This three-part series by the Cannabis Fund explores the opportunity Hong Kong has to become a main-players in the medical cannabis and hemp industry in Asia. Part I looks at why Asia is a prime spot for the distribution of these products, and how best to begin such initiatives.
Medical cannabis, its milder cousin CBD, and a plethora of environmental and impact hemp technologies are already sweeping across Asia. While countries like Thailand have taken the lead, the heavy-hitters are not far behind, with change anticipated in China and India. The question for Hong Kong is whether it will step up to the challenges and opportunities this will bring or if it will remain on the sidelines.
The opportunity is huge. Seasoned cannabis industry insiders believe Asia could be the world’s production and consumption hub with the potential to amass tens, if not hundreds of billions of dollars in revenue.
Just as with trade and finance, Hong Kong is the obvious choice for some to become the centre for Asian ventures in medical cannabis and hemp, especially given Singapore’s traditionally draconian attitude to the product. However Hong Kong cannot afford to assume it will be the first choice for industry players. If it doesn’t take the lead and proactively frame legislation and policies, it risks being left as revenue, jobs, and investments flow elsewhere.
Why Asia?
Asia is tipped for the top for more than its huge population centres, its growing affluence and the sheer size of its markets.
First, there is a natural fit between cannabis derived products and consumers. Traditional Asian medicine has long used cannabis and cannabis derivatives both in Chinese and Ayurvedic traditions.
Today, Asia leads the world in innovation within the key cannabis growth sectors of cosmetics, food, beverage and vapes. Asia is also home to fanatical brand followings beloved of cannabis investors. This convergence of ancient usage, modern development and brand loyalty makes it a unique region.
Second, many forget that beyond the hype of consumable cannabis is the other side of the coin: hemp.
Hemp possesses advantages and strengths as both a crop and as an industrial product with genuine environmental bonafides. Growing concerns about the environment throughout Asia mean the plant can be positioned as the solution to a number of problems. Projects range from plastic replacement to providing a source of green building materials and textiles.
Smart policy drives investment
These potential uses and markets for cannabis have one thing in common. They rely on investment to fuel new projects, to introduce innovations to new markets, and to establish fresh start-up ventures. Hong Kong must create the right conditions to attract, retain, and grow these investments through a series of legislative and policy-led marketing initiatives.
Planting the flag
There are three key themes to these initiatives. Firstly, Hong Kong must position itself as a hub for medical cannabis & hemp, similarly to what Malta has begun to do in Europe. This is about encouraging companies, research projects and investments to domicile in the territory.
First, by being proactive in promotion, creating the right conditions, and cutting certain types of red tape, Hong Kong can show that it is the easiest place to begin a start-up in Asia and gain a first mover advantage.
Second, Hong Kong must create a trusted, secure environment for consumers and investors to take the lead in setting standards. Cannabis is unfairly tainted by association to recreational drug use, and the only way to correct this perception is to focus on medical uses, safety and quality control standards. By demonstrating that products and projects are being rigorously monitored and regulated, Hong Kong can attract inflows of money, from purchases to capital investments.
Third, Hong Kong has the opportunity to build a network across Asia. Instead of an insular, protectionist attitude, there must be an impetus to reach out to key countries from India to Japan, and turn these initiatives into something that goes beyond Hong Kong. This requires true thought leadership, an open mind, and a willingness to share.
A first look at the hemp and cannabis world can be bewildering, but even the most conservative legislator with little exposure to these markets can quickly grasp that some countries have created successful laws and regulations; a lot of the hard work has already been done. There are organisations across the world striving to impose order on this sector, and this is more about selecting best practises than creating them from scratch.
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