Pulpwood is usually the worst market for wood. It takes lower quality wood than other end users, so it is an important market. But pulpwood might sell for $15 a ton while a single high grade log weighing less than a ton might sell for hundreds of dollars.

Losing the pulpwood market would mean that the cost mix would shift for other timber products but it wouldn't threaten the industry.

I'm not sure that a good, cheap process for turning hemp into paper would be that much of a threat to the pulpwood paper makers. Hemp prices can only go so low before farmers won't plant it. An awful lot of pulp wood isn't competing with corn (and any other agricultural commodity) for space to grow.

edit: Here's some global production statistics that back up paper being an important market for wood but not critical:

http://www.fao.org/forestry/statistics/80938/en/