Canada's legalization of cannabis this year wasn’t met with red envelope-like celebration by Chinese government officials. The Chinese government has long blamed the maple-blanketed country for its handling of tons of illegal cannabis imports. Those officials have a right to be somewhat perturbed, as roughly 20% of Canada’s total marijuana production ($1.2 billion worth) was sold illegally beyond the country's borders last year, a good portion believed to be China-bound.

Were it another disconcerted country it might seem less hypocritical because while China is displeased with Canada for contributing to its cannabis problem, the country itself produces 50% of the world’s supply. China’s crops are largely hemp, and thus, the non-psychotropic and fiber-rich variety of cannabis.

Psychology Today traces the Chinese economic uses of cannabis hemp to 10,000 B.C. Chinese farmers know how to farm, cultivate and process cannabis for fabrics, medicine and recreational use. As of 2017, Chinese companies have 309 out of the 606 patents filed around the world that relate to cannabis. So, while cannabis remains illegal in the People’s Republic of China, its massive economic potential poses a threat to cannabis interests around the world and particularly in the U.S. market.

China’s growing cannabis influence

The New Zealand Herald reports, “There are no official figures for the amount of the plant China produces each year but plantations are flourishing - both for commercial and illicit drug use. This growth was in part made possible by government-funded scientists assigned to study the plant's military uses, including medication and uniform fabric.”

Because of this strategic approach, China holds over 600 patents on cannabis applications. This scares pharmaceutical researchers and manufacturers in the West. An Ottawa-based investor and biochemist, Dr. Luc Duchesne emphasized in the same report that, “Because cannabis in Western medicine is becoming accepted, the predominance of Chinese patents suggests that pharmaceutical sciences are evolving quickly in China, outpacing Western capabilities.”

If marijuana remains a Schedule I drug, the research necessary to catch up, let alone lead the potential for the advancement of cannabis-based pharmaceuticals in the U.S., is stifled. Researchers find it difficult to fund work and deliver the necessary testing and there’s no indication that will change soon.

If China does, indeed, supply half of the world’s cash crop, its influence can only grow as individual countries and U.S. states legalize the use of hemp and marijuana. They’ve mastered the art of commercializing hemp more than the U.S. has, as well. Bryan DeHaven’s Colorado-based clothing company, Chiefton Supply Co explained, “You can’t make hemp clothing in the US because the country no longer has sufficient expertise in textile production.”

It is believed, in fact, that Chinese investors and producers with deep knowledge and expertise in hemp cultivation are transferring their talents to the appealing U.S. market. “What better place to invest that expertise than the voracious American economy, where 29 states and the District of Columbia have legalized the psychoactive version of cannabis,” wrote David Carpenter in Big Buds Magazine.

Do Chinese cannabis consumers have a say?

As recently as 2015, Chinese authorities were arresting citizens for marijuana possession and raiding homes, clubs and businesses. Tim Hill said, “Behind a tight veil of secrecy, there is a small but flourishing circle of mainlanders who grow, trade, smoke, and eat weed.”

At the time, Beijing residents had to buy from foreign dealers, Africans, and Uyghurs, importing weed from their countries of origin. And, China still bans cultivation, transport, sale, and possession. Eve Ripley reported that under the People's Republic of China criminal law, “individuals who smuggle, traffic, transport or manufacture narcotic drugs are sentenced to either 15 years of prison, life imprisonment or death, and suffer confiscation of property.”

In Hong Kong, manufacturing cannabis or any other drug included in the city’s Dangerous Drugs Ordinance is deemed the most serious of all drug-related offenses. Any person who cultivates any plant of the genus cannabis faces an HK$100,000 fine and 15 years in prison. Still, the amount of cannabis seized by Hong Kong police increased 238% in the just the first 10 months of 2017.

In the netherworld of Beijing, Shanghai, and other large cities, foreigners, expats, and diplomats much know someone who knows someone to find incarnations of the plant at inflated prices. Visiting Shanghai in 2017 to bring the first cannabis-related real estate investment opportunities to China, I can attest to this. What's more, the quality there isn't up to par with U.S. artisan-grown varieties-- some of it is downright rank.

The future impact

With so many acres under cultivation in China and the local governments turning a blind eye, the product will move. How it moves remains an open question. Chen Weihua reported, “For many Chinese, marijuana is a drug and therefore synonymous with opium, a much more potent substance that the British forced upon the Chinese during the Opium War. The war was widely regarded by Chinese as the start of their country's ‘century of humiliation’.”

So, with those prohibitions in place, the market will seek markets on its own. For example, much of the crop is committed to fabric manufacturing. The Chinese government supports research into fabrics suited for military uniforms.

Moreover, growers harvest the seeds for processing in oils, creams and beauty products. And, some part of the output goes into legendary herbal medicinal cures. For China’s pot to make a significant impression on the Western canna-economy, there must be state-approved logistics for global distribution and permissive banking regulations.

Considering that most countries restrict or simply prohibit importing cannabis, the product is economically isolated. You won’t hear any talk of legalization in China soon. China's history, drug wars, and communist control have left citizens convinced that drugs are personally and socially evil.

So, cannabis hemp production remains the work of remote farmers. Many of them are Muslim Uyghurs, whose land and culture was co-opted by the Han Chinese. Their farming customs originated in East Turkestan, where some of the best cannabis strains began. The Uyghurs are now involved with separatist activism and have suffered repercussions from the Chinese government.

China's influence and potential interest in the US cannabis market

China’s farmers don't pose an immediate threat to U.S. marijuana markets. They have no official or practical trade route. However, as with all things in the People’s Republic of China, anything can change at the whim of the leadership. And with trade tariffs being thrown back and forth between the two countries, American's have the opportunity for a huge economic pivot if legislation reform were to allow it. 

But, this isn't their grandparents’ China. The current regime has a highly pragmatic approach to things. In the decades since the passing of Mao, the National Committee has made room for enough free economy to make them a major worldwide economic force. If the leadership should see the cash value in the legalization and trade of cannabis, they'll move in that direction.

It’s likely they will continue to secure leadership in manufacturing and pharmaceutical applications. They are positioned to capitalize on their natural and human resources – if it is in their interest. The international issue of China’s oppression of the Uyghurs remains the most volatile and unpredictable barrier to the success of their canna-economy.