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Exclusive: CBD Oil Sold on China’s E-Commerce Platforms Raises Regulation Concerns

Products containing cannabidiol oil, an essential part of marijuana, can be found on China’s three major e-commerce marketplaces, even though consumption of marijuana is illegal in the country.

Search results for cannabidiol oil, commonly known as CBD oil, on Alibaba Group’s Taobao , JD.com and Pinduoduo show multiple sellers offering “U.S.-imported” or “authentic imported” cannabidiol oil, claiming their products can help with sleeping, depression, inflammation and even bone growth and cancer-fighting.

To lure buyers, some sellers use marketing pitches such as “try the CBD oil Europeans and Americans are all using.”

Unlike the U.S., where the recreational use of cannabis is legal in many states, China strictly bans the use and sale of cannabis, even calling the legalization of marijuana in Canada and parts of the U.S. a “new threat to China,” sparking a spike in the amount of drugs smuggled into the country.

In the U.S., legalized cannabis oil sold on the market can contain no more than 0.3% THC, the psychoactive ingredient that gets people high. But some of the products listed on the Taobao, JD.com and Pinduoduo platforms do not provide information on THC level, making it difficult to identify whether they belong to the prohibited drug category.

CBD oil containing less than 0.3% THC it is not a controlled drug as it is not included in the list of narcotic drugs in China, but the importation of such products requires permits for psychotropic substances.

CBD oil products sold on JD.com. Photo: Caixin

Some sellers on the e-commerce platforms know they are operating in a gray area and try to avoid problems by posting disclaimers. One seller on JD.com says in the product description that the cannabis oil is brought into China through overseas channels. Once buyers confirm their orders, no claims can be made regarding labels, origin or inspection reports, or on the ground that foreign products do not comply with China’s laws and regulations, the seller says.

If a seller knowingly smuggles in narcotic drugs or psychotropic substances controlled by the state, he or she shall be suspected of the crime of smuggling drugs, said Liu Zhixin, a lawyer specializes in food.

After initial investigation, JD.com said it found that some sellers of CBD oil wrongly list their products under the category of food. The company said it will remove the unlicensed goods from its platform, deduct points from the sellers and continue to check other violators.

Pinduoduo said it will remove CBD oil from its platform after obtaining more information.

In response to a Caixin inquiry, Alibaba said Taobao has been strictly following laws and regulations on CBD oil containing more than 0.3% THC. It won’t tolerate any violation and will report any cases to law enforcement agencies, the company said.

Now CBD oil is still sold on Taobao and JD.com, but searching related products on Pinduoduo shows no result.

There is still a gap in the regulation of CBD in China, said Li Jianhua, a professor at Yunnan Institute for Drug Abuse. He suggested that relevant departments should strengthen supervision as soon as possible.

Exclusive: CBD Oil Sold on China’s E-Commerce Platforms Raises Regulation Concerns – Online availability of ‘U.S.-imported’ derivative of prohibited cannabis raises regulatory concerns for Alibaba, JD.com, Pinduoduo

State of the Industry: CBD Market in China

State of the Industry: CBD Market in China

The Cannabidiol (CBD) market in China has the potential to be a massive industry in the coming years. Despite marijuana being illegal in China, there are some indications that the sale of CBD products will soon become downright common in the future, setting the table for this burgeoning industry to unlock a major market in Greater China.

While the legalization of marijuana products for recreational or even medicinal purposes is not expected any time soon in China, cosmetics containing CBD have been legal in China for dozens of years. And as the central government appears to indicate it might relax its policies towards CBD more generally, and American and global companies begin to receive approval to import CBD cosmetics into China, the potential financial windfall shouldn’t go ignored.

CBD and THC are Highly Different

Often mistakenly considered one and the same, recent efforts across the world have been made to distinguish between tetrahydrocannabinol (THC) and cannabidiol (CBD) in China and around the world.

It’s not a mystery why the two are often conflated and lumped into the same category as marijuana. Both substances are found in the flowers of the plant known as cannabis sativa , with its leaves producing CBD only. Despite deriving from the same plant, THC and CBD produce notably different effects, which is why the former is considered a controlled substance banned in China and only recently made legal throughout the world, and latter is deemed acceptable by Chinese authorities.

THC is a psychoactive compound that is often used for recreational (though sometimes medicinal) purposes. It is the ingredient in marijuana that conjures images of lazy teenagers, consuming several bags of chips and being glued to the couch. Is it this perception that has led to governments’ strict approach to THC and — perhaps incorrectly — CBD by extension.

CBD, on the other hand, tends not to produce such a sensation, which is part of the reason why the various use cases of CBD intrigue so many businesses and consumers. CBD is frequently used in topical creams and natural cosmetics, as they are in China. But in different regulatory environments CBD products are used to treat pain, skin irritation, insomnia, and a variety of other conditions. It is even occasionally prescribed to cancer patients undergoing chemotherapy, as CBD has been found to provide pain relief and stimulate appetite.

CBD Market in China at Present

CBD is not considered a banned narcotic by the Chinese government, unlike marijuana — the possession of which could result in serious criminal consequences. Curiously enough, cultivation of the hemp plant, from which CBD is derived is, in fact, legal in three Chinese provinces: Yunnan, Heilongjiang and Jilin. It is cultivated under strict regulations. As alluded to above, this is because CBD does not intoxicate as does marijuana/THC.

There are historical reasons for social acceptance of CBD in cosmetics and, perhaps one day, for medicinal purposes. Cannabis has been grown and cultivated in China for thousands of years. Hemp plant fibres can be used to manufacture textiles and ropes, while hemp seeds can be consumed or used to produce oil.

According to some ancient texts , cannabis has even been used in the making of traditional Chinese medicine. As with all eastern medicines, the cultivation and utilization of plants, herbs, roots and other harvestable materials had been relied upon for millennia before the first Aspirin was even produced. This inexorable part of Chinese culture bodes well for the acceptability of CBD products in the future — going beyond cosmetics and into more medicinal uses.

CBD Market in China Outlook

Beginning in 2010, the outlook for the CBD market in China became brighter than it had been since the signing of the 1985 United Nations’ Convention on Psychotropic Substances. The industrial production of hemp has grown ever since. The potential economic gains stemming from the export of hemp plants, seeds and oils to foreign markets became too lucrative to ignore.

North American and European countries relaxing their policies on THC and CBD products has created a situation where hemp exports could represent a boon to some of the more rural, impoverished regions of China, and the entire country by extension.

The recent announcement by American company Uncle Bud’s—a hemp and CBD brand that boasts former Los Angeles Lakers star Magic Johnson as its main spokesperson—that it would sell its CBD infused cosmetics via cross-border e-commerce on Tmall Global shows that there may be a wave of Western CBD products being sold throughout Greater China very soon.

Talk to the Experts

As with any foreign brand looking to penetrate the Chinese ecommerce market, the particularities of doing so can be hard to navigate without the support of seasoned professionals who know how to launch major brands in China. And although there is likely an additional regulatory hurdle to be overcome due to the sensitive nature of CBD, finding yourself in the right hands is the first step to take.

Newfound affluence among the upper-middle class has created a situation wherein Chinese consumers are now among the world’s leading consumers of luxury brands and goods, and China’s luxury market is the most lucrative in the world.