A New Area of US-China Competition Ignored—Marijuana

China will be the real winner from marijuana legalization in US
June 7, 2021 Updated: June 18, 2021

Commentary

In the American political landscape, competition with China has always been a significant topic. On the issue of infrastructure, American politicians are copying the Chinese method of massive investment of government money; on the issue of Taiwan, they are afraid of offending the Chinese Communist Party; on wind energy, House legislators are excluding China due to competition. Yet there is one forgotten area that is breeding wealth and will likely harbor Chinese competition—the marijuana industry.

As a matter of fact, China will not only reap the economic benefits from marijuana legalization in the United States, it will also be happy to see American citizens victimized by the consumption of various drugs, as China’s cannabis production is for export only.

The Real Winner of the 2020 Election: Cannabis

After the appearance of the dubious “Biden curve” on the election night of Nov. 3, Paul Armentano, the Vice President of the National Organization for the Reform of Marijuana Laws (NORML), ecstatically published a pre-polished article in The Hill, announcing that the winner of the 2020 election was not Donald Trump, nor was it Joe Biden. It was marijuana. This expressed America’s complete confidence in its marijuana industry, considering the production capacity, processing, marketing, and sales of the industry, as well as making the consumption of marijuana a “4th generational human right.” This major step taken by the United States will likely reorientate and rewrite the Cannabis, as well as the entire illicit drug market.

Armentano has worked tirelessly for many years for the legalization of marijuana, and his “predictions” are all being realized. The marijuana industry achieved a milestone victory on Nov. 3, 2020, as the Oregon Ballot Measure 110 was then passed, allowing unambiguous drugs such as heroin to be decriminalized. USA Today also reported that New Jersey, South Carolina, Montana, and Arizona all passed laws that legalized recreational marijuana on the very same day. Oregon has played a critical role in this legalization process. In 1973, Oregon was the first state to decriminalize the possession of marijuana. In 2014, Oregon legalized the recreational use of marijuana.

But fans of cannabis shouldn’t forget who brought the high tide of marijuana legalization—Obama.

The Catalyst for Marijuana Legalization: Obama Entering White House

In 2008, Barack Obama became the first African-American President in U.S. history. During a debate at Northwestern University when he was a congressman, he expressed how former President Nixon’s war on drugs had utterly failed, and that there was a need to revise marijuana laws and legalize the drug. He also admitted that he smoked marijuana when he was young.

The former President’s past affection for marijuana was likely to sway people’s opinions, and evidently so, as the number of people in legalization parades has grown exponentially, holding star-spangled banners with marijuana imprinted on them and demanding the right to recreationally use marijuana as a basic human right.

In 2012, the State of Washington and Colorado passed the Washington Initiative 502 and 2012 Colorado Amendment 64 respectively, and jump-started the era of recreational use of marijuana. One should note that the term “Recreational Marijuana” is another deceptive and romanticized name for drugs from the left.

Since the President likes marijuana, the laws needed to resonate the narrative. The Supreme Court case Gonzales v. Raich, which ruled that Congress has the authority to criminalize the use and production of homegrown cannabis, was revised, and the number of states that have legalized marijuana is steadily rising. More and more Americans are becoming fans of marijuana, and these legal issues are fading out of the limelight.

The American Marijuana Problem Has Become a ‘People’s War’

Based on the memo indicating Obama’s friendliness towards marijuana, smokers rapidly turned this legalization process into a people’s war. Below are some data to illustrate this point.

First, the percentage of people who wish to legalize marijuana.

Between 2000 and 2009, the Gallup poll concluded, that the percentage of Americans willing to legalize marijuana rose from 31 percent to 44 percent, but after Obama became president, that percentage rose to 49 percent in two short years (2009–2011). The trend continuing to rise was directly correlated to Obama’s supportive attitude, and when he left office in 2012, the percentage of Americans willing to legalize marijuana was at 64 percent.

Under these circumstances, any politicians who dare to put a foot in front of this legalization cascade is risking their careers. Even President Trump, who was explicitly anti-drug, had no choice but to sign the 2018 United States Farm Bill that legalized the cultivation of cannabis.

Around the same time, American universities have become more and more marijuana friendly, and are including classes that teach students everything from growing marijuana to marijuana economics. America is flagrantly becoming the world leader in professionalizing marijuana and instilling it in academics. Colleges and universities play a critical role in shaping the opinion of the young towards marijuana, therefore I feel the need to provide parents with a list of colleges they need to be wary of, which I plan to present in another article.

The 2020 election was held during the bitter pandemic, and Biden promised that one of the things he wished to change was to legalize marijuana across the country. The Democratic Party and the mainstream media all pushed for the narrative of Biden’s win so that America can welcome the genesis of the marijuana industry. As of the end of 2020, 33 States, 4 U.S. territories, and the District of Columbia have all legalized the medicinal use of marijuana; while 11 States, 2 territories, and the District of Columbia have legalized the recreational use of marijuana. From now on, marijuana addicts can enjoy their newfound human rights.

Marijuana Production in the US Spikes

Below are some statistics on U.S. marijuana production.

