Up in Smoke: Clarifying Myths About Thailand’s Cannabis Laws

Even before the recent moves to decriminalise cannabis, there has been no shortage of myths about Thailand’s supposed liberal attitude to the plant. The hopes and dreams for radical reform have, unfortunately, misled many investors eager to jump into new and lucrative opportunities in Thailand’s burgeoning cannabis industry. Nonetheless, many still believe the hype that Thailand has adopted a liberal approach to cannabis and have sunk their fortunes into a business that likely doesn’t exist today.

It is important to understand that cannabis decriminalisation does not mean deregulation, and anyone seeking to enter the industry should take the time to understand the raft of restrictions still in place. As covered in our previous article, the recent ministerial announcement, which will come into effect in mid-2022, only removes most parts of the cannabis plant from Category 5 of the list of narcotic substances and does not give a free-for-all on use of the plant. Recreational use, as well as extracts and products that contain more than 0.2% of THC by dry weight, remain highly illegal. There are also strict guidelines on what cannabis can be used for, which, as of writing, is still limited to medical and research purposes. A further extension to cosmetics and supplements is expected, but the regulations are not out yet.

Current regulations specifically give Thai interests a head start in the country’s “budding” cannabis industry. This means foreign investors and entrepreneurs face added hurdles to directly engaging in activities, particularly commercial ones, involving cannabis. Among these are restrictions on licenses, which are split into those for producing and/or cultivating, importing, exporting, and distributing cannabis and cannabis-based products. This is in addition to the fact that private foreign companies are currently barred from directly participating in any commercial activities involving cannabis until 19 February 2024

Industrial Hemp is marginally easier. According to the Ministerial Regulation on Application for Licences and Granting of Licenses to Produce, Import, Export, Dispose or Possess Narcotics of Category V Concerning Hemp B.E. 2563, any activities involving hemp, whether for commercial or research purposes, are limited to Thai nationals or companies domiciled in Thailand with a majority-Thai directorship. Yet, even these more liberal regulations for industrial hemp mean foreign operators still need to undergo a rigorous screening process, with authorities looking into the background of stakeholders, a careful review of title deeds, operational plans, as well as security and safety procedures among many others. This is in addition to the prohibition on the importation of hemp for processing, as well as limitations on what hemp derivatives can be used for.

Nonetheless, inventive marketers have been pushing various “cannabis-infused” products; but the bottom line is that these products are mostly based on cannabis terpenes or have CBD at a miniscule “naming level” which is unregulated, but way below any pharmaceutical levels.

To make a small fortune, start with a large fortune

Compared to most of its neighbours in the region, which have some of the strictest drug laws in the world, Thailand has been seen as progressive in the realm of cannabis liberalisation. However, this comes with restrictions and conditions, many of which have not been made clear to the hordes of keen investors from North America and elsewhere seeking to replicate the “Green Revolution” in Thailand.

A lack of any real due diligence, especially when travel to Thailand was difficult during COVID-19 restrictions, has meant many entrepreneurs, home growers, and even local farmers have unwittingly fallen victim to unscrupulous projects, some of which are just scams. A constant stream of reports of these scams eventually led the Food and Drug Administration to issue a warning that cultivating cannabis, medical or otherwise, is extensively regulated and to be wary of schemes, especially if they seem “too good to be true.” Cannabis has begun to have the same hype, and playbook, as the unregulated forestry investment schemes that relieved many investors of their cash.

Foreigners are not the only ones who have been affected. Other scams focused on misinformed farmers who believed they could grow cannabis for large profits under licenses obtained by others, which is contrary to current regulations. Certainly, the government has identified cannabis as a potential cash crop, but growers are obliged to follow a long list of requirements. In this scam, farmers were tricked into growing crops by paying an “upfront” sub-license fee, or they were misled and used as “proof of concept” for companies eventually duping investors.

Other schemes include the advanced purchase scam which took advantage of the keenness of foreign entrepreneurs wanting to quickly enter the Thai cannabis market. In these cases, potential partnerships between foreign entrepreneurs and “authorised” partners led to substantial upfront payments to build grow facilities, obtain licenses, or even “bait and switch,” where the “herbal” crop, after payments were received, was changed from cannabis to turmeric or ginger.

Indeed, the Cannabis industry has huge potential and will be an important addition to Thailand’s economic development, but early investment has risks and keen entrepreneurs need to be cautious. The market certainly exists and has considerable potential, but it is important to conduct thorough due diligence and be aware of who one is dealing with to prevent one’s money from going “up in smoke.”

For more information about cannabis and hemp regulations in Thailand, please contact us at [email protected] or by using the contact form provided.