1.Legalization of industrial hemp is in sight. HMI Group and Dezhan Healthcare Share Policy Dividend.

Recently, the CND Secretariat of the United Nations Commission on Narcotic Drugs issued an urgent notice that a special meeting will be held from June 24th to 25th to discuss the proposal of the World Health Organization to adjust the control of cannabis and cannabis-related substances, which means that the international supervision of cannabis and related substances may develop in a more positive direction. In this regard, Grain Farm Finance interviewed Mr. Tan Xin, the chairman of HMI Group and known as the "Father of CBD" in the industry, and exchanged views on the latest progress of its strategic cooperation with the listed company Dezhan Healthcare (000813). HMI Group is the legal investment group in China, which is based on the whole industrial chain layout of industrial hemp and oriented towards biopharmaceuticals. It has made positive contributions to promoting the vigorous development of hemp industry in China, is a participant in the formulation of many industry standards, and is also the main partner selected by Dezhan Healthcare in the field of industrial hemp.

2.Worldwide legalization of industrial hemp is just around the corner.

In this special meeting on cannabis, the recommendations of the World Health Organization mainly involve extracts and tinctures. After the lifting of the ban, it is expected that the international trade of cannabinoids will be more freer, and the legalization of industrial cannabis in the world will wait for a long time. Domestically, more attention is usually paid to the legalization of industrial hemp than to the legalization of recreational cannabis. According to the content of THC (tetrahydrocannabinol) in cannabis, cannabis can be divided into different categories. Among them, the THC content below 0.3% is called industrial hemp, and the THC content above 1% is recreational cannabis. The difference is that THC has neural activity, while CBD is only a beneficial component with medical value and no psychoactivity in cannabis extract. HMI Group, Dezhan Healthcare and China's legal system have the same goal. They oppose the legalization of all forms of recreational cannabis, firmly support the recommendations of the World Health Organization, and hope that industrial hemp can be completely lifted after the recommendations are passed.

Legalization of industrial hemp is a global trend and an irresistible future of the industry. From the perspective of global policies, there are conditions for the global legalization of CBD at present, and the policy framework that may be realized in the future is the global legalization of industrial hem, but the legalization of recreational cannabis may only exist in a few areas, such as the current parts of Canada. China is an open country, and with the gradual liberalization of CBD application in overseas markets, domestic policies are also expected to have favorable changes in the industry.

3.The core advantages of the whole industrial chain layout of HMI Group are highlighted.

The industrial chain of hemp mainly includes six important links: seed-planting-extraction-scientific research-product manufacturing-sales. HMI Group, as the legal enterprise in China with the whole industrial chain layout of industrial hemp, has a complete set of corresponding licenses, and has strong core competitiveness in the above six nodes.

In the seed stage, different varieties have different CBD (cannabidiol) content, which is the core node to determine the subsequent extraction cost. The earliest varieties in China are Yunma No.7 and Yunma No.8, and the CBD content is below 1%, which is far behind the world's leading varieties with 8%-10%. Through establishing cooperative relations with foreign leading institutions and Chinese Academy of Agricultural Sciences in China, HMI Group has cultivated new varieties with CBD content close to 8% after several years, reaching the world advanced level.

In terms of extraction, there are three main extraction methods on the market at present: solvent extraction, supercritical carbon dioxide extraction, molecular distillation, etc. Solvent extraction is the main technical scheme in the industry, and it is also the technology adopted by HMI Group. At present, the recovery rate can reach more than 98%. Combined with the high-content hemp varieties cultivated by ourselves, the extraction cost of HMI Group's CBD can be controlled within 300 USD per kilogram, and there is still some room for decline in the future.

Besides plant extraction, chemistry and biosynthesis are also one of the important technical directions. In this technical direction, the partner selected by HMI Group is Dezhan Healthcare, a listed company. The main value is the R&D strength of Honghuixin, whose technicians are mainly from well-known research teams in Europe. Chemical biosynthesis has a good application prospect in medicine, which can effectively control the content and product purity, and the production cost will be significantly lower than that of plant extraction. However, in the application of food and beverage and daily chemical products, consumers may prefer natural extraction, so it is also very important to master high-quality industrial hemp varieties.

Downstream applications mainly include five directions, namely biopharmaceuticals, new tobacco, food and beverage, daily chemicals and hemp fiber. Bio-pharmacy doesn't need to elaborate. Studies have found that CBD, a medicinal active ingredient of cannabis, has analgesic, anti-inflammatory, anti-epileptic, anti-cancer, anti-anxiety and depression effects. The medicinal value of this part is also the main reason why the policy is willing to liberalize industrial hemp. The new type of tobacco is favored because it can be traced back to the source that marijuana is smoked, and the consumption scene does not need to be educated. In terms of food and beverage, giants have entered the market. Like Coca-Cola, which wants to launch CBD drinks, Constellation Group, a global wine giant, has invested in Canopy, a cannabis company, and Red Bull Company of Austria has purchased CBD from HMI Group for pre-research of drinks. In terms of daily chemicals, hemp as cosmetics has a very good repairing effect on skin, anti-oxidation and anti-aging, which can make consumers younger, and at the same time, it has a very good oil control effect, and it also has a very good effect on young people's oil-tight alopecia. Hemp fiber, because of its natural antibacterial effect, is widely used in masks, military clothing, ladies' pads, sanitary napkins and other fields. In addition, industrial hemp has some applications in pet food, which can restrain pet's mental anxiety, and it is effective in treating pain and injury of pets. In view of the abundant downstream application scenarios of hemp, hemp industry has a very broad market space.

