China Is Becoming a Global CBD Superpower What You Need to Know, and How to Participate

China Is Becoming a Global CBD Superpower: What You Need to Know, and How to Participate

" As domestic policies supporting the growth of China's CBD sector mature, the entire industry will usher in unprecedented development. "

The Cannabinoid (CBD) market is heating up to a projected value of $26 billion USD globally by 2026. Of that total growth, it has been estimated that Asia will be responsible for more than half. Starting from a relatively small scale due to stricter regulations than those in North America and Europe, and given their huge population, the potential for growth in this jurisdiction is enormous.

What is less well known is that China specifically will be a driver and superpower of this market development. Presently, China is already producing around half of the world’s CBD. It owns more than half of the world’s patents in terms of pharmaceutical, nutraceutical and other commercial applications of CBD.

China fully understands the enormous windfall it will reap as a result of easing legislation and is making moves to this end, with a goal toward industrial-scale commercialization of mass-market CBD-based CPG’s.

It’s expected that in Q1-2020 the UN 1961 Convention regulating illegal narcotics will be modified to allow for THC extracts from industrial cannabis (hemp).  This move will be a boon for China as the world’s largest hemp cultivator, and the catalyst to break wide open the region’s superpower potential.

The convergence of easying legislation in the most populous region on earth has set the table for explosive growth in Asia’s CBD sector, particularly in the already significant health and beauty CPG industries.

China sells on average USD$210 billion in cosmetics every month, with a forecast CAGR of 13.5%.  Driven by burgeoning millennial demand coupled with e-commerce, it’s on track to become the #1 marketplace in the world, currently trailing only the U.S. for market dominance.

We believe now is the time to gain exposure to this blossoming marketplace, and provide further details below.

China’s Current CBD Status

Globally, strong regulation is a necessity to drive growth in the industrial cannabis industry.  

At present, the United States through its recent 2018 Farm Bill has a complete regulatory system for the industrial cannabis industry. U.S. Congress, the Federal Drug Enforcement Administration, the Department of Agriculture, and the FDA supervise regulation of seeds, planting, extraction, food and drug applications. Subject to the UN’s “1961 Convention”, US/Canadian domestic regulatory policies have become more stringent.

In China, on the other hand, industrial cannabis operators are only currently allowed to operate legally in Yunnan and Heilongjiang provinces. The regional, not national, government controls all aspects of the industrial cannabis industry – from seed import to breeding, planting, processing and applied research. The Ministry of Agriculture has strict management regulations. As the United Nations “1961 Convention” has not yet been modified, the domestic CBD sector is not operating at its full potential as Companies are currently only allowed to develop and sell cosmetics with added CBD. Massive consumer areas such as food & beverage additives, pharmaceuticals, and functional health products are in a state of preparation for soon to be re-worked legislation in support of CBD-based commercialization.

Unlike in China, it is the recreational cannabis industry that has that put a fire under North American development and the global cannabis industry. In North American markets cosmetics, health products (food supplements), light therapy, and drug R&D contain small doses of THC. Most of these products would be suitable for export to Asia under the new legislation, specifically China. Therefore, the global industry believes that from the perspective of regulatory policy and applications, China is on course to become the largest and most dynamic consumer market in the world.

In terms of industrial development, China is moving aggressively to upgrade and streamline its planting, processing and extraction systems and technologies. Once rudimentary in nature, thus not having a significant market value, China’s sales and export framework are undergoing changes aimed at preparing the country for the flood of impending commerce in this sector.

Early movers in this emerging business environment are in the enviable position to reap significant rewards.

THC and CBD oil
THC and CBD

China’s Path Toward Global CBD Dominance

2020 will be a breakout year for China’s domestic CBD industry, kicking off the start of a huge growth story. A framework for this has already been developed through a staged process currently underway. Prior to modification of the UN’s 1961 Convention on Narcotic Drug Control (expected Q1 2020), the Chinese government has been seeking importation of foreign CBD cosmetic consumer brands and turnkey technological solutions.

Following modification, China’s domestic market will start opening up to the production and importation of all applications of CBD products including most crucially cosmetic and pharma. At this stage, market demand for CBD raw material will explode.  Rapid growth in demand will pave the way for more mature and expanded product offerings, giving first movers with distribution channels already in place a vast opportunity to leverage this seismic shift in macro-policy.

As domestic policies supporting the growth of China’s CBD sector mature, the entire industry will usher in unprecedented development. Relying on China ‘s 1.4 billion populace and world-leading millennial consumer market capacity, CBD application products will begin to flourish. From cosmetics and food to health products and medicine, a thriving ecosystem of CBD-related commerce will emerge, unrivaled in the world.

Can rim Growth Group (CSE: CBDA – Listing Pending)

Leveraging Asia’s Emerging CBD-based Powerhouse Economy

The CBD sector in Asia, particularly China, is going to experience the next major commodification of a previously heavily regulated substance similar to the secular trend towards the legalization of recreational cannabis.

Led by a team of international capital markets, product development & distribution experts, Canrim Growth Group Inc.’s (“CGG”) strategic investment approach and positioning to harness the region’s growth curve is designed to deliver rapid results to stakeholders.

We’re happy to provide further insight on China’s CBD market opportunities – get in touch.

Read more about China’s cannabis industry

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Content Can Not Be Translated or Reproduced without Authorization.

James Foster
jf@cbdgroup.asia
Author Bio
Co-Founder at CBD Group Asia. James has been a China focused investment, sales and distribution expert in the natural health sector over the past 10 years. He founded Natural Source Group which has grown into multi-million dollar revenue-generating group of companies. He has extensive Asian experience having lived and worked in China for the past decade. He started his career in London with the Royal Bank of Canada. He attended the School of Oriental & African Studies in London and Stanford University.

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