After a 5,000-year tradition, China taking a new look at hemp's potential

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Especially with the re-establishment and emergence of American hemp cultivation after decades of prohibition, much of the public focus has recently been on the North American market. With a consumer base hungry for hemp-CBD and millions of dollars already invested in the market, that makes profitable sense. Nevertheless, markets worldwide are proceeding apace, and generating their own benchmarks and buzz.

As detailed in the Hemp Business Journal's Global State of Hemp: 2019 Industry Outlook, China has a long history of cultivation and use of hemp in traditional medicine (such as for digestive aids), and Chinese consumers regularly consume hemp seed oil. There are common uses for every part of the whole hemp plant, including the roots, which translate to a massively active and potential demand for products within a nation of an estimated 1.43 billion people (more than 18% of the world's population, according to Worldometers.com).

Presently, an overwhelming share of China's hemp market is dedicated to textile production, a history of which extends at least 5,000 years. Consequently, China enjoys a completely developed hemp-processing infrastructure (along with cheap labor and lax environmental regulations), which allows the country to produce clothing and textiles at rates and levels of quality that U.S. producers are currently incapable of meeting, and will remain hard-pressed to compete with.

With the world's largest population and second-largest economy, China represents a market which the Hemp Business Journal estimates to exceed $1.5 billion in 2020.

Yet however much the North American market lags in terms of textile production, it far outpaces China in CBD production due to the Chinese government's strict limitations on it.

Because hemp contains trace amounts of THC, hemp cultivation is extremely restricted in China ⁠— even the transfer of hemp seed between provinces is illegal. Yunnan is the country's only province to allow CBD production, where but four companies are licensed to produce it. Their CBD products are purchased wholesale for use in cosmetic products sold in South America and Europe.

Technically, while the Heilongjiang province is also allowed to extract CBD, the Chinese government suspended CBD production in the region after it was reported that individuals were arrested for smuggling out hemp seeds.

Despite such tight restrictions on CBD production, there is growing interest in the market, according to Hemp Road Trip founder Rick Trojan, who recently attended the HCC China International Hemp Industry Forum in Heilongjiang.

Although the Chinese government may not yet share an interest in CBD production, entrepreneurs are keenly interested in the international hemp-CBD market.

"There were quite a few people there from investment groups looking to get into the cannabinoid and extraction side of the hemp industry," Trojan explained. "There's definitely some interest in getting things going in the United States from a Chinese investment standpoint."

Last month, the Guilin Layn Natural Ingredients Corp. (Layn Corp.) — a Chinese company best known for producing stevia and monk fruit ingredients — announced plans to invest $60 million  toward building a hemp-processing and extraction facility in the United States by 2020. In addition to CBD production, the company hopes to develop new cannabinoids with the assistance of farmers and academic institutions.

As companies like Layn Corp. start setting up shop in the U.S., and as American regulatory authorities finally take a stance on CBD, it is only a matter of time before the Sino-Sleeping Giant stirs to the profitable potential of hemp-CBD.

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