to significant uncertainty, especially in floral markets. The analysis also reveals that limited processing capacity and the absence of equilibrium pricing in North Carolina contribute to market inefficiencies, constraining producer profitability. Overall, these results provide benchmark financial estimates for growers and policymakers while the region’s hemp markets, and processing infrastructure continue to mature.