China Cashes in on the Cannabis Boom

China Cashes in on the Cannabis Boom

By Steven Lee Myers
Source: nytimes.com

Cannabis growing in Yunnan Province in China in 2004. Yunnan is now licensing companies to cultivate the plant to produce cannabidiol.CreditCreditLeisa Tyler/LightRocket, via Getty Images
SHANCHONG,
China — China has made your iPhone, your Nikes and, chances are, the lights on your
Christmas tree. Now, it wants to grow your cannabis.

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

They
are doing so even though cannabidiol 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 chairman of Hanma Investment Group, which in 2017 became the first company
to receive permission to extract cannabidiol here 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 ery 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,” Mr. 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 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.


The company Hempsoul extracts
cannabidiol from the hemp it grows on more than 1,600 acres in Yunnan Province.
“It is very good for people’s health,” said the general manager, Tian Wei.CreditSteven Lee Myers/The New York Times


“Prolonged
consumption frees the spirit light and lightens the body,” it said, according
to a translation cited in an article in the
journal Frontiers in Pharmacology.

The
People’s Republic of China, after its founding in 1949, took a hard line on
illegal drugs, and cultivating and using marijuana are strictly forbidden to
this day, with traffickers facing the death penalty in extreme cases.

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 the 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, Mr. Tian of
Hempsoul said.

Hempsoul
is one of four companies in Yunnan that have received licenses 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 license 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 step in
to restrict trading.


China has cultivated cannabis
for thousands of years. Yang Ming, a leading expert on hemp, said the plant’s
seeds were traditionally formed into a ball and used to treat constipation.CreditSteven Lee Myers/The New York Times


While the health benefits of
cannabidiol remain uncertain, the United States 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. Mr. Tian said he believed it was only a matter of time before
China, too, 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. Mr. Tan, the
chairman, said he hoped that China, with the world’s largest market, would
follow the lead of the United States, which he called “the best-educated”
market for the benefits of cannabis.

“It’s
a new application, but one that carries forward our tradition,” he said, citing
the ancient texts describing its medicinal purposes.

Yang
Ming, a scientist with the Yunnan Academy of Agricultural Science who is one of
China’s leading experts on hemp, said the plant’s seeds were traditionally
formed into a ball and used to treat constipation, but the psychotropic
qualities of cannabis were not broadly known by farmers or other residents.

As
China gradually opened up following the Cultural Revolution, however, foreign
visitors to Yunnan in the late 1980s and early 1990s discovered an abundance of
cannabis growing wild. That, in part, turned the region into a destination for
backpackers and adventurers seeking a certain kind of experience.

“They would go to the villagers’
cannabis fields, pick the buds and bring them back to the hotel to dry and
smoke,” Dr. Yang said. “Some of them became deranged and ran around naked after
smoking it.”

That’s
when the authorities intervened. Dr. Yang, originally from Yunnan, was a recent
graduate of the agricultural university in Beijing at the time. He was assigned
to study cannabis, and he has been doing so ever since. His avatar on social
media is a cannabis leaf.

The
academy has been breeding its own varieties of hemp — each of which requires
approval from the police — to ensure the plant contains less than 0.3 percent
of THC, the international standard for cannabis. There are nine varieties now,
and Dr. Yang’s team continues to research more.

One
of the varieties, Yunnan Hemp No. 7, allows the extraction of greater amounts
of cannabidiol. While the compound’s use in commercial products remains in its
infancy, Dr. Yang has watched the stigma of its association with marijuana
begin to evaporate.

“Other countries,” he said, with pride
of parenthood, “really like our CBD.”

Claire Fu contributed
research.

TXT Fox
txtfox1@gmail.com
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