Cannabis Business in Thailand: Key Legal Points

Brief History of Cannabis Legalization in Thailand

Cannabis, known as “ganja” in Thailand, has been used in traditional medicine for centuries. However, in 1934, its use was criminalized following global trends at the time. The Marijuana Act was passed, prohibiting its use and distribution. This act was later incorporated into the 1974 Narcotics Act, where cannabis was classified as a Category V narcotic.

A social movement for the liberalization of cannabis use in Thailand gained momentum in recent years and received political support. In February 2019, a new Narcotics Act was passed, legalizing cannabis use for medical purposes. This was a significant step towards more liberal regulation of cannabis.

On June 9, 2022, Thailand became the first country in Asia to decriminalize cannabis. Cannabis was removed from the list of prohibited Category V narcotics, with only cannabis extracts containing more than 0.2% tetrahydrocannabinol (THC) remaining illegal.

Attempts at Recriminalization and Current Status

In the first half of 2024, there were significant efforts to recriminalize cannabis in Thailand. On May 8, 2024, Prime Minister Srettha Thavisin announced plans to reclassify marijuana as a narcotic by the end of the year. The Ministry of Public Health even published a draft regulation to reclassify cannabis as a Category 5 narcotic, effective January 1, 2025.

However, by the end of July 2024, the situation changed. According to recent reports, the authorities abandoned plans for recriminalization and returned to the original idea of developing legislation to regulate cannabis. This shift highlights the ongoing debates and uncertainty in the country’s cannabis policy.

On September 3, 2024, Anutin Charnvirakul, leader of the Bhumjaithai Party, expressed confidence that the new government would support the cannabis policy and that the cannabis law would be passed.

The legal foundation for businesses in the cannabis sector in Thailand remains uncertain. Market participants are eagerly awaiting the adoption of a comprehensive cannabis and hemp law, which would establish clear regulations and support the further development of the industry. However, the adoption of this law has been delayed multiple times, and recent efforts to recriminalize cannabis have temporarily stalled the legislative process.

On September 3, 2024, Anutin Charnvirakul, leader of the Bhumjaithai Party, expressed confidence that the new government would support the cannabis policy and that the cannabis law would be passed soon. The cannabis industry remains in a state of uncertainty, with market participants awaiting a clear legal framework.

Thailand’s Draft Cannabis Bill: Focus on Regulation and Medical Use

On September 18, 2024, Thailand published a new cannabis bill focusing on medical and health uses while limiting recreational use. The bill does not classify cannabis as a narcotic but imposes fines for misuse. Public feedback is open until September 30, after which the bill will proceed to the Сabinet and Parliament for approval.

Key Provisions of Thailand’s Draft Cannabis Bill

Rationale for the Draft Bill

With cannabis and hemp no longer classified as narcotics, public access to cannabis has increased, potentially negatively impacting public health and society if left unregulated. Recognizing both medical and economic benefits, the draft bill aims to establish a regulatory framework to control cannabis use while promoting its development for industrial and medical purposes. The bill focuses on ensuring public safety and responsible use by setting clear rules for businesses and individuals.

Licensing Requirements for Cannabis Businesses

Any individual or entity engaging in the cultivation, production, sale, import, or export of cannabis, hemp, or their extracts must obtain a license. The bill outlines strict requirements for licensing:

Eligibility:
- Thai citizens aged 20 or older with no criminal record.
- Thai-registered legal entities, including companies with majority Thai shareholding.
- Government and community enterprises.
License Types:
- Cultivation licenses are categorized based on land size:
  - Small-scale: Up to 5 rai (~1.98 acres / 0.8 hectares).
  - Medium-scale: Up to 20 rai (~7.9 acres / 3.2 hectares).
  - Large-scale: Up to 400 rai (~158 acres / 64 hectares).
- Separate licenses are required for production, sales, and import/export of cannabis products.
- Licenses are valid for three years and must be renewed upon expiration.

Cannabis Regulatory Board

The draft bill proposes the formation of a Cannabis Regulatory Board, chaired by the Minister of Public Health. The board will consist of 21 members, including 13 government officials and 7 experts from fields such as public health, law, and agriculture.

The board’s responsibilities include:

Issuing and reviewing licenses.
Developing and enforcing policies and regulations.
Promoting the safe use of cannabis for medical and economic purposes.

