“As the necessity for the development of new substances and product commercialization in green bio (agricultural biotechnology), including medical cannabis, is significant, we will support using the military facility-protected and environmentally regulated border areas that have been slow to grow as a new growth engine.”
Bang Gi-seon, the Deputy Prime Minister for Government Policy Coordination, stated this on the 9th at the ‘Green Bio Industry Activation Strategy Forum’ held at the National Assembly in Yeouido, Seoul. This forum was organized by the National Assembly research group, ‘Border Area Tomorrow Forum,’ established to ease regulations in border areas and create new growth engines. It was the first time a forum on the activation of medical cannabis was held at the National Assembly.
The flowers and leaves of cannabis contain tetrahydrocannabinol (THC) substances that cause hallucinations and addiction. Therefore, except for uses such as fabric and paper raw materials, cultivation and use have been prohibited until now. However, recently, cannabidiol (CBD), another key component, has shown effectiveness for various diseases, including epilepsy, Parkinson’s disease, and depression, leading to a global trend in the development of medical cannabis. This process lowers the THC content to less than 0.3% and develops treatments with CBD as the main ingredient.
If medical cannabis is developed, not only patients but the entire country can benefit. By recycling agricultural by-products that were discarded, a new growth engine for the pharmaceutical industry can be created. If imported medical cannabis is localized, medical expenses can be reduced, and it can be developed into exportable pharmaceuticals. According to market research firm Global Market Insights, the global medical cannabis market is expected to grow to $108 billion (158 trillion won) by 2032.
In Korea, research on medical cannabis is being actively conducted. The Natural Products Research Center of the Korea Institute of Science and Technology (KIST) Gangneung Branch is representative. In Andong City, designated as a regulatory free zone by the Ministry of SMEs and Startups in 2020, cultivation, development, and production technologies of medical cannabis are being demonstrated. NeoCannBio, a KIST technology spin-off, successfully extracted high-purity CBD for the first time at the Andong free zone factory in 2021.
Although domestic extraction and production technologies of medical cannabis are at a similar level to overseas, the lack of institutional support for industrialization has hindered market opening. CBD is an active pharmaceutical ingredient. To export overseas, facilities must meet Good Manufacturing Practice (GMP) standards. However, due to the absence of clear regulations allowing this domestically, approval by the Ministry of Food and Drug Safety is practically impossible. The same applies to the cannabis regulatory free zone in Andong, Gyeongbuk.
Political circles and local governments are pursuing ways to activate border areas that have been slow to grow due to military facility protection and environmental regulations, to use them as CBD production bases. The border areas are adjacent to North Korea and are mostly military protection zones subject to various overlapping regulations. They include 15 cities and counties such as Yeoncheon-gun in Gyeonggi Province and Cheorwon-gun, Yanggu-gun, and Goseong-gun in Gangwon Province. The plan is to designate these areas as regulatory sandboxes, temporarily lifting regulations for innovative technologies, and grow them as medical cannabis production demonstration sites.
Kim Sang-hoon, the Chairman of the Policy Committee of the People Power Party, stated, “The border area is optimal for the medical cannabis industry due to abundant natural biological resources, including the ecological environment of the Demilitarized Zone (DMZ),” adding, “We plan to actively pursue regulatory reforms to set the border area as a regulatory sandbox, nurture the green bio industry as future food resources, while easing various restrictions in the border area.”
Yeoncheon-gun in Gyeonggi Province is investing 30 billion won from 2024 to 2028 to establish an industrialization support center within Yeoncheon BIX (EunTong General Industrial Complex), and is exploring the necessary legislation and regulatory reforms for activating the green bio industry in collaboration with Dongguk University.
Yu Eun, head of the Regulatory Sandbox Team of the Ministry of Trade, Industry and Energy, noted, “For the activation of medical cannabis production and cultivation in border areas, regulatory exemptions and temporary permits can be achieved through several regulatory sandbox reviews,” yet added, “Close discussions with various ministries such as the Ministry of Health and Welfare and the Ministry of Food and Drug Safety are necessary.”
Currently, medical cannabis has been legalized in over 60 countries, including the United States, Canada, the United Kingdom, Germany, Australia, and Japan. It is allowed not only for research and development (R&D), but also for cultivation, production, and export. Medical cannabis has become a new growth industry, contributing as a new revenue source in agriculture, creating jobs, and revitalizing local economies in each country.
In particular, the United States became the largest CBD market in the world with the 2018 Farm Bill amendment, producing various products such as oils, cosmetics, foods, and medicines. As of last year, the market size reached $8 billion (10 trillion won).
In Korea, the only approved medical cannabis treatment is the epilepsy treatment ‘Epidiolex’ developed by the British pharmaceutical company GW Pharmaceuticals, which received approval from the U.S. Food and Drug Administration (FDA) in 2018. NeoCannBio aims to refine high-quality CBD to the level of a pharmaceutical ingredient and develop a generic (replica) with the same ingredients and form as Epidiolex within two years.
The core component of Epidiolex, CBD, is a naturally derived substance, which allows the development of generics due to the expiration or limited protection scope of key substance patents. The company plans to replace expensive imported drugs with domestic generics, reducing the price by more than a third.
Kim Jeong-Kook, president of NeoCannBio, said at the forum that the medical cannabis industry operates under legal amendments that vary depending on each country’s environment and its social and economic challenges related to THC, the psychoactive component of cannabis. He emphasized, “Since this industry is led by the government rather than the private sector, the growth of the industry depends greatly on government intention.”