How China Quietly Became a Legal Hemp Powerhouse

When thinking of the booming legal cannabis industry, the majority of analysts are following the developments in the United States, Canada and Israel. It makes sense, since these world superpowers are already bringing in billions of dollars annually on both medical and recreational pot.

But there is another cannabis powerhouse quietly developing that you may not expect—China.

According to a recent report from the South China Morning Post, a small number of Chinese provinces, including Heilongjiang, near the Russian border, and Yunnan to the south, now make up nearly half of the world’s legal hemp cultivation.

The news is surprising, considering the hard-line approach of the Chinese government on cannabis (getting busted with more than five kilos could get you the death penalty). However, authorities have long turned a blind eye to farmers in these regions who have been growing industrial hemp for decades.

The crops are extremely valuable, fetching around 10,000 yuan ($1,500) per hectare, which is far more than other traditional crops. Hemp is also easy to grow, thrives in many climates and needs little pesticides; the plant is used to make everything from cooking to medication to textiles. Government officials eventually began to regulate hemp production in the provinces where they are most prevalent due to the plant’s viability.

The boom in the number of farmers beginning to cultivate cannabis has been attributed to China’s research and development of the plant, something that began in the late 1970s when the country went to war with Vietnam. At the time, the government was interested in the potential hemp had as a breathable, antimicrobial fabric for military uniforms, as well as its potential medical benefits.

After this extensive research, China now holds more than half of the over 600 cannabis-related patents in the world.

In another shift, the People’s Liberation Army recently teamed with Beijing-based Hemp Investment Group to develop a drug used to treat post-traumatic stress disorder (PTSD). The drug is currently in its final clinical stages and could soon boost China’s prominence in the so-called “Green Rush.”

Tan Xin, president of Hemp Investment Group, believes that cannabis will “grow into a 100 billion yuan industry for China in five years’ time.”

The company already has offices in the U.S. and plans to expand to Canada, Japan, Israel and parts of Europe soon. Some analysts believe that China may be equipped to take advantage of its broad range of IP on cannabis products, while the West continues their R&D and legalization efforts.

“Because cannabis in Western medicine is becoming accepted, the predominance of Chinese patents suggests that pharmaceutical sciences are evolving quickly in China, outpacing Western capabilities,” said Dr. Luc Duchesne, of InvestorIntel. “[Chinese traditional medicine] is poised to take advantage of a growing trend. The writing’s on the wall: westernized Chinese traditional medicine is coming to a dispensary near you.”