Consumption and Usage Restrictions

The draft bill prohibits recreational use of cannabis but permits its use under specific, regulated conditions:

Medical Treatment: Cannabis can be used for treating, curing, or relieving human ailments, as well as for disease prevention. It can also promote health, improve bodily functions, and reduce disease risk factors, all under the supervision of licensed professionals, including doctors, dentists, veterinarians, and practitioners of traditional Thai and other recognized medical practices.
Scientific Research: Authorized government agencies and institutions are permitted to use cannabis for research and educational purposes. This includes studying the medical, pharmaceutical, or scientific benefits of cannabis. Organizations such as the Thai Red Cross Society and accredited higher education institutions can also engage in cannabis research for medical purposes.
Commercial Products: Cannabis can be used in products such as herbal remedies, medicines, food, and cosmetics, provided these products comply with relevant laws like the Herbal Product Act, Medicine Act, and Food Act, ensuring strict safety and distribution regulations.

Sales Restrictions

The draft bill imposes strict controls on the sale of cannabis, differentiating between prohibited recreational sales and permitted sales for medical, research, and commercial uses, as outlined in the Consumption and Usage Restrictions section.

Prohibited Sales Methods: Cannabis cannot be sold via vending machines, online platforms, or promotional activities such as giveaways, discounts, or bundling with other products. Peddling or exchanging cannabis for goods or services is also forbidden.

Prohibited Sales for Recreational Use: Selling cannabis, hemp, or extracts for recreational purposes is strictly prohibited. Sales are only allowed for the medical, health-related, and research uses described earlier.

Permitted Sales for Medical Use: Cannabis sales are allowed for medical treatment, cure, or relief of ailments, and for disease prevention. These sales must comply with the medical use regulations outlined above.

Permitted Sales for Research: Sales for research and educational purposes are allowed, but only by authorized government agencies and institutions engaged in medical, pharmaceutical, or scientific research. Accredited organizations like the Thai Red Cross Society and higher education institutions can also purchase cannabis for these purposes.

Sales in Commercial Products: Cannabis may be sold as an ingredient in products such as herbal remedies, medicines, food, and cosmetics, provided these products comply with laws such as the Herbal Product Act, Medicine Act, Food Act, and Cosmetics Act. These products must follow strict distribution regulations.

Restrictions on Sales to Vulnerable Groups: The sale of cannabis to individuals under 20, pregnant women, and nursing mothers is strictly prohibited, in order to protect vulnerable groups.

Prohibited Sales Locations: Cannabis sales are banned in sensitive locations, including temples, religious sites, schools, dormitories, public parks, zoos, and amusement parks. The Minister may impose additional restrictions near these areas.

Advertising Restrictions

The draft bill places strict limits on how cannabis can be advertised to prevent misleading claims and protect consumers:

Prohibited Advertising: Advertising cannabis flower buds, resin, extracts, or smoking devices is strictly prohibited.
Restricted Advertising: Any advertising or marketing of cannabis, hemp, or extracts (outside the banned products) must not make false or exaggerated claims. Ads must avoid statements that suggest miraculous healing powers, complete cures, or anything that might harm society or degrade culture.
Enforcement: If an advertisement is found to violate these rules, the licensing authority can issue a written order to cease the advertisement immediately.

Penalties for Non-Compliance

The draft bill outlines various penalties depending on the severity of the violation. The penalties below are key examples and not exhaustive, as the bill includes additional penalties for offenses like misuse, failure to comply with orders, or breaches of licensing terms. These may lead to fines, imprisonment, or confiscation of products.

Examples include:

Selling to Prohibited Groups: Selling cannabis to individuals under 20, pregnant, or breastfeeding women can result in up to 3 years imprisonment and fines up to 300,000 THB.
Unlawful Sales Practices: Violations such as recreational sales, use of vending machines, giveaways, or peddling cannabis can result in 6 months to 1 year imprisonment and fines up to 100,000 THB.
Prohibited Sales Locations: Selling cannabis in restricted areas such as temples, schools, dormitories, or public parks can lead to up to 1 year imprisonment and fines up to 100,000 THB.
Unauthorized Recreational Use: Individuals consuming cannabis recreationally outside of medical or research settings may face fines up to 60,000 THB.
Unlicensed Cultivation and Production: Growing cannabis without a license on small plots may lead to up to 1 year imprisonment and fines up to 20,000 THB. For larger plots or commercial production, penalties increase to up to 3 years imprisonment and fines up to 300,000 THB.
Illegal Import/Export: Bringing in or sending out cannabis without a license can result in up to 5 years imprisonment and fines up to 500,000 THB.
License Violations: Failing to comply with licensing rules, such as import/export procedures or continuing operations during license suspension, may lead to fines between 5,000 THB to 60,000 THB, or up to 1 year imprisonment. Continued violations can incur daily fines until resolved.

