Strict supervision

China takes a hard line on illegal drugs. The cultivation and use of marijuana is strictly prohibited, with traffickers facing the death penalty in extreme cases. Yunnan and Heilongjiang, in the northeast, are the only provinces that allow the large-scale planting and processing of hemp.

According to Yang, Heilongjiang's hemp is mainly used to make textiles, while Yunnan's producers focus on extracting CBD and growing seeds for the vegetarian and vegan market because they are an outstanding source of fatty acids, such as Omega 3, 6 and 9.

In recent years, provinces such as Shanxi and Gansu have started small-scale hemp-cultivation pilots.

Yang said hemp was grown on 11,330 hectares in 14 cities and autonomous prefectures last year. The sector has brought much-needed investment to Yunnan and farmers have also benefited.

"A farmer can charge about $300 for 0.4 hectares of hemp, much more than corn or flax," he said.

"Although they look similar to marijuana, industrial hemp plants contain very little THC and will not produce mind-altering sensations if the flowers or leaves are smoked. However, that similarity increases the risk of potentially illegal activity."

He stressed that the regulations provide strict supervision of each link in the industry chain, from seed supply to the destruction of waste products.

Pan said all the hemp seeds his company grows for CBD extraction are registered with the local public security bureau and police officers inspect the processing facilities at least three times every week.

The waste－the only possible loophole for the illegal extraction of THC－must be destroyed. "The process is recorded, and then documented at the local police station," Pan said.

Tian Wei, general manager of Yunnan Hempsoul Biotechnology, which was granted permission to extract CBD in 2017, said uncertified hemp plants are destroyed in the fields, while legitimate ones can only be processed under extremely strict protocols.

"At least 80 tests are conducted during the procedure. Even the cleaning cloths used in specific sections are color-coded to distinguish them from each other," he said.

Hempsoul's factory is situated in a remote valley west of Kunming, Yunnan's capital, next to a weapons manufacturer. To ensure maximum security, most of the employees are People's Liberation Army veterans or former employees of the armaments factory. Also, the facility has dozens of closed-circuit cameras that stream footage directly to the Yunnan Public Security Bureau.

Pan said: "Honestly, it is too costly to extract THC from industrial hemp. The low profits would not even begin to justify the risk of breaking the law."