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.