Licensing Fees

The draft bill specifies the following fees for cannabis business licenses:

Cultivation license: 50,000 THB.
Production license: 50,000 THB.
Import license: 100,000 THB.
Export license: 10,000 THB.
Sales license: 5,000 THB.

Licenses are valid for three years and are subject to renewal under the same fees.

Transition Rules in the Draft Cannabis Bill

When the draft bill becomes law:

Current Cultivators: Individuals who have been cultivating cannabis or hemp for medical or economic purposes must apply for a license within 60 days of the law taking effect. They are allowed to continue their activities until their application is processed.
Existing License Holders: Those who currently hold licenses under previous regulations (e.g., Ministry of Public Health’s 2022 Announcement on Controlled Herbs) will have their licenses automatically recognized under the new bill. For instance:
- Licenses for research on herbal products will now cover the cultivation, production, and sale of cannabis or hemp.
- Licenses for the export of herbal products will transition to cover cannabis or hemp cultivation, production, and export.
- Licenses for the sale or processing of herbal products will be recognized for cannabis or hemp-related activities.

These existing licenses will remain valid until their expiration, after which renewals must comply with the new bill’s provisions.

Conclusion

Thailand’s Draft Cannabis Bill of 2024 introduces a comprehensive legal framework aimed at regulating cannabis for medical, industrial, and scientific uses. It emphasizes the importance of licensing and controlled consumption, with strict penalties for violations. While recreational use is limited, the bill supports the development of a safe and responsible cannabis industry that can benefit public health and the economy. Public feedback on the draft is open until September 30, 2024, after which the bill will proceed to the cabinet and Parliament for approval.

International Commitments

Thailand is a party to the 1961 Single Convention on Narcotic Drugs (amended in 1972), a multilateral treaty adopted by the United Nations. This convention regulates the circulation of several substances, including cannabis, allowing exceptions only for medical and scientific use.

Cannabis Business Boom

The decriminalization of cannabis in June 2022 catalyzed the rapid growth of the cannabis business in Thailand. Key areas of interest include:

Cannabis cultivation
Wholesale sales
Export
Retail sales
Production of food and cosmetics
Medical applications
Use in the hospitality, wellness, and spa industries

Since the decriminalization, it is estimated that some 20,000 cannabis dispensaries have opened in Thailand, making cannabis highly accessible to both locals and tourists. In practice, cannabis is widely used for recreational purposes, despite the initial legalization being intended solely for medical use. This widespread use has been facilitated by a legal vacuum, as decriminalization was not accompanied by comprehensive laws regulating cannabis use.

According to the University of the Thai Chamber of Commerce, the cannabis market in Thailand is projected to reach USD 1.2 billion by 2025.

In response to growing concerns about the widespread availability of cannabis and its potential negative impact on society, Thai authorities introduced new regulations. These measures aim to limit cannabis distribution among the most vulnerable groups, including banning its use in public places and sales to individuals under 20 years old, pregnant women, and nursing mothers. These steps were taken to bring some order to the burgeoning cannabis market while the country develops more comprehensive regulation.

Foreigners and the Cannabis Business

Foreign entrepreneurs and investors are showing significant interest in the cannabis business opportunities in Thailand. However, due to restrictions set by the Foreign Business Act and specific regulations governing the cannabis sector, foreign participation is only possible through minority stakes in Thai companies, and it requires registration and/or obtaining licenses. The type of required licenses depends on the specific business activities.

Key requirements for obtaining cannabis-related licenses include:

Foreign ownership in a company must not exceed 49%.
Additionally, at least two-thirds of all shareholders must be Thai nationals, which can include both individuals and legal entities. For instance, in a company with three shareholders, two must be Thai, collectively holding at least 51% of the shares, while the foreign shareholder can own up to 49%. Practically, this could be structured as: a foreigner owning 49%, one Thai shareholder owning 49%, and another Thai shareholder owning 2%. However, not all provinces strictly enforce this requirement regarding the number of shareholders.
At least two-thirds of the company’s directors must be Thai citizens.
The director authorized to represent the company must be a Thai citizen.

