China has announced a significant policy change that will tighten regulations on cannabidiol (CBD), categorizing it as a precursor chemical starting September 1, 2024. This would tighten controls over hemp, which might be linked to the expansion of synthetic derivates products. The U.S. Department of Agriculture (USDA), which seeks to support hemp development, has advised stakeholders of the new rules.

The announcement by the State Food and Drug Administration and others ministers of the People's Republic of China (PRC),was not issued in English. The USDA provided an “unauthorized” translation, reported Marijuana Moment.

Hemp Regulation Changes In China

The announcement will subject CBD and six other substances to stricter controls, per the translated announcement. The new regulations will affect the licensing, reporting, and export of CBD products. Despite the added regulatory layers, the US agriculture department notes potential business benefits.

One possible upside is that CBD will now have a clear harmonized tariff system, which could simplify the export process for companies that comply with these new regulations. At the moment, CBD production in China is limited to the regions of Yunnan and Heilongjiang. However, under the new rules, licensed businesses can legally produce and market CBD nationwide, potentially expanding the market.

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Hemp Industry Implications

While these changes present additional hurdles for CBD producers, they also open new avenues for international trade and commercial growth. The USDA highlights that this clear regulatory framework could ultimately benefit the U.S. hemp industry, allowing for more streamlined trade with China. Though businesses will need to navigate the more stringent controls to capitalize on these opportunities.

China's Role In The Expanding Hemp Market

The industrial hemp market is on the brink of significant growth, projected to expand by $13.90 billion from 2024 to 2028, driven by its diverse applications in textiles, food and personal care products. With an expected compound annual growth rate (CAGR) of over 25.25%, the Asia-Pacific (APAC) region, particularly China, is poised to play a vital role in this expansion. Contributing approximately 39% to the global market, China alone accounted for 26.27% of the market in 2022.

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