China grows nearly half the world’s legal hemp. In 2018 their sales, principally as textiles, totaled $1.2 billion. By next year Chinese sales of cannabidiol (CBD) will quadruple to $228 million. A Chinese hemp index has more than doubled in value this year. Shineco, a biotech whose market capitalization on the Nasdaq exchange has nearly doubled to $25 million since last month, is planning China’s largest industrial cannabis project in Heilongjiang, the province that issued a proposal to become the most prominent cannabis cultivator in the world by 2020.
The hemp plant has a long history in China where they twisted the world’s first rope around 2,800 B.C. The Divine Farmer’s Classic of Materia Medica, a text from the first or second century, attributed curative powers to cannabis, its seeds, and its leaves for a variety of ailments. “Prolonged consumption frees the spirit light and lightens the body,” it reads.
The People’s Republic banned the use and cultivation of marijuana in the 1950s, but the Yunnan Province’s ethnic minorities continued their harvests in secret. As China gradually opened up after their cultural revolution, Yunnan became a destination for backpackers and adventurers in the late 1980s due to the abundant wild-growing cannabis.
China decided to allow industrial hemp in 2010 and permitted Yunnan to resume legal production. Hemp was then used principally for textiles, including the uniforms of the People’s Liberation Army, and brought much-needed investment to Yunnan where a farmer can earn more per acre than from flax or rapeseed.
Hanma Investment Group received China’s first license to extract CBD in January 2017. Hanma extracts cannabidiol in oil and crystal form from their hemp at a state of the art factory it opened two years ago in a restricted zone next to a weapons manufacturer. They have an extraction plant in Las Vegas expected to begin production soon, and plans for another in Canada. Chairman Tan Xin says he will start to grow and process hemp in Nevada later this year because American hemp has higher CBD levels than China permits.
Hempsoul is one of three other companies in Yunnan that have received licenses to process hemp for cannabidiol, establishing more than 36,000 acres under cultivation. The Hempsoul factory has a closed-circuit camera system that streams videos directly to the provincial public security bureau. Their CBD is added to oils, sprays, and balms as a treatment for insomnia, acne and even diseases like diabetes and multiple sclerosis. The bulk of Hempsoul’s product — roughly two tons a year — is exported to overseas markets since China doesn’t allow CBD for use in anything but cosmetics.
The Yunnan Academy of Agricultural Science in Beijing has even been breeding their own varieties of hemp. “Other countries really like our CBD,” says lead scientist Dr. Yang Ming, and China really likes the money the cannabis business is bringing in.
Linnane, Ciara. “Cannabis Stocks Mixed as Investors Await next Crop of Earnings.” MarketWatch. May 08, 2019. https://www.marketwatch.com/story/cannabis-stocks-mixed-as-investors-await-next-crop-of-earnings-2019-05-08.
Myers, Steven Lee. “China Cashes In on the Cannabis Boom.” The New York Times. May 04, 2019. https://www.nytimes.com/2019/05/04/world/asia/china-cannabis-cbd.html?smid=fb-nytimes&smtyp=cur&fbclid=IwAR3nAQzNCTKuEGA0QKlbTgsMZyzMIYY9sQdbUin9g9lB6klgXS8gC_bsPQg.