When Hong Kong’s Colonial Government Had a Monopoly on Opium

It is a well-established fact that Hong Kong became a British colony following the Opium Wars. Yet, the impact of opium on colonial Hong Kong did not end there. In fact, the colonial government came to rely heavily upon the opium trade.

Because London refused to provide financial support to build Victoria City, the colonial government faced incredibly high expenditures. Meanwhile, private trading companies were generating enormous profits from the trade.

The government realized that it, too, could generate substantial revenue from this market. In 1844, the administration established the “opium farming system,” auctioning off exclusive monopoly licenses to merchants. These traders were granted the sole right to import raw opium, process it into prepared opium, and sell it to the local population. This system soon accounted for an absurdly high percentage of Hong Kong’s domestic revenue.

However, driven by mounting international pressure on the global drug trade, that system came to an end in 1914. The colonial government eliminated the private farming system and took over the industry, essentially establishing a direct state monopoly.

An official government opium factory opened in Wan Chai. Raw opium was imported from India, processed into state-branded opium paste, and sold through government-licensed shops and state-regulated opium dens.

This system came to a grinding halt when Japanese forces captured Hong Kong on December 25, 1941. When British rule was restored in August 1945, Proclamation No. 13 was enacted, officially banning opium smoking in the city and putting a permanent end to the government monopoly.