(Yicai Global) April 26 -- Yunnan Baiyao Group will establish a joint venture with Hong Kong investment holding firm Ban Loong Holdings to produce industrial hemp, a derivative of the cannabis plant that is used to make a variety of products, including rope, textiles, paper, bioplastics, biofuel and health foods, the Chinese pharmaceutical firm said today.

Ban Loong will take a 51 percent stake and play a leading role in the JV, while Kunming, southwestern Sichuan province-based Yunnan Baiyao will hold the remaining equity and play a supporting role, according to the memorandum of understanding signed by the two parties on April 23. Exact investment amounts were not specified.

Yunnan Baiyao, whose primary product is the traditional Chinese medicine of the same name which is used as a pain reliever and to stop bleeding, will develop end products containing cannabinoid and industrial hemp ingredients, provide marketing support and do its best to obtain all the necessary licenses and permits, it said.

Yunnan Baiyao already holds a 30 percent stake in Ban Loong, which mainly provides short-term private and corporate loans and is also engaged in the cooking oil, sugar and cosmetics trade. After the subscription and share swap, the pharma firm’s holdings will be enlarged to 45 percent and it will become Ban Loong’s largest shareholder, Yunnan Baiyao said.

Ban Loong's stock price [HKG:0030] closed up 1.01 percent at HKD0.50 (USD0.06) today. Yunnan Baiyao's shares [SHE:000538] dropped 2.75 percent to finish the day at CNY112.9 (USD17.38).

Editor: Kim Taylor