Build the Local Market First. Export Second.

Nearly every national hemp conversation I get invited into opens the same way.

We have the land. We have the climate. We have low labour costs. The world wants hemp. We will grow it and sell it into Europe, or North America, or China.

I understand why. If you are a lower or middle income economy, export is the story that fits everything your government is already trying to do. It brings in foreign currency. It shows up in trade statistics. It sounds like industrialisation. It attracts the kind of investor who arrives with a slide deck and a global market forecast. And it lets you skip the hardest question, which is whether anybody at home actually wants the product yet.

The export story is also the easiest one to get funded and the hardest one to deliver.

Five things, more or less in this order.

You become a price taker in a market you can't see. When your only customer is offshore, you have no visibility on demand, no pricing power and no way to plan. You are the marginal supplier to somebody else's supply chain, which means you are the first one cut when their market softens. I have seen new national industries built on a single letter of intent from a single foreign buyer that was never a binding contract.

Export specifications are the hardest specifications in the industry. Selling hemp seed, oil, fibre or extract into the EU or the US means certification, traceability, residue testing, phytosanitary clearance, food safety systems and in some categories GMP. That is a two to four year capability build on its own. Selling the same product to a manufacturer in your own city means a truck and an invoice. Starting with the hardest customer is a strange way to learn a business.

Concentration risk gets ignored until it bites. Canada is the most developed hempseed industry in the world and it is a useful warning. In the USDA's assessment of the sector, Canadian hempseed exports were worth roughly US$54 million, and about 95% of that went to one country, the United States.^[1] That is a mature, well run industry with a single point of failure. If a country with Canada's institutions carries that exposure, a first generation industry with one export customer is not building resilience, it is building a bet.

There is no feedback loop, so you never learn your own product. This one is underrated. A local market teaches you things no export order will. Which varieties actually perform in your soil for the end use you care about. What your fibre does in a real production line. What price your consumer will pay. What your product needs to look like on a shelf. Companies that sell locally first improve quickly, because the customer is close enough to complain.

And the industry has no domestic constituency. This is the political failure and it is the one that kills projects quietly. If nothing made from hemp is sold, used, built or eaten inside the country, then no local manufacturer, retailer, builder, farmer group or consumer has any reason to defend the industry when the regulations get reviewed, the minister changes, or a scare story runs in the newspaper. Export-only industries are politically weightless.

Colombia is the public case study people can look up. It licensed cannabis production with a strong export orientation and enormous expectations. By May 2021, cumulative exports since 2019 totalled about US$7.7 million, while three of the listed producers operating there had lost a combined CA$228 million over two years.^[2] The crop was fine. The regulations were serious. The problem was that the export markets everyone was building for were small, slow and hypercompetitive, and the domestic market had been left switched off. Colombia's 2021 decree began opening domestic distribution and local use of CBD in foods, cosmetics and wellness products, which was the correction.^[2]

The same pattern has played out across several African hemp and cannabis frameworks, where licensing was designed around export and, in practice, priced small local producers out of their own industry.^[3]

I'm not against export. I have spent much of my career building export businesses. The argument is about sequence, not principle.

A local market first gives you four things.

It gives you a real customer at short range, which means faster payment cycles, lower logistics cost, and a shorter distance between a problem and a fix.

It gives you price discovery. You find out what your product is worth from people who will actually pay for it, rather than from a market report.

It gives you a bankable story. A processing plant with signed local offtake is infrastructure. The same plant with an export hope is a speculation. Any credit committee anywhere in the world will read those two documents differently.

And it gives you that constituency. Once there are hemp foods in your supermarkets, hemp insulation in your buildings, hemp fibre in a local factory and hemp composite in a locally made product, the industry has friends. Regulation gets easier, not harder.

I lived this one personally. Before November 2017, hemp seed could not legally be sold as a food in Australia. I was running the largest hemp food business in the southern hemisphere and we could export to almost anywhere, but we could not sell to an Australian. Everything changed when the Food Standards Code changed and the domestic market opened.^[4] Farmers planted for a buyer they could drive to. Products went into mainstream supermarkets. Processing capacity followed the demand rather than waiting for it. The export business got stronger too, because we finally had scale and a home base to build it from.

Europe tells a version of the same story from a different angle. France grows more than 60% of Europe's hemp, not because of superior land but because France never lost continuous domestic demand and therefore never lost its processing base.^[5] Continuity of local use is what kept the industry alive through the decades when nobody was excited about hemp.

I hear this constantly, and sometimes it's true. Usually it's three different things being confused.

Small isn't the same as absent. Start with import substitution. Look at what your country already imports that hemp can replace or supply into: animal bedding, insulation, particleboard, protein powder, cooking oil, textiles, plastic components, absorbents, mulch, cosmetics ingredients. That is existing, proven, paid-for demand with a customs record attached to it. It is the least speculative market you will ever find, because it is already being served, just by somebody else.

Government is a market, not just a regulator. The fastest anchor demand I have seen created came from procurement, not subsidy. Public housing built with hemp based materials. Hemp fibre in uniforms or institutional textiles. Hemp seed in a school or hospital nutrition program. Hemp composite in public infrastructure fittings. A government that buys creates a market. A government that only grants licences creates paperwork. If I get one recommendation into a national strategy, it is usually this one.

Regional before global. Your neighbours are not export in the difficult sense. Same trade bloc, similar standards, shorter logistics, often shared language. Treat the region as the second ring of the local market, not as international expansion.

