Hemp fiber is an incredibly useful industrial material. In the 19th century it's main use was for ships, making up sails, ropes, tarps, or other fiber based items that needed to avoid rot with high moisture. The demand for hemp increased sharply during the Civil War and even WWI. However, in the 1920s it dropped to only being about 140 acres grown in the US as of 1933. There was a "Hemp for Victory" campaign during WWII that brought production back up above 100,000 acres, but it was only temporary.

The Marihuana Tax Act of 1937 didn't actually outlaw hemp production, it placed taxes upon it. Those that were first arrested for "possession" had not paid taxes for it. Tax stamps were issued during WWII to growers of hemp for this reason. The last commercial hemp fields were actually planted in Wisconsin in 1957, so it was a slow dying process. Mandatory sentencing acts of the 1950s and the Controlled Substance Act of 1970 were part of making cannabis based fibers illegal to cultivate.

It is still legal to sell/possess hemp fibers in America since they are a different species than the hemp used for it's THC levels. Hemp is legal to grow in Europe and is still a good crop there. There's a lot of historical speculation that the reason hemp fiber was pulled into the taxing/outlawing process for cannabis was due to some very high power industrial tycoons. Hemp was competition for wood pulp for paper and for the newly invented Nylon in the early 20th century. It's demise has been linked to William Randolph Hearst (newspaper mogul who ran campaigns against it), Andrew Mellon, and the Du Pont family who all stood to benefit from it's disappearance. We didn't know what caused certain species of cannabis to have their drug-like properties at that point, so it wasn't hard to connect them all to it.

Even if hemp had not been subject to taxation and laws about it's cultivation it likely would not have been a large scale crop nationally. The technology to process the fibers lagged behind other manufacturing of things like cotton and the competition for new products they could make put them up against powerful companies (rigging sailing ships is not big business like it was).