Canadian firm says it has licenses to set up CBD processing in China

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A Canadian company said it has obtained all licenses necessary to start an indoor hemp growing and extraction operation to produce CBD in China.

Mary Agrotechnologies, Markham, Ontario, plans to set up a 150,000-sq-ft (~14,000-sq-m) facility in Yunnan Province based on hydroponic grow boxes the company already sells to home growers, CEO Frank Qin told Yahoo News. Yunnan and Heilongjiang provinces are the only two provinces in China where legal frameworks for cultivation and processing industrial hemp are well established.

Six-month timeline

Qin said the company aims to have a European GMP-compliant facility set up within the next six months, with plans to sell CBD extracts to established producers and eventually develop its own line of of health & beauty products, the only applications for CBD that are legal in China.

Mary Agrotechnologies’ license for cultivation, and a “conditional license” the company said it has obtained for extraction, are difficult to come by in China’s tightly controlled hemp industry. Only about 15 firms have so far been licensed for CBD extraction by Chinese authorities while around 60 have obtained permits for hemp farming, according to a recent report by U.S.-based Arcview Group.

“It’s very hard for a foreign company to receive a license in China. It’s almost near impossible,” Qin said, noting most foreign players operating in the country have partnered with local growers and producers, which are predominantly state-owned companies.

First foreign firm licensed?

“We might be the first (company) in North America to have this full set of licenses,” said Qin, whose company already sources components for its Canadian-built grow boxes from Chinese suppliers.

While companies developing CBD assets in China are taking advantage of the country’s low cost of production – cheaper electricity, labor and raw materials – they also benefit from established manufacturing infrastructure. Nonetheless, the CBD sector has developed in fits and starts. Those that have staying power and can turn out high quality products could cash in on Chinese CBD exports that totaled €820 million ($964 million) in 2019 ­– a figure likely to grow as regulators around the world slowly clarify rules for marketing and sales.

With patience, they’ll also eventually gain access to the massive domestic market as Chinese officials loosen up laws.

While large Chinese pharmaceutical companies have already turned their attention to CBD, state-owned tobacco companies are also reported to be eyeing the sector for its potential.

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