Introduction
I have been witnessing a surge in inquiries about the legalities surrounding foreign (US) cannabis business ownership in Thailand. Indeed, many American cannabis businesses are flourishing in Thailand, and the topic of Thai cannabis legalization is a hot subject of discussion among them.
While I am not licensed to practice in Thailand, I can share a broad overview of the current Thai regulations based on my understanding. If you are considering expanding your cannabis operations to Thailand, this will serve as a basic preliminary guide. However, for a comprehensive consultation, you should consult with a Thai attorney.
In Thailand, foreign businesses are governed by the Foreign Business Act (FBA), which ordinarily requires at least 51% of the shares in a business to be held by Thai nationals. However, the cannabis business in Thailand is subject to a different set of regulations.
According to the Thai Narcotics Act, Section 26/5.34, the licensing authority may issue a license to produce, import, export, distribute, or possess narcotics of category 5, which includes cannabis, under certain conditions.
For individual applicants, they must be Thai nationals and domiciled in Thailand. For companies, the entity must be registered under Thai law, and at least two-thirds of the directors, partners, or shareholders must be Thai nationals. Furthermore, the entity is required to have an office in Thailand.
While these regulations seem to heavily favor Thai nationals, they also open avenues for foreign investors interested in the Thai cannabis industry. Though the majority stake (two-thirds) must be held by Thai nationals, foreign investors can still hold a significant minority stake.
The Green Rush
Some of those American and Canadian cannabis businesses are doing very well in Thailand.
As a hub for the cannabis industry, Thailand has seen an influx of American cannabis businesses and other foreign entities looking to capitalize on the burgeoning market. But recently, it appears that this ‘Green Rush’ is not all rosy. Local cannabis growers in Thailand are voicing concerns that their businesses are being undercut by cheaper, illegal imports from overseas, particularly from the United States. This has raised pertinent questions about the legality and regulations surrounding foreign cannabis business ownership in Thailand.
In June 2022, Thailand took a significant step by striking cannabis off its list of banned narcotics. This was part of a high-profile campaign by Health Minister Anutin Charnvirakul to establish the kingdom as a global hub for medical cannabis. However, nearly a year later, local growers and sellers are lamenting that they are unable to compete with the influx of illegal imports from the U.S that are sold at a fraction of the price of the homegrown buds.
Despite the decriminalization, Thailand’s parliament has yet to pass a long-awaited cannabis bill, leaving the regulatory framework for the industry in a state of uncertainty. In this vacuum, foreign money has seeped into the market, with dispensaries across the country reportedly pushing low-cost cannabis imported illegally from the U.S.
Local cannabis entrepreneurs have reported being approached by foreign brokers selling cheap, untaxed, smuggled weed. The weed is then sold at two to five times its original price, undercutting the local growers who are unable to compete with these prices. This scenario has led to growing concerns about the sustainability of local businesses in the face of booming demand and the growing influence of foreign entities.
Understanding the Legalities of Cannabis Business in Thailand
With the legalization of cannabis in Thailand, it’s crucial for all businesses operating in this space to understand the legal and illegal activities surrounding the industry.
Legal Activities for Cannabis Business in Thailand
Seed Importation: Both Thai and foreign-owned entities are permitted to import cannabis seeds. However, before doing so, businesses must apply for the appropriate license from the Thai Plant Quarantine Department.
Cannabis Product Production: Thai entities are allowed to produce cannabis products, and foreign-owned entities are also permitted to do so. However, for foreign-owned entities, there are different license requirements needed depending on the product being produced.
Cannabis Extraction: This is legal for entities with at least two-thirds of shareholders/directors held by Thai nationals. However, cannabis extraction is permitted only for academic and medical purposes, and entities will be required to acquire a specific license issued to medical service organizations.
Cultivation: Both Thai and foreign-owned entities are allowed to engage in mass cultivation. However, there are limitations for foreign-owned entities related to agricultural activities, whereas Thai companies face no such restrictions.
Cannabis Distribution: Certain parts of the cannabis plant can be distributed by Thai entities without the need for a license, while other parts require one. For foreign-owned entities, the distribution of cannabis will depend on the agricultural activities restrictions.
Illegal Activities for Cannabis Business in Thailand
Despite the legalization, there are activities in the cannabis business space that remain illegal in Thailand:
Importing Products Containing Cannabis and Hemp Extracts: Importing products that contain cannabis and hemp extracts is illegal. This restriction affects both Thai and foreign-owned entities.
