China Will Lead In Low-Cost Cannabinoid Production
Despite well-defined and severe punishments against THC, progressive legalization of industrial hemp for non-psychoactive cannabinoid (CBD, CBG, CBN, etc.) production is ongoing.
The Yunnan Provincial People’s Government issued the Yunnan Province Hemp Cultivation and Processing License Regulation (effective January 1, 2010) defining industrial hemp as containing lower than 0.3% THC, creating a distinction between industrial hemp and narcotic cannabis (containing greater than 0.3% THC).
On May 1st, 2017 Heilongjiang became the second Chinese province to regulate industrial hemp, amending its Anti-Drug Regulations, in Chapter 4, entitled Hemp Management, Article 24, to allow for hemp cultivation and processing, directing that “the people’s government at or above the county level shall plan, guide, supervise and manage the variety selection, cultivation, sales and processing of hemp, and strengthen the publicity and education of relevant knowledge such as the difference between industrial hemp and narcotic cannabis.”
Jilin will soon become the third province in China to regulate industrial hemp cultivation and cannabinoid processing after Yunnan in the southwest and Heilongjiang in the northeast.
Just as China’s cannabinoid production industry is in its infancy, its domestic consumer market for CBD products is in early days. Regulatory progress in the West will spur demand in China – only recently has the Chinese government allowed industrial hemp extracts as an ingredient in topicals and cosmetics.
Chinese consumer spending on cosmetics and health and wellness categories is strong and growing, indicative of growing affluence amongst China’s 1.45 billion consumers. This greenfield market opportunity is enhanced by China’s unique demographic mix, particularly in categories such as beauty products and healthcare. China is the second largest global beauty market and set to overtake the USA by 2023. Chinese enthusiasm for innovative skincare products makes beauty a particularly attractive market segment. In China, nearly 40%, over 500 million people, are aged 30 or younger.
Healthcare for the elderly population is an area of pressing concern for China. Conditions that CBD is most commonly used for are prevalent among older demographics. In the US, 73 million baby boomers (aged 55-75) represented the fastest growing segment of CBD consumers in 2018, and are the most enthusiastic users of CBD products.
The potential of China’s domestic market for CBD is enormous.