As of the second quarter of 2020, the cannabis cultivation area has reached 465,787 acres, and 21,496 licenses were distributed for the cultivation thereof. This is a 27 percent increase from 2019. According to BDSA, a platform for monitoring marijuana sales in the United States, the legal sale of cannabis generated a record sum of $17.5 billion in 2020, which is a 46 percent increase from 2019. The top three regions that predominantly contributed to this staggering amount of sales were Democrat states California, Colorado, and Oregon. Where recreational marijuana was legalized, the percentage of people who used it rose from 38 percent to 43 percent. The cannabis market is especially strong in Colorado as 48 percent of residents consume it there. Now, the popularization of marijuana is spreading to younger people and suburban residents, who are the main contributors to growth in the cannabis market in 2020.

BSDA estimates that in 2026, legal Cannabis sales will reach $41 billion nationwide, leveling alongside the craft beer industry. At the same time, the global market for marijuana is projected to be $170 billion, where America will undoubtedly take the lead as the primary consumer.

The Rise of Marijuana Use in US Delights China’s Cannabis Industry

Just as happy as the consumers in the United States are the producers in China’s cannabis industry.

Euromonitor International projects the percentage of legally sold cannabis products to reach 77 percent by 2025, estimating a $166 billion market. The recreational sale of marijuana in the coming five years is forecast to increase the current market size by 376 percent, and 67 percent of the legal marijuana market is estimated to be for recreational use, while only 9 percent is for medicinal use (less than half of the 23 percent of 2020). Spiros Malandrakis, the head of alcoholic drinks at Euromonitor, also predicted that, “New consumption occasions and tailored value propositions will drive the industry into fast-moving consumer goods territory.”

As early as 2017, when the worldwide legalization wave began, China realized that there are huge profits to be made from the cannabis market. It assigned market analysis experts to study the trend in various countries and provide a forward-looking strategy for the Chinese Cannabis industry.

Currently, China is the largest producer of Cannabis and accounts for half the amount produced worldwide. China’s production rate as of 2018 is at 75,000 tons per year, and is projected to be at 105,000 tons a year by 2024. As China has not yet legalized marijuana, their production mainly consists of industrial cannabis, however it is in a leading position worldwide for CBD (cannabidiol) production.

China’s CBD market has reached $760 million and is estimated to reach $1.8 billion in 2024. The ArcView Group released an analysis report in August 2020, calling China a rising superpower for CBD production.

“As regulations are clarified in destination markets in North America and Europe, multinational pharmaceutical and nutraceutical companies that already source a broad range of ingredients from China, will similarly source cannabinoid-based ingredients from: China,” the report said. “China is likely to be a leading source of cannabinoids for the global supply chain for the foreseeable future, with newfound government support for the industry, one of the lowest cannabinoid production costs globally, and unrivaled large-scale manufacturing infrastructure and expertise.”

This power assigned to China naturally rivals the cannabis industry of the United States.

The Effect of Decriminalizing Marijuana on US-China Relationship

Marijuana industry in the United States is mainly for medicinal, industrial, and recreational use, and more than 12 percent of Americans are users of some form of cannabis. Not a single country dares to openly declare that they have gotten the side effects of marijuana under control, which applies to America as well. Under the given circumstances, the cannabis industry and market will likely enjoy handsome profits, but the negative side effects from the psychoactive properties of marijuana will eventually become a burden to society. America is already a major drug consuming country, and as the number of addicts is rising, the negative effects on society will likely be evident at an accelerating rate.

China mainly produces hemp, or industrial cannabis. It is fully capable of producing recreational marijuana for export only, and further growing its CBD market share. It may even lease land overseas to grow marijuana in countries where there is a demand.

China has strict drug restrictions for its own citizens. Given China’s history of struggling with drugs such as opium since the beginning of its industrialization, it has so far effectively prohibited drug abuse. Under these circumstances, the consumption rate of marijuana in China will never reach that of America, where consuming cannabis is regarded as a human right.

In summary, although the U.S. cannabis industry wants to become self-sufficient, as the demand is high, importation is therefore inevitable. The Chinese cannabis production is diversified: it can achieve self-sufficiency for the needs of cannabis products in medicine and cosmetics, and at the same time produce recreational marijuana solely for export, with the advantage of low cost and dumping.

One country has the highest demand, the other has the capacity to become the largest supplier. Although the market is only beginning to develop in this area, it is already clear who will win and who will lose.

He Qinglian is a prominent Chinese author and economist. Currently based in the United States, she authored “China’s Pitfalls,” which discusses corruption in China’s economic reform of the 1990s, and “The Fog of Censorship: Media Control in China,” which addresses the manipulation and restriction of the press. She regularly writes on contemporary Chinese social and economic issues.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

He Qinglian
He Qinglian
He Qinglian is a prominent Chinese author and economist. Currently based in the United States, she authored “China’s Pitfalls,” which concerns corruption in China’s economic reform of the 1990s, and “The Fog of Censorship: Media Control in China,” which addresses the manipulation and restriction of the press. She regularly writes on contemporary Chinese social and economic issues.