Will China Dominate the Cannabis Industry?

China is a big country with even bigger ambitions. For several years it has been considered one of the world’s economic superpowers, and it recently flexed its technological muscles by becoming the first country to land a probe on the far side of the moon.

Although the country has a zero-tolerance policy when it comes to narcotics, China is now responsible for growing much of the planet’s industrial hemp. But China’s interest in the humble cannabis plant may not end there. Chinese investors are beginning to warm to the new market, but a negative social stigma and a lack of education surrounding the drug are hurdles that need to be overcome

Cannabis has been used as a traditional Chinese medicine for thousands of years. It was first mentioned in a text known as the Divine Farmer’s Materia Medica, published in around 200–250CE. Throughout the long history of Chinese medicine, cannabis was used as a painkiller, an anesthetic, and to treat seizures and mental illness.

Although traditional Chinese medicine is still frequently practiced alongside biomedicine in China, cannabis can no longer be found on pharmacy shelves in the People’s Republic. The herb was made illegal in 1985, and now the only part of the plant recognized as a medicine is its seeds. These are used as a remedy for constipation, while other the medicinal uses of cannabis have been long forgotten. That is, until now.

While growth and consumption of marijuana remains illegal in China, the government has been investing in health-related cannabis known to help illnesses such as Parkinson’s, multiple sclerosis and cancer.

Aside from its medicinal uses, hemp is mainly grown to make textiles and as a food product. China is also interested in the use of hemp fibers as a construction material since they are light and environmentally friendly. This is obviously a massive plus for a country which has struggled with hazardous pollution levels for decades.

“China for the last five years has had a lot of money invested in research and development without anybody’s knowledge or help,” said Glenn Davies, group CEO of CannAcubed, a Singapore-based cannabis and biotech company, in an interview at the Hong Kong Cannabis Investor Symposium on Thursday. “Before the US had been pushing through legislation, they have been doing underlying research and development on a government level into cannabis.”

But will all of this interest in hemp and cannabis lead to the herb being legalized in China? It seems highly unlikely, for the time being at least.

Cannabis Laws in China

In China, drugs laws are strict. The population as a whole has a very negative attitude towards drugs in general, probably in part due to the devastating aftermath of the 19th century Opium Wars. These wars began as a trade dispute with the British, but ended in a massive loss of life, especially on the Chinese side. Another side effect was millions of Chinese left addicted to opium, a problem that plagued the country for years. China also borders the countries Myanmar and Lao PDR, home to the ‘Golden Triangle’ of opium production. This has led to serious issues with trafficking of the drug throughout history, and may well have contributed to the Chinese opinion of narcotics.

In Hong Kong marijuana was classed illegal under the 1969 Dangerous Drugs Ordinance. Trafficking carries a maximum sentence of life in prison, and just smoking the drug can lead to up to seven years in jail and a fine of HK$1,000,000 (US$127,594). There are no registered pharmaceutical products containing cannabis for medicinal use in the city.

Unfortunately, no distinction is made between harder drugs such as opium, heroin, and cocaine, and cannabis. If you are found with any of these substances in China, the punishment is likely to be harsh. Drug penalties in China may include a trip to “compulsory rehabilitation” for as long as two years, while drug crimes deemed less severe could result in 10–15 days’ imprisonment and a hefty fine.

However, there is one variety of cannabis which can be grown and used freely in China, and that is industrial hemp. With a THC content of below 0.3%, hemp has no psychoactive properties and is not classed as a narcotic substance. Chinese farmers are taking advantage of this fact, and hemp is quickly becoming one of the most widely grown crops in the country.

There is a good reason for this as hemp is not only environmentally friendly but also quick and easy to grow and incredibly versatile. As worldwide demand for hemp steadily increases, it seems a safe bet that China will be at the forefront, ready to meet other countries’ needs as well as its own.

Chinese companies own 309 of all 606 cannabis-related patents worldwide. They relate to hemp – the legal variety for industrial use in things like clothing and food products – and cannabidiol. Also known as CBD, cannabidiol is a strand of the plant used for medicine without creating a high, but remains illegal to grow or consume in China.

In 2018, the Chinese hemp industry was estimated to be worth around $1.1 billion, a figure set to rise to $1.5 billion by 2020. There are many different reasons why the industry is taking off so rapidly, and just as many reasons why China could be ideally placed to lead the way.

In China, the most significant use of hemp by far is as an alternative to cotton for making textiles. Compared with cotton, hemp requires less space, less water, and fewer pesticides to grow. This means that it is better for the environment, but also that it is cheaper to produce. This makes it an attractive prospect for farmers looking to get the most out of their land, and for consumers looking for a greener way to shop.

The next most common use for hemp in China is as food. Its seeds are highly nutritious and a good source of omega-3 and omega-6 fatty acids and protein. With more of the world now looking to plant-based diets, hemp is set to become even more popular as a food source in the future.

Another hemp product which is edging its way onto the Chinese market is CBD oil. CBD has been shown to have a plethora of clinical applications, not dissimilar to those for which cannabis was originally used in Chinese medicine. CBD is possibly one of the fastest growing markets when it comes to hemp products in China. In 2017, Chinese CBD products brought home an impressive $53 million; a figure predicted to quadruple by 2020!

In addition to these uses, hemp fiber is now being utilized as a construction material, and its oil is a major ingredient in many fashionable personal products and cosmetic brands.

As hemp’s reputation continues to shine, global demand is sure to rise. Luckily for China, the country is ideally placed to meet their own requirements and more.

Currently, most Chinese hemp is grown in Heilongjiang, a province in North-East China which shares a long border with Russia and is famed for its freezing winters. Around 74,000 acres of hemp is produced in Heilongjiang every year. This is about equivalent to the overall area dedicated to growing the crop in either Canada or Europe. There are already plans to double hemp production in Heilongjiang in coming years.

When you take into account that Heilongjiang is just one province of 34 (including municipalities like Beijing and autonomous regions such as Tibet), the opportunity for growing vast quantities of hemp in China is very real. Add into the mix the huge population and therefore potential workforce, and you have a guaranteed recipe for success.

Another significant advantage that China has is that its large area and placement on the Earth have resulted in a country with pretty much every climate imaginable. From the sub-zero winters of the north to the tropical forests of the south, there is a habitat suitable for growing pretty much any type of cannabis the Chinese choose. If the government were ever to relax its laws on higher-THC strains, the possibilities would be endless!

Final Thoughts

Although cannabis is still very much illegal, the hemp industry is booming in China. The country has the space and the human resources to produce an enormous amount of this versatile crop, meaning that in the future, it could well dominate the market.

One key area to watch is the CBD industry. Respect for this natural remedy is increasing worldwide, and the Chinese have a special link with cannabis as a medicine, spanning over 2000 years. The government will undoubtedly be keen to preserve this link in its ongoing efforts to bring Chinese medicine up to date and promote its benefits to the world.

So next time you pick up a hemp or CBD product, take a look at where it was produced. In the future, you could well find more and more of these items carrying the famous ‘Made in China’ mark.