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Proposed ban on CBD in cosmetics alarms Chinese stakeholders

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CBD producers in China say a proposed ban on the use of industrial hemp derivatives in cosmetics would force producers to depend entirely on exports. China’s National Institutes for Food and Drug Control have called for public comments on the proposed ban, which singles out CBD for particular scrutiny.

Stakeholders suggested the proposal would ban hemp flowers, seed oil and extracts, particularly affecting cosmetics containing CBD — the only CBD application that can be legally sold to Chinese consumers. Hemp is used as a moisturizer and anti-oxident in many beauty product formulations.

Shares dip on news

“If the ban is implemented, the domestic market for industrial hemp (in cosmetics) will be shut down,” Pan Zongbing, general manager of Hankang Yunnan Biotechnology Corp, told China-based Global Times. “As a result, exports may be the only solution for our survival.”

A notice seeking public comments on the proposed ban released last Friday hit Chinese hemp stocks on Monday. Meilleure Health International Industry Group saw its share price dip by about 15%, while shares in Yunnan Baiyao, China’s leading medicine producer, declined 6.89%. 

Fifty-four companies in the industrial hemp sector are listed on China’s A-share market, with a total capitalization of more than 500 billion yuan ($76.21 billion), according to online financial data provider Tonghuashun. 

Betting on CBD

A growing number of Chinese health and bio-technology companies are staking out positions in CBD and other cannabinoids as they promote hemp’s fit in traditional Chinese medicine, a critical health product sector marked for fast growth by the Chinese government and bio-pharma industry.

More than 60 companies are involved in CBD production in Yunnan and Heilongjiang provinces, the only regions of China where hemp can be grown and processed legally. Twelve enterprises are currently authorized for extraction and processing in Yunnan, which has rapidly grown into a major CBD supplier to world markets of such end products as e-cigarettes, medicines and pet food.

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