THE HEMP plant has a storied history in China. It was probably twisted into the world’s first rope there around 2,800BC. In the West you find it in cigarette paper and Bible pages. In the East, it is woven into uniforms of the People’s Liberation Army (PLA). Since its cooler sister, marijuana, became legal for recreational use in Canada and many American states last year, industrial-use hemp—a variety of cannabis that contains trivial amounts of weed’s mind-altering substance, THC—is flourishing in a country that until a few years ago banned its cultivation outright and where cannabis traffickers can face the death penalty.
China grows nearly half the world’s legal hemp. In 2018 sales, mostly of textile fibre made from the plant’s stalk, totalled $1.2bn. Now global demand for its seeds, leaves and flowers is surging. Packed with fulsome fatty acids, seeds go into snacks and oil. Leaves and flowers contain cannabidiol (CBD), a non-intoxicating compound that reduces anxiety and inflammation. It is being added as a supplement to food, drinks and cosmetics across the West. In June America approved the first CBD medicine, for epilepsy.
China’s first licence to extract CBD went to Hanma Investment Group, owner of its largest hemp planter and processor, in January 2017. By next year, estimates New Frontier Data, a cannabis consultancy, Chinese sales of CBD will more than quadruple to $228m. Investors are rushing into the field. A Chinese hemp index tracked since 2018 by Wind Information, a data provider, has more than doubled in value this year. Shares in Shanghai Shunho New Materials Technology, a packaging firm, rose threefold after it received a licence to plant hemp in south-western Yunnan, the first province to lift a national ban in 2010. Shineco, a biotech company whose market capitalisation on New York’s Nasdaq exchange has nearly doubled to $25m since it unveiled a hemp subsidiary last month, plans China’s largest industrial-cannabis project in frosty Heilongjiang.
That north-eastern province became the second to legalise hemp-growing in 2017, issuing a three-year plan to become the biggest cannabis base in the world by 2020. In its inaugural year, Heilongjiang harvested 30,000 hectares (74,000 acres) of hemp—nearly one-third the size of European and Canadian fields combined. Neighbouring Jilin province, too, will soon earn a licence.
Chinese growers are already setting their sights farther afield. In December America legalised industrial hemp nationwide for the first time since the second world war. Hanma ships more than half its domestic output there. Tan Xin, chairman of Hanma, says he will begin to grow and process hemp in Nevada later this year. American hemp has higher CBD levels than China permits.
On March 27th the anti-drugs squad declared that China had never approved industrial cannabis as a medical or food additive; the hemp index briefly drooped. Mr Tan expects China’s government to tighten monitoring, while gradually allowing wider application of the plant’s by-products. Factories in China are also closely monitored with CCTV cameras and workers are subjected to daily urine tests. But Hanma has teamed up with the PLA to develop a CBD-based drug to treat post-traumatic stress. That will be the next chapter in the plant’s long history in China. During the long years of the hemp ban Yunnan’s ethnic minorities continued in secret to harvest leaves, stalks and seeds. Today they can earn farmers 50,000 yuan ($7,400) per hectare, at least twice as much as corn.