Low CBD prices? Chinese foodmaker says it’s no problem

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Chinese foodmaker Chenguang Biotech Group Co., Ltd. said it has reached elevated extraction yield levels that give the company a significant edge in the production of CBD, allowing it to make margins even at current low prices.

Chenguang claims output from its extraction operations is significantly greater than that of its peers, leading to cost advantages that are allowing the company maintain sound profitability despite estimates that CBD has dropped in price from ~$6,000 per kilogram to ~$1,000 in the past 18 months. Further planned expansion is expected to lead to even greater efficiency gains, the company said.

License in Yunnan

Long-term investment in raw materials research, and internal development of core plant extraction technology give the company a decided edge in global markets, where Chenguang has experience in overseas factory management. The company said it maintains robust monitoring of hemp markets around the world, and constantly tracks regulatory policies.

Chenguang Biotech Group Co., Ltd., located in Handan, Hebei, a northern Chinese province near Beijing, generates roughly €380 million ($450 million) in annual sales. The company’s main business is in natural plant extracts; it produces, develops and markets red pepper essence, marigold extract, Capsicum oleoresin and lycopene, among others. The group, which comprises 25 companies, received an industrial hemp processing license in Yunnan province in July 2020.

Bio-tech & hemp

Chenguang is among a growing number of Chinese health and bio-technology companies that are aggressively taking up positions in the hemp production chain, backed by investors driven primarily by the potential for CBD and other cannabinoids. Most have assets in the burgeoning CBD center in Yunnan Province, where local officials have identified industrial hemp as a key driver in economic development plans. The government and Chinese industrialists see a major role for hemp in traditional Chinese medicines, a sector the government is also pushing.

A major CBD supplier to world markets, China exports CBD to the United States, Europe, Canada, Japan, South Korea and other countries and regions. Some CBD is also sold domestically for health & beauty products, the only CBD applications that can be legally sold to Chinese consumers.

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