(Yicai Global) April 29 -- Chinese antibiotics manufacturer Fuan Pharmaceutical Group plans to buy at least 51 percent of Las Vegas-based Red Diamond Investors, which is licensed to grow and process hemp in Nevada.

The buyer will complete its due diligence by the end of July and is prepared to pay Red Diamond's parent Red Realty up to CNY100 million (USD14.9 million) as goodwill to ensure it does not sell the shares in the meantime, Fuan said today.

Shares in Fuan [SHE:300194] have more than doubled since April 1, when the firm announced that it had struck a cooperation agreement with Red Realty, but its stock had tumbled 2.74 percent to CNY8.16 (USD1.21) as of 2.26 p.m. today.

Many listed pharmaceutical firms in China have been shifting toward the hemp sector since stocks associated with the field began surging in mid-January, with many frequently hitting the 10 percent daily limit and some as much as quadrupling this year to date.

The investor hype led to several warnings from China's drug control committee, a likely reason behind Fuan's decision to head stateside, where 33 of the 50 United States have legalized medical marijuana.  

The anti-drug committee said in March that the country strictly controls the cultivation of industrial hemp and has not approved plantations intended specifically for medical cannabis, nor greenlit any drugs containing tetrahydrocannabinol or other active cannabinoids.

Editor: James Boynton