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The range of applications for industrial hemp has consistently increased in various sectors over the years. For example, hemp hurd can be used as a resource to produce biodegradable packaging materials when incorporated into a fungal mycelium composite, a process that has been commercialized. Although these packaging materials can be composted after usage, they may present an opportunity for valorization in a biorefinery setting. Here, we demonstrate the potential of using this type of discarded packaging composite as a feedstock for biofuel production. A one-pot ionic liquid-based biomass deconstruction and conversion process was implemented, and the results from the packaging material were compared with those obtained from untreated hemp hurd. At a 120 °C reaction temperature, 7.5% ionic liquid loading, and 2 h reaction time, the packaging materials showed a higher lignocellulosic sugar yield and sugar concentrations than hemp hurd. Hydrolysates prepared from packaging materials also promoted production of higher titers (1400 mg/L) of the jet-fuel precursor bisabolene when used to cultivate an engineered strain of the yeast Rhodosporidium toruloides. Box–Behnken experiments revealed that pretreatment parameters affected the hemp hurd and packaging materials differently, evidencing different degrees of recalcitrance. This study demonstrated that a hemp hurd-based packaging material can be valorized a second time once it reaches the end of its primary use by supplying it as a feedstock to produce biofuels. [ABSTRACT FROM AUTHOR]