China's Industrial Cannabis Stock Surges amid Optimism in Capital Market

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China’s Industrial Cannabis Stock Surges amid Optimism in Capital Market

With the start of October, the industrial hemp stocks soared like a rocket. Up close, Fuan Pharmaceutical Co. Ltd(300194), Longjin Pharmaceutical Co. Ltd(002750), Fangsheng Pharmaceutical Co. Ltd(603998), Zixin Pharmaceutical Co. Ltd(002118) and some other stocks were trending, with Shunhai (002565) and Conba (600572) stocks rising more than 5%.

The industrial hemp industry arranged by Conba has got commercialized for the first time. Six industrial hemp cosmetics launched by Zhenshiming, a well-known eye care brand of Conba. have been registered by the Chinese National Medical Products Administration. The hemp(CBD) eye treatment masks were stocked on Zhenshiming E-commerce platform during China's national holiday, and the price is CNY¥129 per box containing 60 pieces on its Tmall flagship store.

Much earlier than Conba, Kunyao Group(600422) has also focused on cannabis cosmetics. Kunyao Group Co., Ltd. officially published an article entitled "Kunyao Group KPC Cannabis Leaf Skin Care Series Innovative Appearance", which said that its "Industrial Cannabis Business Department" and "Big Health Business Department" were established to create KPC skincare series by using the core raw materials of industrial cannabis.

China Industrial Cannabis Stock

According to data, the legalization of industrial cannabis in the United States has boosted cannabis cultivation. It is expected that the cannabis planting area nationwide will reach at least 50,600 ha in 2019, which will be about 10 times that of 2016. In the processing links with a variety of extraction methods, American enterprises combine the capabilities of extraction technology and operators with the extraction objectives. In the retail sector, legitimate products such as industrial cannabis and medical cannabis need to be sold in pharmacies with retail licenses. Among all CBD products, the CBD concentrate sales increase rapidly, which are expected to reach $4.1 billion in the United States in 2019, with the year-on-year growth about 41.3%, among them, the sales of e-cigarettes devices accounted for 68.4% of the concentrate.

With the increasing recognition of CBD’s healthy and medical properties, the future market value of CBD can be estimated to be hundreds of billions of dollars. Up to July 10, 2019, more than 3 million people in the United States had used legal medical cannabis to treat their illness. The overall market size of industrial cannabis in the United States is $37.1 billion in 2018, which is expected to exceed $110 billion by 2030.

As to that, Fuan Pharmaceutical Co. Ltd signed the CBD Industry Cooperation Framework Agreement with the American medical cannabis service provider, Red Realty, to purchase 51% stock right of the latter. Red Realty has a complete industrial chain, mature technology in cultivation and processing. Meanwhile, the Red Realty independent brand has been recognized by the market and its clear project planning and available construction in the second phase also make sense. Through this cooperation, Fuan Pharmaceutical Co. Ltd is expected to penetrate into the industrial and medical cannabis industries, seize the fast-growing American market and seek new profit growth opportunities for the company.

Wild Hemp in China

In addition, the extraction plant invested by HMI Group in Nevada has been granted a breeding, planting and extraction license by the U.S. government, and its factory construction in Las Vegas has been completed.

With the new CBD extraction license and the expansion of the market, China's large industrial cannabis enterprises are ready to roll. The second wave of investment opportunities will boost China's industrial cannabis stock.

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