What China’s relationship to cannabis reveals about its economy

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This story is part of an ongoing series on how China is reshaping our world.

Cannabis is fast becoming the world’s newest cash crop. In southwest China’s Yunnan province, farmers make more money growing and selling the plant than they can from more common crops like corn or wheat. And they’re growing more of it than ever.

But growing weed in China is not as simple as planting seeds in the ground. Many places in the world are becoming more tolerant of the drug, and in some US states and Canada, recreational use is now legal. That is far from the case in China, where drugs are heavily stigmatized, and trafficking marijuana can lead to a death sentence.

The result is that Chinese businesses, investors, and farmers face complex and uncertain regulations when it comes to cannabis. The provincial authorities in Yunnan have loosened restrictions on CBD—a cannabis extract that doesn’t get you high, but has a host of potential medical applications—and allowed the local industry to thrive. But if the central government gets a hint that this industry is blurring the lines between medical and recreational cannabis, it could step in at any moment, centralizing control of cannabis or prohibiting activity altogether.

That’s what’s happened in other brand-new industries that are developing in the country. At first, companies proliferate in a wild frenzy to get in on the game. But the bigger the sector gets, the more likely it is that the Chinese government will begin heavily regulating it. That’s what happened in online payments: In the 2000s, they were largely unregulated in China, and Alibaba’s Alipay amassed hundreds of millions of users. Eventually the government stepped in, and now all online payments have to go through the central bank.

Cannabis and CBD offer a multi-billion dollar opportunity for China. It’s especially promising for Yunnan. One of the poorest provinces in the country, its climate and elevation are well-suited to cannabis and people have been growing it there for centuries.

In our latest episode of Because China, we head to Yunnan to find out how a new industry develops in China. Whether or not cannabis succeeds, it turns out, will depend on how well it can navigate the paradoxes of the Chinese economy.