Hemp-related stocks surge after third Chinese province expected to legalise cultivation
- Industrial hemp isn’t the same as pot. It’s used in such products as body care and clothing China accounts for half of world’s hemp cultivation; is biggest exporter of hemp paper, textiles
The industrial hemp sector posted a big jump Monday morning on the Chinese stock market, as funds flew into the sector after local government media reported that northeastern Jilin province is expected to legalise its cultivation.
Jilin would be the third province to cultivate the plant in China, which is the world’s largest hemp producing country. Yunnan and Heilongjiang provinces grow it already.
Marijuana growth and consumption is illegal in China, but hemp – also part of the cannabis family – is used for industrial purposes, such as clothing and paper. While the two are sometimes associated in popular culture, it has been said that your lungs would fail before you would get high from smoking industrial hemp.
The country is trying to revive the old rust-belt economy of Northeast China, which has struggled to transforms itself in a rapidly changing country. Heilongjiang and Jilin are both located there.
Shanghai Shunho New Materials Technology, which holds a license to grow hemp in southwestern Yunnan province, soared on Monday and hit the Shenzhen bourse’s daily increase limit of 10 per cent, closing at 7.14 yuan.
Other hemp-related shares also surged. Jilin Zixin Pharmaceutical advanced 7 per cent to end at 5.63 yuan. Galaxy Biomedical Investment rose 4.5 per cent to 3.75 yuan. Tianjin Global Magnetic Card gained 2.1 per cent to 5.81 yuan.
The broad rise came after Jilin Radio, the government-owned broadcaster, reported that the industrial hemp sector is set to become a “new economic growth point” for Jilin province, which has set up a specific research centre for hemp at the provincial agricultural science academy.
The provincial government of Jilin also announced last March that the legalisation and regulation of the hemp industry will enter the legislative process in 2019.
Hemp is a variety of the cannabis sativa plant species, from which marijuana can also be developed.
The difference between hemp and marijuana lies in the amount of the psychoactive component THC, with hemp varieties containing just trace amounts. Hemp flowers and leaves can be used to make cannabinoids, compounds that offer pain relief and have anti-inflammatory properties.
In 2010, Yunnan – located in the far southwest of China bordering Myanmar, Laos and Vietnam – became the first province to allow hemp cultivation. Since then, it has given licences for hemp cultivation on more than 220,000 mu – equal to more than 36,300 acres – data from Yunnan government showed.
In 2017, Heilongjiang, the northernmost province on the China-Russian border, also started regulating the plantation, processing and sale of industrial hemp.
China accounts for about half of the world’s legal hemp cultivation, and is the biggest exporter of hemp paper and textiles, according to official figures.