4.The comprehensive strategic cooperation between China-Malaysia and Germany Exhibition keeps blossoming.

Based on the advantages and experience of Dezhan Healthcare in R&D and sales, HMI Group and Dezhan Healthcare have established all-round strategic cooperation since March 2019. After more than one year's promotion, the technical cooperation between the two sides has gone deep into many aspects, such as hemp seeds, hemp cultivation, cannabinoid chemistry and biosynthesis, biopharmaceutical application, food and beverage application, daily chemical application, etc. The strategic level and technical depth of the cooperation between the two sides are rare in China.

Talking about the deep strategic cooperation with Dezhan Healthcare, Mr. Tan Xin pointed out that, on the one hand, Dezhan has been deeply involved in the field of medicine and biology for many years, and has enough R&D teams and technology accumulation. On the other hand, it also values the healthy sales strength of Dezhan. In the past, the other party could achieve a net profit of more than 900 million yuan at the peak with a single atorvastatin calcium tablet, which shows that its sales team is very advantageous. It is believed that the products such as hemp seed health drinks and cosmetics jointly launched by the two parties, driven by Dezhan Healthcare's original production management mode and sales team, will have more opportunities to create huge profits and market space. Of course, if industrial hemp is legalized in China, it will definitely benefit not only HMI Group and Dezhan Healthcare. The big environment built by the global legalization policy will constitute an all-round platform, on which both the enterprises laying out industrial hemp and the consumers of its products will benefit, and such a platform will also give birth to real head enterprises.

5.industry and capital gather together to share policy dividends.

The cooperation between HMI Group and Dezhan Healthcare mainly involves three main companies: Yunnan SMBT Technology Co., Ltd. related to seeds, Deyi Pharmaceutical Co., Ltd. related to synthesis and Meiwana Food and Beverage Co., Ltd. related to application. Its downstream applications include biopharmaceuticals, food and beverage, cosmetics, etc., and substantial progress has been made in the promotion of related industries and the landing of projects.

In terms of hemp seeds, the cooperation between the two sides has cultivated hemp seeds with high CBD content. Recently, SMBT, a joint venture subsidiary of HMI Group and Dezhan Healthcare, joined forces with Kunming Municipal Government Agricultural Investment Company to build China's first indoor planting base of industrial hemp, which was completed and started production in Liangwangshan, Kunming, Yunnan Province. The planting base can efficiently and productively provide high-quality, environmentally friendly, organic and pollution-free raw materials for industrial hemp demanders all over the world.

Liangshan industrial hemp breeding greenhouse part

Panorama of Liangshan Industrial Hemp Breeding Greenhouse

In biological research and development, the key direction is the chemical synthesis technology reserve of all cannabinoids. No matter which cannabinoids will be deeply applied in the field of medicine in the future, the technical reserves generated by current research and development can help both partners to quickly carry out low-cost chemical synthesis production. At present, the major technological breakthroughs include water-soluble CBD, which opens up a wider application space by improving the hydrophobicity of CBD; In addition, the chemical synthesis of CBG (cannabinol), CBN (cannabinol) and CBC (cannabinoid) has also made great progress. Among them, CBN has excellent medicinal value in sedative, sleep-aiding, anti-inflammatory, anticonvulsant and so on. After breaking through the chemical synthesis technology of cannabinoids, the research and development of related drugs will be further promoted. At present, some positive explorations have been made in raw material preparation, cannabinoid impurity analysis and drug dosage forms.

In terms of food, aiming at the problems of high-pressure anxiety and poor sleep quality of young people, a new healthy drink was developed with hemp seeds and hemp seeds as the main raw materials. This beverage is still a blank field in the domestic beverage market, and has a very large market space. At present, related products have been basically finalized and gradually introduced to the market.

In terms of cosmetics, based on the original biomedical research foundation of Dezhan Healthcare, and combined with the medical characteristics of CBD, it has been upgraded and innovated, and the products in research and development are highly innovative and attractive. Both parties will launch the products and put them on the market as soon as possible.

Generally speaking, the cooperation between HMI Group and Dezhan Healthcare is an all-round cooperation, which is an in-depth cooperation between industry+capital and Dezhan Healthcare's financial strength based on the technical advantages of HMI Group. Regarding the future cooperation between the two parties, Mr. Tan Xin, chairman of the group, expressed full confidence: "I believe that in the future, in the field of industrial cannabis, HMI Group and Dezhan Healthcare are both head enterprises. Our cooperative relationship is unmatched by other domestic partners, and Dezhan Healthcare will participate in the market value that HMI Group can create. "