The Chinese manufacturing industry is never shy about investing in high-profile sectors and taking on the established players. We’ve seen it with home electronics, we’ve seen it with smartphones and we’ve seen it with cars. Now, the CBD craze that is sweeping the western world means that cannabis cultivation is firmly in China’s crosshairs.
In 2017, Hanma Investment Group became the first company in China to be awarded a license for the extraction of CBD. This despite the fact that use of the product is prohibited in China, a country well-known for its strict policies on drug enforcement.
The US cannabis boom
The absence of a local market does not dampen Hanma’s enthusiasm for a business venture that “has huge potential,” according to the company’s Chairman, Tan Xin. Hanma market their CBD overseas, specifically targeting the US market, where cannabis products of all sorts have never been more popular.
The CBD craze has hit at the same time as legalization of cannabis in its broader forms sweeps across the US. There is an eager market waiting to grab everything from smokables to edibles to cannabis seeds for cultivation right now. While it is hard to see Chinese exporters entering the recreational cannabis market any time soon, the CBD oils that are used to treat anxiety, skin problems and even chronic diseases like MS or diabetes are flying off the shelves. This is in spite of the fact that clinical research on its effectiveness for these conditions is still in its infancy.
State of the art operations
Two years ago, Hanma’s subsidiary company, Hempsoul, opened a state of the art factory in a remote village called Shanchong in Yunnan Province. Here, in excess of 1,600 acres of hemp are cultivated to create CBD oil and crystals. Local manager Tian Wei counts himself among the CBD faithful and told the New York Times “It is very good for people’s health.” He added that China has entered the market “a little bit late,” but he feels there are significant opportunities for future development.
Close supervision
China has a history of cannabis cultivation that goes back thousands of years, and ancient texts like The Divine Farmer’s Classic of Materia Medica expound on its diverse uses for oil, textiles and even medicine. It is only in the past 70 years or so that China has outlawed the use of marijuana. In the 1980s, it went so far as to ban hemp cultivation entirely, a move that had a disastrous impact on rural farmers who were already struggling to make ends meet.
10 years ago, there was a slight flexing of the rules to allow industrial hemp. The Hempsoul license that allows CBD production is a further step forward. Earlier this year, the Deputy Director of China’s National Narcotics Control Commission said that China was cognizant of the momentum toward legalization around the world and that production of industrial cannabis in China would be strictly supervised. This can be seen in action with the dozens of surveillance cameras at the Hempsoul factory that all stream directly back to the provincial public security bureau.
Nevertheless, these are exciting times in a buoyant market – and it’s one in which China seems destined to take in increasingly active role.
