Hemp Derivatives Market to Reach US$ 20.97 Billion by 2028:...

Hemp Derivatives Market to Reach US$ 20.97 Billion by 2028: What’s Driving the 19.7% CAGR?

Posted 2026-02-11 14:14:08

Hemp derivatives are products made from various parts of the hemp plant, including its seeds, stalks, leaves, and flowers. Through different extraction and processing methods, manufacturers create a wide range of materials used in industries such as wellness, food, textiles, and construction. These derivatives often contain cannabinoids, fibers, proteins, and oils that can be refined for specific applications.

The hemp derivatives market is witnessing exceptional expansion, rising from US$ 5.95 billion in 2021 to a projected US$ 20.97 billion by 2028, registering a CAGR of 19.7% during the forecast period. Industrial hemp, a variety of Cannabis sativa cultivated for commercial use, produces valuable derivatives such as CBD oil, hemp seed oil, and hemp fiber. These derivatives serve multiple industries including food and beverages, pharmaceuticals, nutraceuticals, personal care, textiles, construction, and animal feed. The combination of regulatory shifts, expanding applications, and consumer awareness is accelerating global market growth.

Explosive Growth and Industry Transformation

The transformation of the hemp derivatives industry reflects increasing global acceptance and diversified commercial usage. Between 2021 and 2028, market expansion is being fueled by innovation in product formulations and broader legalization frameworks. Countries are recognizing the economic benefits of industrial hemp production, particularly as governments explore alternative tax revenue streams.

The COVID 19 pandemic positively influenced demand. Heightened stress, anxiety, and sleep disorders during the crisis encouraged consumers to explore hemp based wellness products. Increased online searches and awareness around potential health benefits further strengthened market penetration.

What is driving the rapid growth of the hemp derivatives market?
The hemp derivatives market is expanding at a CAGR of 19.7% due to rising applications across food and beverages, pharmaceuticals, nutraceuticals, personal care, textiles, and construction industries. Increasing consumer awareness of hemp based wellness products, especially CBD oil and hemp seed oil, has significantly boosted demand. Regulatory legalization in several countries, growing interest in plant based and sustainable materials, and expanding research into therapeutic applications have further accelerated market growth. The positive impact of the COVID 19 pandemic on health consciousness also contributed to higher adoption of hemp derivatives.

Key Segments Powering the Market Boom

By Type

Hemp CBD oil
Hemp seed oil
Hemp fiber
Others

Hemp fiber held the largest market share in 2021. As a bast fiber plant similar to jute and flax, hemp provides strong, biodegradable, and lightweight materials. Its thermal resistance, mildew resistance, UV blocking properties, and antibacterial characteristics make it highly attractive for textiles and construction composites.

CBD oil continues to gain traction due to expanding applications in pharmaceuticals and nutraceuticals. Hemp seed oil, rich in amino acids, minerals, and vitamins, is widely used in dietary supplements and cosmetic formulations.

By Application

Food and beverages
Pharmaceutical and nutraceutical
Personal care
Textiles
Others

Hemp derivatives are increasingly incorporated into protein rich foods, plant based dairy alternatives, skincare products, and industrial textiles. Hemp seeds serve as a soybean substitute in products such as milk, tofu, butter, and burgers. Fibers are used in bio composites, insulation materials, and eco friendly construction components.

Which segments and regions offer the strongest growth opportunities in the hemp derivatives market?
Hemp fiber held the largest share in 2021 due to its wide usage in textiles, bio composites, and construction materials. Hemp CBD oil is also a high growth segment driven by demand in pharmaceutical and nutraceutical applications. Regionally, Asia Pacific leads the market owing to strong textile demand, rising awareness of medical benefits, and legalization of hemp in food supplements. North America and Europe also present strong investment opportunities due to regulatory support, innovation, and increasing consumer preference for natural and sustainable products.

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Regional Leadership and Emerging Hotspots

Asia Pacific accounted for the largest share of the hemp derivatives market in 2021. Rising awareness of hemp’s medical benefits, expanding cosmetics demand, and legalization of hemp in food supplements are key growth factors in the region. The textile industry also significantly contributes to regional dominance.

North America and Europe are witnessing growth driven by regulatory clarity, consumer wellness trends, and strong research and development initiatives. Meanwhile, South and Central America, along with the Middle East and Africa, are gradually emerging as promising markets due to increasing investment and industrial development.

Regulatory Shifts and Innovation Momentum

Legalization efforts across multiple countries are unlocking new commercial opportunities. Governments are considering hemp as a regulated and taxable agricultural product, thereby encouraging licensed production and distribution.

Research initiatives during the pandemic explored potential therapeutic applications of hemp derivatives. Studies in Canada examined the interaction of Cannabis sativa extracts with SARS CoV 2 host cell receptors. Companies such as STEROBiotech Ltd. investigated cannabis and CBD applications in medical treatments. Such research strengthened market credibility and accelerated innovation.

Consumer Demand Surge Driving Market Expansion

Growing consumer inclination toward natural, plant based, and sustainable products is significantly boosting demand. Hemp derivatives align with clean label, eco friendly, and wellness driven consumption trends. Nutritional awareness, increased health consciousness, and demand for biodegradable materials are key forces shaping buying behavior.

The versatility of hemp derivatives across food, cosmetics, textiles, and industrial sectors ensures diversified revenue streams and reduced dependency on a single application segment.

Competitive Landscape and Strategic Moves

The hemp derivatives industry is moderately fragmented with key players focusing on expansion, mergers, and product innovation.

Key Market Players

Colorado Hemp Works, Inc.
Dun Agro Hemp Group
Ecofibre
HempFlax Group B.V.
HemPoland Sp. z o.o.
Konoplex
MH medical hemp GmbH
Plains Industrial Hemp Processing Ltd.
South Hemp
BAFA Neu GmbH

Strategic Focus Areas

Mergers and acquisitions to expand geographic reach
Investment in processing technology and product innovation
Expansion into nutraceutical and personal care categories
Strengthening supply chain integration
Regulatory compliance and certification initiatives

Investment Hotspots

High growth opportunities exist in Asia Pacific and North America due to regulatory advancements and strong consumer demand. Investment in hemp fiber processing and CBD based wellness products offers significant return potential. Companies focusing on sustainable applications and industrial composites are likely to benefit from increasing environmental regulations and green building standards.

Future Forecast and Outlook

By 2028, the hemp derivatives market will be significantly reshaped by expanding applications, regulatory maturity, and technological innovation. Growth will continue to be driven by wellness trends, sustainable material demand, and diversified industrial usage. As research deepens and legalization frameworks strengthen, hemp derivatives are expected to become mainstream components across multiple industries, solidifying the market’s high growth trajectory and long term commercial viability.