Hemp growers sowing seeds of expansion

Extracts of the plant are potential game changers in the fields of medicine, food supplements and cosmetics.

A narrow,  meandering stony  path  connects  the suburbs of Eshan, a small town in the southwestern province of Yunnan, with a factory  perched in the neighboring mountains.

The  factory  buildings  have  no windows, so small fans on the roof  run constantly to allow fresh air to enter. Inside, workers in lab coats

oversee hundreds of pieces of equipment.

“For the first few months after my company  started  operating,  the local police visited the factory several times a week. They suspected we

were secretly making illegal drugs in the mountains, like you see in the movies,” said Pan Zongbing, CEO of Hankang (Yunnan) Biotechnology.

Rather  than  illegal  activity,  the company  is  focused  on  extracting substances from hemp plants. Pan opened a small box on his desk and took  out  several  glass  vials;  some held  a  white  power,  while  others contained a clear liquid. None emitted any special odor.

“It’s cannabidiol, more commonly known  as  CBD,  a  nonintoxicating extract  (of  the  Cannabis  sativa plant). It has been described as a ‘rising superpower’, because it is highly valued in the international market and is thought to have great potential in a wide range of uses, including  cosmetics,  food  and,  most importantly, medicines,” he said.

In  the  1950s,  the  government banned the cultivation and use of marijuana,  but  in  2010,  Yunnan introduced the country’s first regulation on the commercial planting and processing of hemp, the industrial strain of the plant.

Since then, hemp has been grown in the province, but the concentration of tetrahydrocannabinol — or THC, the mind­altering ingredient in marijuana — is no more than 0.3 percent, an extremely low level.

Yang Ming, a hemp expert at the Yunnan  Academy  of  Agricultural Sciences, said farmers mainly grow the  plant  for  its  seeds,  fibers  and CBD.

“So far, scientists have identified more than 500 extracts in cannabis plants. Nearly 100 of the extracts are found in the flowers and leaves. The various cannabis plants have different  amounts  of  these  extractives, and the one called ‘industrial hemp’ is a legal crop in many countries,” he said.

He  added  that  CBD  has  come under the international spotlight in the  past  five  years  after  research suggested it could be used to treat

many  problems,  including  anxiety and insomnia, and as an analgesic.


Early in 2009, Pan learned about CBD from a business partner in the United Kingdom who worked in the cosmetics sector. “He told me CBD was  used  overseas  in  cosmetics, healthcare  products,  pet  food  and even  medicines.  Moreover,  it  sold for about $4,000 per kilogram in the international market, which sounded very profitable,” he said.

“He tried to persuade me to grow hemp in China and extract the CBD.I  refused.  After  all,  many  people associate  anything  hemp­related with  additive  drugs.  How  could  I dare enter such an illegal business?”

Despite  initially  dismissing  his friend’s  suggestion  and  blocking CBD from his mind, Pan later began researching  the  subject.  Having learned more about the extract and its potential, he founded Hankang in 2014 with the help of experts from the academy. The company was the first in Yunnan to be granted a certificate to legally process hemp.

Hankang now grows hemp on 333 hectares of land spread across several cities and towns, including Eshan, Xinping and Yuxi, and extracts about 5 metric tons of 99 percent pure CBD a year.

“Seventy percent of it is exported to the UK and the other 30 percent is sold to buyers in the United States. In  addition  to  nutritional  supplements, cosmetics and pet food, the extract is used in many foreign countries  as  an  ingredient  in  drugs  to treat childhood epilepsy,” Pan said.

As a newly emerging trend, Pan said the sector lacks accurate global data about the scale of planting and production.  Moreover,  there  is  no regulated market price, but approximations are released by a number of industry associations and research institutes.

According  to  Brightfield  Group,which collates data about the CBD and cannabis industries, China was the world’s leading CBD supplier in 2018, with sales of nearly $1.2 billion.It was followed by the United States ($1 billion), Europe ($980 million) and  South  and  Central  America ($220 million).

In the past five years, the booming industry  has  attracting  a  growing number  of  companies  looking  to extract CBD from hemp leaves and flowers.  Some  are  biotech  specialists,  while  others  operate  in  the pharmaceutical sector.

According to Yang, Yunnan is the global  pioneer  in  large­scale  CBD production  and  the  province  is home to more than 30 startups, seven  of  which  have  already  begun operations.

“The  high­purity  CBD  produced in  the  province  now  accounts  for more  than  half  the  global  market share, and our extractive technology is a world leader,” Yang said.

“Yunnan is a renowned international producer of high­quality CBD, which is mainly exported to the US, Canada and European countries.”

Strict supervision

China takes a hard line on illegal drugs.  The  cultivation  and  use  of marijuana  is  strictly  prohibited, with traffickers facing the death penalty in extreme cases. Yunnan and Heilongjiang, in the northeast, are the  only  provinces  that  allow  the largescale planting and processing of hemp.

According to Yang, Heilongjiang’s hemp is mainly used to make textiles, while Yunnan’s producers focus on  extracting  CBD  and  growing seeds for the vegetarian and vegan market  because  they  are  an  outstanding source of fatty acids, such as Omega 3, 6 and 9.

In recent years, provinces such as Shanxi  and  Gansu  have  started small­scale hemp­cultivation pilots.

Yang  said  hemp  was  grown  on 11,330  hectares  in  14  cities  and autonomous  prefectures  last  year. The sector has brought much­needed investment to Yunnan and farmers have also benefited.

“A farmer can charge about $300 for 0.4 hectares of hemp, much more than corn or flax,” he said.

“Although  they  look  similar  to marijuana,  industrial  hemp  plants contain very little THC and will not produce mind­altering sensations if the flowers or leaves are smoked. However,  that similarity increases the risk of potentially illegal activity.”

He stressed that the regulations provide strict supervision of each link in the industry chain, from seed supply to the destruction of waste products.

Pan said all the hemp seeds his company grows for CBD extraction are registered with the local public security bureau and police officers inspect  the  processing  facilities  at least three times every week.

The  waste  —  the  only  possible loophole for the illegal extraction of THC  —  must  be  destroyed.  “The process is recorded, and then documented at the local police station,” Pan said.

Pan said: “Honestly, it is too costly to  extract  THC  from  industrial hemp.  The  low  profits  would  not even  begin  to  justify  the  risk  of breaking the law.”

Future aims

“Our  future  aim  is  to  definitely explore the use of CBD in medicines,” Pan Said

In addition to CBD, companies are extracting Cannabidivarin, or CBDV, a nonpsychoactive cannabinoid that has gained attention in medical circles for its potential in the treatment of neurological conditions. So far, it has been studied less than its more famous counterparts, such as THC and CBD.

Meanwhile, even though it is sold overseas, CBD has not been authorized  for  consumption  in  China, which only permits its sale for use in cosmetics.

“As the global demand is booming,especially for related medical properties of CBD, I believe it is only a matter  of  time  before  China approves  the  compound  for  ingestion (either as a medicine or nutritional supplement),” Pan said.


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