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China Cannabis economy grows faster than US

First Hemp-based drink in China sets up in Vegas
Chinese Cannabis (or at least Hemp) is a multi-billion Yuan industry and is set to fully legalised – emerging from a decade of ambiguity.

Chinese growers sell the stems of the crop to textile factories to make high-quality fabric, the leaves to pharmaceutical companies for drugs, and the seeds to food companies to make snacks, kitchen oil and drinks.

The 1970s saw heavy research into its properties by the Chinese government as part of its war effort in Vietnam and this is now paying off.

As a result of that research, more than half of the world’s 600-plus patents related to the plant are now held in China, according to the World Intellectual Property Organisation. This has prompted concerns in the Western pharmaceutical industry that the Chinese government or Chinese firms might take advantage of the patent barriers.

Cannabis sativa has been cultivated in China for centuries, mainly for the plant’s strong fibres which can be turned into rope, fabric and paper. Hemp fabric dating back more than 3,400 years has been found in Shang dynasty tombs in Hebei and the fibre is believed to have been the basis of the earliest forms of paper made in the country.

In China cannabis is classed as an illicit drug but the authorities tend to turn a blind eye on cannabis growers but this can vary from region to region.

Anybody with more than 5kg of processed marijuana leaves, 10kg of resin, or 150kg of fresh leaves can face the death penalty, under Chinese criminal law.

Nevertheless, industries have sprung up around cannabis like the Hemp Investment Group, a Beijing based company which advocates the commercial pharmaceutical use of the plant. The company has even partnered with the People’s Liberation Army to take the Chinese technology and product to the world.

Two of China’s 34 regions are quietly leading a boom in cultivating cannabis to produce cannabidiol, or CBD, the non-intoxicating compound that has become a consumer health and beauty craze in the United States and beyond.

They are doing so even though CBD oil has not been authorized for consumption in China, a country with some of the strictest drug-enforcement policies in the world.

“It has huge potential,” said Tan Xin, the chair of Hanma Investment Group, which in 2017 became the first company to receive permission to extract cannabidiol in southern China. The chemical is marketed abroad – in oils, sprays and balms as treatment for insomnia, acne and even diseases like diabetes and multiple sclerosis. (The science, so far, is not conclusive.)

The movement to legalize the mind-altering kind of cannabis has virtually no chance of emerging in China. But the easing of the plant’s stigma in North America has generated global demand for medicinal products – especially for cannabidiol – that companies in China are rushing to fill.

Hanma’s subsidiary in Shanchong, a village in a remote valley west of Kunming, the capital of Yunnan province, cultivates more than 1,600 acres of hemp, the variety of cannabis that is also used in rope, paper and fabrics. From the crop, it extracts cannabidiol in oil and crystal form at a gleaming factory it opened two years ago, in a restricted zone next to a weapons manufacturer.

“It is very good for people’s health,” Tian Wei, general manager of the subsidiary, Hempsoul, said during an interview at the factory, which was punctuated by test gunfire from the manufacturer next door.

“China may have become aware of this aspect a little bit late, but there will definitely be opportunities in the future,” Tian said.

China has, in fact, cultivated cannabis for thousands of years – for textiles, for hemp seeds and oil and even, according to some, for traditional medicine.

The People’s Republic of China, after its founding in 1949, took a hard line on illegal drugs. After signing the United Nations Convention on Psychotropic Substances in 1985, China went even further. It banned all cultivation of hemp – which had long been grown in Yunnan, a mountainous province that borders Myanmar, Laos and Vietnam and is among China’s poorest. Farmers produced hemp to make rope and textiles and China had banned it even though it has only trace amounts of tetrahydrocannabinol, or THC, the mind-altering compound found in marijuana.

At a news conference in Beijing last month, Liu Yuejin, deputy director of the National Narcotics Control Commission, said the momentum toward legalization in other countries meant Chinese authorities would “more strictly strengthen the supervision of industrial cannabis.”

The Hempsoul factory has dozens of closed-circuit cameras that stream videos directly to the provincial public security bureau.

China relented on industrial hemp only in 2010, allowing Yunnan to resume production. Hemp then was used principally for textiles, including the uniforms of the People’s Liberation Army, but soon the products expanded.

The growing industry has brought much-needed investment to Yunnan. The mild, springlike climate is exemplary for growing cannabis, and a farmer can earn the equivalent of $300 an acre for it, more than for flax or rapeseed, Tian of Hempsoul said.

Hempsoul is one of four companies in Yunnan that have received licences to process hemp for cannabidiol, putting more than 36,000 acres under cultivation. Now others are joining the rush.

In February, the province granted a licence to three subsidiaries of Conba Group, a pharmaceutical company based in Zhejiang province. A company based in the city of Qingdao, Huaren Pharmaceutical, said recently it was applying for permission to grow hemp in greenhouses, which already line the landscape around Kunming.

Other regions have taken notice, too. In 2017, Heilongjiang, a province along China’s northeastern border with Russia, joined Yunnan in allowing cannabis cultivation. Jilin, the province next door, said this year that it would also move to do so. The flurry of announcements sent the companies’ stocks soaring on Chinese exchanges, prompting regulators to restrict trading.

While the health benefits of cannabidiol remain uncertain, the U.S. Food and Drug Administration last year approved the first use of it as a drug to treat two rare and severe forms of epilepsy. Other potential uses are being studied.

China permits the sale of hemp seeds and hemp oil and the use of CBD in cosmetics, but it has not yet approved cannabidiol for use in food and medicines. So, for now, the bulk of Hempsoul’s product – roughly two tons a year – is bound for markets overseas. Tian said he believed it was only a matter of time before China approved the compound for ingestion.

Hanma’s ambitions are global. It has acquired an extraction plant in Las Vegas, which is expected to begin production soon, and it plans one in Canada.

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