New trade deal ensures a steady flow of US-grown hemp to China

Published Mar 7, 2020 10:00 a.m. ET
iStock / nikoendres

Historically the United States of America has looked on China as a primary source of the agricultural non-intoxicating product known as hemp. January 15, 2020, saw U.S. policymakers signed the Phase One Economics and Trade Agreement with China. The new terms include the export of 200 required agricultural goods to be exported to China from America. Hemp is one of those goods.

The U.S.A. has clinched a budding green trade deal with China.  The agreement includes hemp being exported from the U.S.A. to China. This will support the continued future of hemp farming productions in the states. China has agreed to import hemp on a larger scale from the U.S. within the following two years, as part of the deal.

Hemp has been cultivated in China for many thousands of years. Recently the country has been expanding domestically in the hemp industry. Strict anti-drug laws and the realization that legalization has spread internationally, and more businesses have incorporated hemp in their product list has encouraged the expansion.

Let’s be clear on what true hemp is:

  • A strain of the Cannabis sativa plant
  • Explicitly grown for industrial use of its derived products
  • One of the fastest-growing plants
  • Spun into usable fiber 10,000 years ago
  • Over 25,000 known uses

Some of the products that are manufactured from hemp include:

  • Textile
  • Paper
  • Food
  • Paint
  • Oil
  • Biofuel
  • Insulation
  • Animal feed

Hemp usually contains less than 0.2% of Tetrahydrocannabinol (THC). The psychoactive component found in the look-alike marijuana flower or bud. The hemp flower or CBD bud, as one might call it, is produced upon maturation of the female hemp plant. The hemp flower may fool you by its looks and smell into thinking it is a marijuana bud. The hemp flowers can contain high levels of terpenes, cannabidiol, and flavonoids, just like the marijuana flower.

Hemp stocks

Hemp stock values are rising for Chinese firms Dezhan Health and Meiyingsen, not only during the harvesting period but for the entire year in 2019.

The Chinese National Anti-Drug Committee published a release that clarified China's position on industrial hemp farming. The announcement indicated that CBD is not on the narcotic drug list of controlled drugs. Marijuana that tests with T.H.C. content less than 0.3% or less is legal to grow in certain parts of China. The report was rather vague in many areas of CBD's role in China's hemp production.

This left a negative effect on multiple Chinese hemp stocks, which prompted some investors to sell off their hemp stocks. The zero-tolerance approach to cannabis in China is not reflective of the high demand for hemp. China is the world’s largest hemp provider and exporter of the money-making plant.

Interestingly research and development for products using CBD are technically legal in China. However, only beauty products containing CBD are legal to sell. Hemp leaf extraction has been legal in China since 2015 and is used in cosmetic beauty products. The cosmetics and beauty space is enormous in China. Tan Xin chairman and founder of Hanna Investment Group Co Ltd sees that the hemp industry is all about health, and his company considers the upwards climb in hemp stocks.

China brags it has a cannabis boom yet still has the death penalty for cannabis use

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