Beijing Talks Tough, Calls Canada & US Marijuana Legalization a "New Threat to China" - Freedonia Group Analysis

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Aug 27, 2019, 11:19 ET

CLEVELAND, Aug. 27, 2019 /PRNewswire/ -- According to Liu Yuejin, deputy director of the China National Narcotics Control Commission, the legalization of marijuana in Canada and some US states constitutes a "new threat to China", as he attributed new, more permissive North American cannabis laws to an uptick in drug smuggling into China.

China Sees Spike in Cannabis Use Following North American Legalization Initiatives

Liu also asserted that the number of cannabis users in China had grown to 24,000 people in 2018. Though that number is miniscule as a share of China's population of 1.4 billion, it represents an increase of more than 25% over the previous year in a country where drug smuggling, trafficking, and/or possession are punished severely – with some offenses even subject to the death penalty.

While Liu declined to specify what percentage of cannabis coming into China could be sourced back to North America, his sharp words represented yet another salvo in the ongoing dispute between the US and China, and additionally dragged Canada further into the complicated geopolitical power struggle.

Will China's Ire Impact Legal Cannabis Markets in Canada & the US?

However severe China's rhetoric, it's unlikely it will impede the growing Canadian and US markets for cannabis production, which were expected to reach US$5.2 billion and US$34.4 billion, respectively, in 2019. This information is according to estimates from Cannabis Growing Market in Canada and Cannabis Growing Market, a pair of new reports from The Freedonia Group.

See the study pages here:

https://www.freedoniagroup.com/industry-study/cannabis-growing-market-3749.htm

https://www.freedoniagroup.com/industry-study/cannabis-growing-in-canada-3761.htm

As cannabis production and use both become more socially acceptable in Western countries, the North American market will continue to expand, reaching growth rates in dollar terms into the double digits in Canada (where legalization is national), and close to that in the US (where legalization is currently limited to 10 states).

Furthermore, Beijing has its own locally sourced drug problem compounding discord with the US. China is a major production and distribution hub for fentanyl, a potent prescription painkiller at the center of the US opioid crisis. Considered 30 to 50 times stronger than heroin, the US Center for Disease Control and Prevention linked one in four overdose deaths in the US in 2018 to the drug, which for years was trafficked from China into the US via the US Postal Service.

Though China has, in recent months, agreed to crack down on local fentanyl producers and distributors in response to pressure from the Trump administration, the issue remains contentious, with Trump recently accusing Chinese President Xi Jinping of reneging on these promises. So it's unlikely that reciprocal cooperation on cannabis is imminent.

Interested in More Info On Cannabis in North America?

China's protests aside, the Canadian and US cannabis markets are set for robust growth through 2023, as legalization measures take effect and new efforts are established. For more information, be sure to check out Cannabis Growing Market in Canada and Cannabis Growing Market, two new reports from The Freedonia Group. These reports cover the Canadian and US markets for three species of cannabis plants (Cannabis sativa, Cannabis indica, and Cannabis ruderalis) used to cultivate specific hybrid varieties (or strains) of:

hemp, which contains 0.3% or less tetrahydrocannabinol (THC), but can be high in cannabidiol
marijuana, which is high in THC

Production volumes disclosed in the reports cover only the dry weight of usable cannabis plant, with values reported at the grower level (excluding the added value of downstream processing). Reported cannabis production numbers in these studies refer to:

all marijuana and hemp produced by known and/or licensed (annual and temporary) commercial cultivators, whether or not that marijuana ends up on the black market (e.g., sold out of regulated channels)
marijuana grown legally by individuals at home

The data excludes marijuana or hemp grown by unknown and unrecorded operations, marijuana grown illegally by individuals at home, and cannabis illegally distributed outside of regulated channels and sold on the black market.

About The Freedonia Group – The Freedonia Group, a division of MarketResearch.com, is a leading international industrial research company publishing more than 100 studies annually. Since 1985 we have provided research to customers ranging in size from global conglomerates to one-person consulting firms. More than 90% of the industrial companies in the Fortune 500 use Freedonia Group research to help with their strategic planning. Each study includes product and market analyses and forecasts, in-depth discussions of important industry trends, and market share information. Studies can be purchased at www.freedoniagroup.com and are also available on www.marketresearch.com and www.profound.com.

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SOURCE The Freedonia Group