For many years, China has been the top industrial hemp producer on the planet even though China did not issue the first license for legal CBD until 2017. China’s industrial hemp is used to make everything from clothing to paper and hand lotion, with many of these products exported to other countries.
Hemp farmers in China have benefited from the lax enforcement of hemp prohibition over the years. At the same time, other countries enforced hemp prohibition more strictly. Some of those countries, including the United States, allowed the importing of finished goods derived from hemp while prohibiting domestic production of hemp-based goods.
Now, a reverse in historic hemp trade trends between the United States and China may be on the horizon thanks to provisions in a new trade agreement. While the two countries continue to be locked in an ongoing trade war, a first-stage agreement was signed recently by the nation’s two leaders that includes provisions involving hemp.
Part of the agreement is a provision requiring China to import $12.5 billion more agriculture commodities from the United States, compared to what China imported in 2017, in the next year. The following year China will be required to import at least $19.5 billion more according to the agreement.
Of the more than 200 agricultural products listed in the agreement, hemp commodities are included. However, there is no breakdown in the requirements of how much to import of each commodity. Hypothetically, China could import anywhere between $12.5 billion to zero dollars worth of hemp in the next year, based on the available information from the agreement at this time.
The agreement comes at a crucial time for the emerging United States hemp industry. The popularity of hemp cultivation has exploded in recent years in the United States, thanks in large part to the 2018 Farm Bill. According to Vote Hemp, over 500,000 acres were licensed for hemp cultivation in the U.S. in 2019, which was an almost 500 percent increase over the previous year. The final 2018 licensed-acreage figure was in itself more than a 3-fold increase over 2017.
Hemp and CBD products have flooded the United States hemp market, and there is currently no anticipated end to that deluge. Because of the historically unbalanced level of hemp trade between the U.S. and China, the Chinese market is mainly untapped from a United States perspective.
It will be interesting to see if U.S. hemp companies can make inroads into the Chinese market in the coming years. China certainly cultivates a significant amount of industrial hemp within its borders. However, the quality of hemp-derived products made in China is less than desirable to many consumers due to various factors. In 2018, the U.S. imported roughly $3.3 million in hemp products from China. The U.S. hemp industry is projected to grow to as large as $30 billion in value by 2025.
Johnny Green is the Media and Content Director for the International Cannabis Business Conference and has been writing about cannabis culture since 2010.