Since the Communist Party took power in 1949, China has been taking a hard line on regulations of marijuana and other forms of illegal drugs, and traffickers face the death penalty in extreme cases, but surprisingly the hemp superpower is growing with its huge production and export of the potential lucrative plants.

Yunnan Province | Chinafolio

Among China’s 34 regions, Yunnan Province in the Southwest and Heilongjiang Province in the Northeast is leading the boom in cultivating cannabis, accounting for more than half of the world’s hemp productions and 1/3 of the world’s hemp sales in total.

Jilin Province, also in the Northeast, is expected to become the third province in China to legalize industrial hemp cultivation.

In a move to lessen its grip on industrial cannabis, China has started to permit the sale of hemp seeds and hemp oil and the use of CBD in cosmetics since the beginning of 2019. But it has not yet approved CBD for use in food and medicines, The New York Times reported.

Most of China’s industrial cannabis is marketed abroad, like the United States and the European Union, as a treatment for insomnia, acne and even diseases like diabetes and multiple sclerosis, though research on its medicinal effect is inclusive as of today.

“We did a lot of research in the early days and saw that investors like Peter Thiel and George Soros had put money into this industry. We believe this business has huge potential,” said Tan Xin, the chairman of Hanma Investment Group in Beijing, which became China’s first company to be permitted to extract industrial cannabis for medicinal use in 2017.

Hanma cultivates roughly 1,600 acres of hemp in a remote village in Yunnan Province, a region bordering one of the world’s biggest illicit drug trafficking center, Golden Triangle in Southeast Asia.

China’s present flourishing of industrial cannabis industry is also partly due to the easing of drug regulation in North America, as well as increasing demand for CBD-made products like cosmetics, pharmaceuticals, and beverages.

In 2018, Canada became the world’s second country to legalize marijuana, followed by Uruguay. In the United States, a total of 11 states, including Washington, Massachusetts, and California, have now legalized recreational and medicinal marijuana.

Seeing the potential massive market, Chinese farmers and companies in Yunan, Heilongjiang and Jilin have begun to invest in expanding hemp cultivation. This sent the industry’s stocks to soar on the Chinese exchange.

Yet, in a blow to their enthusiasm, the Chinese National Anti-Drug Committee last year removed CBD from the list of narcotic drugs in the country and issue that it is not a controlled drug.

China holds 309 of the world’s 606 hemp-related patents, Guancha.CN quoted the World Intellectual Property Organization (WIPO) as saying. As Beijing gradually legalizes the industrial cannabis industry, the country’s huge market potential is set to release.

Just as Tan puts it, “The hemp industry is a health industry. Nothing can prevent us from pursuing health.”