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University of Minnesota Extension

Potential economic impact of hemp processing in Waseca, Minnesota

Worker handling small CBD bottles from a conveyor belt

Key findings

  • Investment: Investors plan to spend $10 million to expand the current CBD oil processing facility. In total, this investment would generate an estimated $12.6 million of economic activity in the county.
    • This includes $5.2 million in labor income. 
    • Construction work will also support an estimated 110 jobs.
  • CBD oil production: Under the proposed expansion, investors estimate annual revenues will increase by $12.6 million. In total, the increased CBD oil production will create an estimated $14.5 million in additional economic activity in Waseca County.
    • This includes $1.8 million in labor income.
    • Production will support a projected 40 jobs.
  • Capital investment: The CBD company plans a capital investment of $3 million to launch new CBD oil formulation work. In total, the investment will generate an estimated $3.8 million of new economic activity in the county.
    • This includes $1.6 million in labor income.
    • The investment will also support 34 jobs.
  • Employment: The Waseca-based company anticipates the CBD oil formulation facility will hire 100 employees. In total, the expansion of CBD oil formulation will increase total economic activity in the county by an estimated $46.6 million.
    • This includes $8.9 million in labor income.
    • The expansion will support an estimated 170 jobs in the county.

About this report

The 2014 Farm Bill established a legal definition of hemp. This allowed states to launch pilot programs to grow hemp for research purposes. Subsequently, the Minnesota Department of Agriculture (MDA) launched its hemp growing pilot program in 2016. The 2018 Farm Bill further expanded the definition of industrial hemp. As a result, industrial hemp is now an agricultural commodity regulated by the United States Department of Agriculture. In addition, Minnesota passed a statute in 2019 that allows the sale of hemp-derived CBD oil in Minnesota.

One CBD oil processor is located in Waseca, Minnesota. The operation has increased in size and currently processes industrial hemp grown on 645 acres. The company’s owners would like to continue the operation’s growth, and they are considering a $13 million investment in CBD hemp extraction and formulation. If this occurs, the increase in CBD production would add 24 new jobs and $1.2 million in payroll. Formulation would add up to 100 new jobs with a payroll of an estimated $6.3 million. Acreage processed would increase from 645 acres to 1,500.

The City of Waseca was interested in understanding how this expansion would affect economic activity in the area. Thus, they hired University of Minnesota to conduct a basic economic impact analysis. The analysis was supported by the EDA Center at the University of Minnesota. This report is a summary of results.

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Brigid Tuck, senior economic impact analyst; Jennifer Hawkins, Extension educator

Reviewed in 2020

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