Hemp growers' shares dive facing a possible ban, pushing firms to seek exports
Published: Mar 29, 2021 08:18 PM
Hemp plant. Photo:Xinhua

Hemp plant. Photo:Xinhua

An official notice seeking public comments on a proposed ban on the use of industrial hemp in cosmetics sent the shares of many major hemp growers in China diving on Monday, prompting some growers to look to exports to survive.

Shares of Meilleure Health International Industry Group fell about 15 percent, while shares of China's leading medicine producer Yunnan Baiyao declined 6.89 percent. 

The National Institutes for Food and Drug Control on Friday called for public comments on a proposed ban on the use of industrial hemp in cosmetics - in particular, cannabidiol (CBD) - as well as the fruit, seed oil and extracts from the leaves of cannabis sativa.

Industrial hemp and marijuana are the same species of cannabis sativa L., but hemp can't contain more than 0.3 percent THC (tetrahydrocannabinol), according to Politico. 

The cultivation of such plants is allowed in Southwest China's Yunnan Province, as well as Northeast China's Heilongjiang and Jilin provinces. 

Among the disabled components mentioned in the notice, CBD is used in cosmetics as a moisturizer, anti-oxidant and acne treatment - at least according to the claims of some companies.

If industrial hemp is banned in cosmetics in China, companies that produce, process and sell the material will be punished. According to statistics from Tonghuashun, China's online financial data provider, 54 companies in the industrial hemp sector are listed on the A-share market, with a total capitalization of more than 500 billion yuan ($76.21 billion). 

"If the ban is implemented, the domestic market for industrial hemp will be shut down. As a result, exports may be the only solution for our survival," Pan Zongbing, general manager of Hankang Yunnan Biotechnology Corp, told the Global Times on Monday.

Pan's company plants industrial hemp in Yunnan, which can yield 3,000 kilograms of CBD each year. The company does business in both the domestic and overseas markets, including the UK, Japan and European countries. 

According to Fior Market, a market intelligence company, the global CBD market is estimated to hit $17.3 billion by 2026.