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Thailand decriminalizes cannabis in ‘major step’ towards commercialization

January 28, 2022

Thailand has become Asia’s first country in modern times to formally decriminalize cannabis in what one expert called a “major step towards other major steps.”

The lifting of criminal penalties for marijuana possession potentially paves the way for a regional industry around cannabis products and services in a part of the world known for having some of the strictest drug laws on the statute books.

This week, Thailand’s Narcotics Control Board removed cannabis and its components from its drugs list. This amounts to de facto decriminalization of cannabis for personal use (the kingdom prohibited marijuana in 1934, though medicinal and culinary use remained almost as commonplace as it had done for centuries.)

The centrist-populist Bhumjaithai Party, which is a junior coalition partner in the Thai government, has been pushing for full decriminalization of cannabis since the country became the first in East Asia to legalize medical use of the plant in 2018.

It has introduced draft legislation into which offers a potential framework for a regulated cannabis market in the country – which, in turn, could set the stage for the growth of an industry around cannabis-related products and services.

The Narcotics Control Board’s decision to delist the crop was made in alignment with the government-backed  bill, which now awaits final passage by legislators. Until then, however, the rules around commercial production of cannabis remain unclear – so experts recommend caution for any ‘budding’ entrepreneurs, startups, and growers eyeing the space.

Cash crop opp?

Speaking at an event on the Asian hemp and cannabidiol (CBD) industry hosted by Plug & Play this week, Tom Julpas Kruesopon — founder of hemp importer Golden Triangle Health and a policy advisor to Bhumjaithai — said that the emerging Thai market, as outlined in the bill, would not be like those that have grown in parts of Europe and North America.

“The [proposed market] rules here are actually very simple, in that hemp is going to be the crop, not cannabis for THC,” he explained. 

Hemp is the term used for cannabis cultivars which are mainly grown for their industrial, material, and medicinal properties; as opposed to those bred primarily for enhanced levels of tetrahydrocannabinol (THC) – the compound most closely associated with the ‘high’ sought out by recreational users of the drug.

“The rules are very clear: hemp is to be used commercially, and THC is to be used medically. Anyone who tells you different is smoking dope,” Kruesopon said.

While Bhumjaithai has touted cannabis as a ‘cash crop’ opportunity for Thai farmers, Kruesopon said it would be “a disaster” for smallholders to try cultivating the crop “without the right knowledge or funding.”

“This is not grass, you cant just plant seeds and think it’s going to grow in your backyard […] You need to build a fence, set up security cameras, tracing, all these things – so I don’t think a lot of smaller farmers will be able to afford [it],” he added.

“The [proposed law says] if you want to grow for your own use, you can grow six plants after today – and you can boil it, fry it, smoke it, whatever you want to do. But on the commercial side, it’s not as simple as having a plot of land and growing cannabis, because the quality has to be right.”

A domino falls

Nevertheless, the proliferation of tech solutions — both those specific to cannabis, and in the wider agricultural sector — could help an embryonic Thai hemp industry to hit the ground running, said Kruesopon’s co-panellist Luc Richner.

“It is not a straightforward crop to grow, but what we’ve found is that through basic, basic tech measures, you can really support that part,” said Richner, who is founder and CEO of cannabis supply chain platform Cannavigia.

“Just basic infrastructure allows it to be much more efficient. It’s not the gold-rush crop that will solve any problem out there, but I think in the cannabis space, technology will play a big role, [on the] side of cultivation, and [on the] other side with manufacturing, distribution, and monitoring of the entire supply chain.”

Given these limitations, Kruesopon suggested that cosmetics, CBD oils, and related products could be among the categories that might flourish under the new regulations – as well as hemp-based and CBD-infused foods and beverages (Thai food producer NR Instant agreed to acquire Golden Triangle Health last year.)

Panellist Tim Oates, founder and CEO at Delta Tetra, a medical cannabis consultancy, agreed. He underlined the importance of Thailand devleoping a “solid domestic sector” and exploring regional opportunities before entertaining interest from external buyers and producers.

“The wellness sector, which relates primarily to CBD as well as hemp oil products – that’s the low-hanging fruit,” he said. [Southeast Asia’s] population size is big, and the base is accustomed to plant-based and herbal remedies. But a lot of consumer education needs to be done in those regions; a lot of damage has been done by the ‘War on Drugs.'”

Find out why our parent company, AgFunder, invested in Purissima – read more here

So don’t expect to see a fully-fledged cannabis industry in Thailand just yet. But, responding to a question from AFN, Kruesopon described decriminalization as “another major step towards other major steps.”

“It means if you have cannabis in your possession for personal use, you won’t be arrested and thrown in jail. It means you can grow cannabis. So with passing of this law, it takes the stigma of cannabis being a narcotic off of people’s minds, and will shift more people into use of cannabis for medical purposes,” he said.

“The next step, then, is to fully legalize it for commercial use. This law doesn’t fully [do that] as we’ll still have to go via the FDA [Thailand’s Food & Drug Administration] and through all the hoops. [But] it’s progress; one of many steps, but perhaps the biggest one. It’s taking the stigma out. It’s knowing you won’t be arrested for possessing cannabis; and the commercial side will follow. It makes it easier for food products, for cosmetic products. And eventually the FDA will bring down its ‘iron curtain’ for approving these products, because it won’t be approving narcotics.”

Kruesopon claimed he is also advising the governments of Malaysia and Mongolia on potential decriminalization of cannabis. “As the domino falls, another follows. The Thai domino has fallen, and I would imagine when other countries see medical tourism pick up, when the tax base of [tourist areas] increases, more dominoes will fall,” he said.

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