Post-Hong Kong ban: CBD beauty firms forced to close could test waters in Japan and South Korea

02-Mar-2023 - Last updated on 02-Mar-2023 at 01:43 GMT

Companies that sold CBD-based cosmetics in Hong Kong are caught in a “revamp or shut down” dilemma following a ban issued by the authorities in February. ©Getty Images

Companies that sold CBD-based cosmetics in Hong Kong are caught in a “revamp or shut down” dilemma following a ban issued by the authorities in February, in spite of growing awareness and consumer demand.

From February 1 this year, Hong Kong has banned the manufacturing, supply, sale, import, export, and possession of cannabidiol (CBD) products, including cosmetics and food. Any person who violates the rule would be dealt with heavy penalties.

With CBD classified as a “dangerous drug” in the country, cosmetics companies that had turned to Hong Kong after the ban in China two years ago found themselves in a predicament.

Prior to the new regulation, CBD was applied in a wide range of cosmetic products sold in Hong Kong, including facial serum, lip balm and body lotion.

“The ban has forced many CBD firms to remove the products from their shelves, remodel their businesses, or close down completely,” Hedy He, Cosmetic Regulatory Analyst at ChemLinked, told CosmeticsDesign-Asia.

While a large majority of companies ceased operations, a few have chosen to pivot. One of them is C-Hemp, which has turned its shop in the Central district into a beauty salon called Luxtique.

Among high-profile companies that have shuttered is Found, the first CBD cafe and retail store in Hong Kong, which stocked CBD-containing body balms and massage oils.

Owned by Altum International, the firm had reportedly experienced a 20-fold growth in business since its opening in July 2020 but has now shifted its focus to other markets like Australia and New Zealand, where consumers are allowed to purchase CBD products albeit with restrictions.

On the same note, Hedy said that CBD companies could look to markets such as Japan and South Korea, which have shown potential for development.

“Most Asian countries have strict anti-drug laws and hold a conservative attitude towards cannabis, except Japan and South Korea. Cosmetics infused with CBD derived from stalks and seeds of hemp — rather flowers and leaves — and that are free of tetrahydrocannabinol (THC) are legal in Japan. There are no specific regulations regarding CBD cosmetics in South Korea but in practice, the ingredient can be used when the amount of CBD and THC are at 10ppm or less and 20ppm or less respectively.

“In addition, CBD products are allowed in certain parts of the United States and Europe. Although Thailand allows domestic manufacturers to produce cosmetics using four types of cannabis and hemp ingredients, the import of cosmetic products containing such ingredients is forbidden. Thus, for the APAC region, companies can test the waters in the Japanese and South Korean markets,” she explained.

Rising demand despite challenges

Based on a report by Grand View Research, the global CBD skin care market size was valued at US$964.1m in 2022. This figure is projected to expand at a CAGR of 31.5% from 2023 to 2030.

In spite of the regulatory hurdles, there is growing demand for CBD-infused products due to increasing awareness among consumers regarding the beneficial claims of the ingredient.

Last November, Juana Skin became the first CBD-based skin care brand to be launched in the UAE, with products ranging from cleanser and exfoliating scrub to face oil and body butter.

“CBD is a natural ingredient derived from the Cannabis Sativa plant that cannabinoid receptors in our body recognise and use to reduce inflammation, regulate oil glands, and calm aggravated skin. We are focused on harnessing the immense therapeutic powers of ethically sourced CBD,” said Juana Martini, co-founder of Juana Skin.

The firm is also working with the US’s Environmental Working Group (EWG) to drive clean and sustainable beauty in the Middle East and beyond.

“CBD works best when it is combined with the right ingredients. Our EWG-verified formulations include botanical extracts, such as Golden Root and grape seed oil, that support and enhance the benefits of CBD. It is very clear that there is a demand for reliable and clean skin care in the UAE.

“With the EWG on board, our consumers can have peace of mind that our products are safe to use, highly effective at de-stressing the skin, and kind to the environment.”