Then, when you have volume, quality systems, a brand and a track record, export becomes what it should always have been: the upside, not the plan.

Here is the second thing that separates the projects that move.

The successful starts, almost without exception, brought in people and companies who had already done it somewhere else. The waiting ones tried to invent everything locally, usually for reasons of national pride, and paid for that pride in years.

This shows up in a few forms and they compound.

An advisory board with real operators on it. Not diplomats and not consultants only. People who have run a decortication line, sold hemp protein to a supermarket buyer, or passed a food safety audit. One experienced operator in the room will save you a year on your first capital decision.

A director from your target sector, not from hemp. If the plan is hemp in construction, put a construction company executive on the board. If it's food, put a food manufacturer there. Hemp expertise tells you what the plant can do. Sector expertise tells you what the customer will buy, at what price, against what incumbent, through which distribution channel. Projects consistently underestimate this. The industry you are entering matters more than the crop you are growing.

A partner who exports technology, IP or product to you before you export anything to anyone. This is the model I have seen work best, and it is the one I keep working on today.

Processing equipment is usually the first thing worth importing. The decortication and fibre cleaning lines that make a hemp industry possible are designed and built by a small number of specialist engineering firms, most of them European, and buying a proven line with commissioning and operator training attached beats developing equipment locally on both cost and timeline. It is also a defensible use of foreign currency, because what you are buying is a permanent local asset rather than a consumable.

Let me describe it concretely, using a shape I've used more than once.

A country wants to manufacture and sell a hemp based product. Take hemp biocomposite components, or hemp building materials, or a hemp food line. The temptation is to build the factory first, on the assumption that the market will appear once product exists. That assumption is what creates the long wait.

Instead, you partner with an established company in a mature market, usually the US or Europe, that already makes the product and already sells it profitably. The sequence runs like this.

Stage one. Import their finished product and sell it locally. You are now building the actual market. Distributors, retailers, specifiers, builders, procurement officers, consumers. You are learning what sells, at what price, into which channel, with which objections. Cashflow starts early and the market education is being paid for by trading margin rather than by grant money.

Stage two. Import the input, finish it locally. Bring in the compound, the resin, the semi-finished material or the concentrate, and do the last stage of manufacturing at home. Local jobs begin. Local quality systems begin. Import duty and freight exposure drop. Your partner's technical people train yours.

Stage three. Localise the raw material. Now you plant, because now there is a buyer and a specification. Contracted acreage into a processing hub with a known customer at the other end. This is the point at which farmers can be asked to take risk, and not before.

Stage four. Full local manufacture. Under licence, joint venture, or an equity structure with the partner. The technology transfer was earned progressively rather than bought blind.

Stage five. Export, including sometimes back to your partner's market or through their channels. By this stage you have cost advantages they don't, a proven product, and a partner with distribution who has a commercial reason to help you. I have seen the flow reverse this way, and it is a much stronger export position than the one everyone wanted at the start.

What makes this work is that the risk is loaded onto the part of the chain that is already proven. The foreign partner's product, brand and know-how carry the early market building. Your capital goes in behind demonstrated demand instead of ahead of it.

Two objections come up, both legitimate.

The first is that importing looks like the opposite of industrial policy. It looks like you're buying foreign product with foreign currency. The answer is that you are buying a market, and it is temporary by design. Put a sunset on it. Write import volume step-downs and local content step-ups into the agreement, tied to dates and to capability milestones, so the imported product is scaffolding rather than a permanent arrangement.

The second is dependency on the partner. That is managed in the deal, not avoided by refusing to do the deal. The things I look at: is IP licensed with a defined path to local ownership or perpetual rights, or is it held offshore forever? Is technology transfer contractually specified, with named roles trained and documented, or is it a goodwill clause? Is local equity meaningful? Is exclusivity time limited and performance tested? Does the partner have a genuine commercial interest in your success, ideally equity or a royalty, rather than only a margin on what they sell you?

A partner who only makes money selling you product will keep selling you product. A partner with equity wants your plant built.

1. Decide the end product and the end customer first. Not the crop, not the hectares. The product.
2. Size the local and regional market for that product, starting from your own import data.
3. Secure anchor demand. Government procurement, a major local manufacturer, or a retail listing.
4. Bring in an experienced foreign partner and a sector-experienced director. Structure the technology transfer with milestones.
5. Import finished product and sell it. Build the market and the brand while banking margin.
6. Build processing behind contracted demand, not ahead of it.
7. Contract the farmers, once there is a buyer and a specification.
8. Localise manufacturing in stages.
9. Export as upside, into the region first.

It is not a fast plan, but it is a shorter one than the alternative, because the alternative usually includes an eight year pause in the middle.

If you're a minister, an agency, a development bank or a corporate looking at hemp, the question I'd put to you first is not how much land you have or what your yields might be.

It's this. Who, inside your own borders, will buy the finished product, and what will they pay?

If you can answer that with names, the rest is engineering and finance. If you can't, then export won't rescue the plan, it will just delay the moment you find out.

Hemp gives a country food, fibre, building materials, industrial inputs and carbon drawdown out of one harvest. It is one of the few genuinely useful industrial systems available to a developing economy. It deserves better than another decade of waiting.

Build the local market first. Bring in people who have done it before. Then export.

This is the work I do through BioSmart Group, with governments, agencies and corporates. If you're designing a national or regional hemp strategy, or a commercial entry into one, I'm happy to talk.