In 2019, Thailand became the first country in Southeast Asia to legalize the use of medical marijuana – although several key restrictions remain in place. The government ban on marijuana plants and products containing significant amounts of THC (the psychoactive compound that produces a high) remains in place, although other parts of the plant have since been approved for commercial use. [Note: Since December 2020, certain parts of the plants can be used for non-medical purposes.] under certain conditions. Additional guidelines for hemp and cannabis seeds are expected to be announced later this year.
Marijuana and hemp plants are widely used in other countries for a variety of purposes unrelated to the recreational psychoactive narcotic effects produced by THC. The healing benefits of marijuana can be significant for people with certain medical conditions or who are undergoing chemotherapy as part of their cancer treatment.
Hemp also has direct medical uses, although its durable fibers are also highly valued for their use in textiles as well as for various industrial purposes. Multipurpose hemp seeds can be used as valuable components in certain foods, cosmetics and other products. Other parts of the plant, such as the stem, stem and root, can also be put to good use in various industries.
The partial decriminalization of these factories by Thailand therefore opens up new potentially lucrative business opportunities for enterprising companies operating in related fields. However, the legal landscape for such activity remains restrictive in some areas and obscure in others. Commercial success in Thailand’s new marijuana and hemp oil markets therefore depends not only on production and sales, but also on a nuanced understanding of the legal environment.
Thailand’s complex relationship with cannabis – past and present
For centuries, cannabis was used in Thailand as a form of traditional medicine, until it was banned in the 1930s due to international pressure. In 1979, the Thai Narcotics Act specifically designated cannabis as an illegal Category 5 substance. Under this law, the production, trade or possession of cannabis was considered a criminal act punishable by heavy fines and / or prison terms.
This designation was changed in 2019 to provide exemptions for certain medical activities involving marijuana and hemp. A subsequent 2020 regulation removed parts of plants (THC 0.2%) from the classification of Category 5. Parts of marijuana and hemp, as well as the use of these plants for non-medical purposes, remain illegal and liable to criminal penalties. As mentioned above, further revisions of relevant laws are on the way, with the country’s Agriculture Department planning to announce updated guidelines soon.
However, the marijuana-related policies introduced in 2019 are unlikely to be reversed and it’s worth taking a close look at how these regulations work in a business context.
In the weeds
Medical cannabis licenses are currently available for seven groups, each of which must follow detailed guidelines in order to obtain authorization for the consumption, possession, research or production and sale of cannabis. These eligible groups are identified as:
Approval is not automatic for entities classified in any of the above groups; additional requirements apply in some cases, and licenses must be formally requested. So far, more than 2,000 distribution, cultivation and extraction licenses have been granted across Thailand.
It should be noted that private companies are notoriously absent from the list of groups licensed to handle cannabis in Thailand. However, this exclusion does not need to be the last word in the matter. Companies may be able to include cannabis in their operations by doing so in cooperation with and under the license of an approved member of one of the authorized groups. Such agreements are currently only permitted for companies registered under Thai law, with an office registered in Thailand, and with Thai nationals representing at least 51% of their partners, directors or shareholders.
While Thailand’s drug laws remain conservative to global standards, and particularly to those of the West, this more relaxed and accommodating stance places Thailand at the forefront of marijuana liberalization in South East Asia. This more modern approach could lead Thailand to standardize marijuana in medical treatment, where appropriate, making the country a leading medical center.
A market poised to skyrocket
This newly regulated cannabis market, including related products such as hemp oil, could offer lucrative new opportunities for farmers and manufacturers in Thailand.
By 2024, the country’s cannabis market volume is expected to increase to $ 300 million or more, with additional economic benefits estimated at $ 2.5 billion by some estimates. This figure is bound to be adjusted accordingly once the Thai Department of Agriculture makes its regulatory announcement, but it highlights the economic impact that a family of plants with an unusually diverse range of potential uses can have.
With the cannabis market currently in its infancy, companies that act quickly will naturally have an advantage over laggards. Nonetheless, the risks are real: Failure to follow Thai drug laws, regardless of a person’s innocent intentions, could result in loss of a business license – or much worse.
Organizations looking to incorporate cannabis into their business models should therefore do so with a clear understanding of all relevant regulations and be especially careful to stay on the right side of the law at all times.
As Thailand slowly modernizes its cannabis policies, the government is certain to take a close look at the early adopters of its new regulations. Successes could potentially lead to further liberalization, while violations could cause those responsible to back down.