For optimal business structure, a two-tier model known as a “Thai holding” is recommended. This structure involves creating a holding company that owns shares in an operating company in Thailand.

Read Also:

Strategies for Minority Control in a Thai Company

Current Regulations and Requirements

In the absence of a specific cannabis law in Thailand, the regulation of the cannabis sector is governed by other existing laws. These include:

Cannabis Extracts: Extracts containing more than 0.2% THC are regulated under narcotics laws.
Non-Narcotic Parts of Cannabis: For parts of the cannabis plant not classified as narcotics, laws regulating traditional Thai medicine, plant circulation, food products, cosmetics, and other areas apply.

The Thai Food and Drug Administration (Thai FDA), under the Ministry of Health, plays a crucial role in regulating this sector.

Key Regulations:

Ministry of Health Notification (November 11, 2022):
- Classification of Cannabis Buds: Cannabis buds are classified as a controlled “herb,” requiring sellers to obtain a license from the Ministry of Health for their sale. Licenses are not required for selling other parts of the plant.Restrictions on Sales: The sale of cannabis buds is prohibited to individuals under 20 years old, pregnant women, and nursing mothers.Major Prohibitions:
  - The use of cannabis at the point of sale.Selling cannabis buds through vending machines, electronic channels, or computer networks.Advertising cannabis buds through any channels.
These regulations present significant challenges for the development of e-commerce in the cannabis sector, though there are instances where these rules are bypassed.
Department of Traditional Medicine Notification (January 19, 2023):
- Tracking System: A mandatory system was introduced to track the circulation of cannabis buds. Sellers are required to report their sales and purchases.
- Buyer Identification: Buyers must present identification documents when purchasing cannabis buds.

Cannabis Cultivation

The need for a permit to cultivate cannabis in Thailand is a subject of some debate. The main question revolves around whether registration through the Plookganja website or app is sufficient, or if an official license is required for commercial cultivation.

According to prevailing opinions among Thai legal experts, following the decriminalization in 2022, a license for cultivation is not required.

The Thai government recommends registering marijuana cultivation through the ‘Plookganja’ (grow cannabis) website or app. The registration form includes a section where the purpose of cultivation must be specified, including whether it is for commercial use.

Plookganja Use Statistics

The long-term viability of using the Plookganja app for commercial cannabis cultivation is uncertain. While Plookganja offers a streamlined registration process, obtaining a commercial license is expected to provide greater security and protection for businesses involved in cannabis. The forthcoming cannabis and hemp law is anticipated to clarify these uncertainties. According to representatives from the Department of Thai Traditional and Alternative Medicine (DTAM), licenses will be required for cannabis cultivation and the production of dried cannabis buds.

Quality Standards

In the cultivation and production sectors, the implementation of GMP (Good Manufacturing Practice) and GACP (Good Agricultural and Collection Practices) standards is anticipated. These standards are especially important for potential export opportunities.

Information about the Thai standard GACP for cannabis, Thailand Cannabis Good Agricultural and Collection Practices (Thailand Cannabis GACP), can be found on the website of the Department of Thai Traditional and Alternative Medicine.

Opening a Cannabis Dispensary in Thailand

To sell cannabis buds, it is necessary to obtain a sales license. The license is issued by the Ministry of Health and its local branches, and each dispensary requires a separate license. It’s important to comply with the previously mentioned requirements, such as restrictions on sales to individuals under 20, pregnant women, and nursing mothers, as well as prohibitions on advertising and the use of cannabis at the point of sale. Additionally, dispensaries must adhere to track and trace obligations, which involve maintaining a system to monitor the sale and distribution of cannabis products, ensuring that all transactions are recorded and reported as required by the authorities.

Conclusion

The cannabis industry in Thailand is at a critical point. It presents growth potential and has attracted interest from both local and foreign investors. However, regulatory uncertainty and potential legislative changes pose risks for businesses.

Entrepreneurs should closely monitor the situation and be prepared for legal changes. It is essential to comply with current regulations and be ready to adjust to new rules as they are implemented.

While the government has decided against fully recriminalizing cannabis, stricter regulations are anticipated. There will likely be more stringent rules for cannabis use, including limitations on recreational use. Authorities are focusing on regulation rather than prohibition, aiming to balance economic opportunities with public health concerns.

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Photo by Matthew Brodeur on Unsplash

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