Possession or Sale of High-THC Products: The possession or sale of extracts or food products that contain over 0.2% of THC is also illegal. The Food and Drug Administration (FDA) in Thailand has removed cannabis with extracts containing no more than 0.2% of THC from its list of banned narcotics, thus products exceeding this limit are not permissible.
Navigating the legal landscape of the cannabis industry in Thailand requires a thorough understanding of the rules and regulations. For foreign investors, partnering with local businesses and legal experts can be a strategic move to ensure complete compliance with Thai laws, while also leveraging the opportunities presented by this growing industry.
Setting Up A Cannabis Business in Thailand
With the emerging cannabis market in Thailand expected to grow to 70 billion baht by 2024 according to the Thai Industrial Hemp Trade Association, starting a cannabis business can be a promising venture. However, navigating the legal requirements and regulations for setting up such a business can be a complex process. Here’s what you need to know:
Incorporating a Thai Limited Company
Whether you’re a local or a foreign entrepreneur, the first step is to establish a Thai Limited Company. Foreigners must jointly own the company with a Thai shareholder. You can learn more about this process through resources on Company Registration in Thailand.
Obtaining Authorization
Depending on the scope of your business operations, you might need authorizations from the Thai Food and Drug Administration (FDA), which is the key regulator for cannabis in Thailand.
Buying and Selling Cannabis
For buying and selling cannabis within Thailand, you can commence operations immediately, at least until the enactment of new legislation.
Growing Cannabis
If you plan to cultivate cannabis, you must register on the mobile application or website “Plookganja” launched by the FDA. You’ll need to provide your ID number, date of birth, and reason for growing cannabis (for commercial reasons, for example). This registration is valid for one year.
Importing Parts from Abroad
For importing cannabis parts from abroad, you must obtain permission in accordance with the Plant Propagation Act B.E. 2518 and the Plant Quarantine Act B.E. 2507. Importing extracts with THC concentration below 0.2% violates the Narcotics Code, as the exemption from being classified as a narcotic only applies to extracts from cannabis cultivated in Thailand. Imports are therefore prohibited, except for medical purposes. Also, you cannot import cannabis to produce food or cosmetics.
Selling Food, Drink, or Cosmetics Containing Cannabis Extract
If you plan to sell food, drink, or cosmetics containing cannabis extract, ensure that the extract does not contain more than 0.2% THC. The Food Act and its bylaws do not permit the use of cannabis inflorescence in food.
For food containing CBD extracts, you must apply for food registration or permission to use food labels. If you wish to produce food for sale, you must also apply for a food production location and food serial number. The registration process is managed by the FDA.
So, while the process of setting up a cannabis business in Thailand can seem daunting, with proper understanding and adherence to the rules and regulations, it can be a fruitful endeavor. It’s always recommended to seek legal advice to ensure compliance with all regulations.
Applying for a License
The application process varies depending on the location of the business. Only cannabis businesses located in Bangkok and Nonthaburi province can apply at the main ministry campus, the Department of Thai Traditional and Complementary Medicine at the Public Health Ministry in Nonthaburi province.
For cannabis businesses located in other jurisdictions, applications must be made at their respective provincial public health office. It’s always advisable to verify the specific requirements and processes for your local jurisdiction before starting your application.
The process of applying for a cannabis license in Thailand might seem complex, but with a clear understanding of the requirements, documentation, and procedures, you can navigate the process with confidence. Remember, all information provided here is based on the current legal landscape and could change in the future.
Eligibility Criteria
The first step in acquiring a cannabis license in Thailand involves understanding who is eligible to apply. Both Thai and foreign nationals with work permits can apply for a cannabis license. The business where they plan to sell cannabis must already be operating in a physical storefront. Business owners may appoint a representative to apply on their behalf.
Preparing the Necessary Documents
It is crucial to bring all necessary documents to avoid being sent back from the application center. You should carry photocopies of your commercial business license, official identification, home registration (for Thai nationals), and a printed map of your business location (Google Maps is acceptable). Additionally, a map and photo of the farm where applicants plan to source their cannabis is also required.
How to Apply
Applications must be made between 9am and 4pm at the Department of Thai Traditional and Complementary Medicine at the Public Health Ministry in Nonthaburi province, which is north of Bangkok’s Bang Sue district and northwest of Chatuchak.
Upon arrival, you will have to present one form of valid ID to obtain visitor badges for everyone in your group at a guard post situated in front of the central building. Then, head to building No. 3 and take the lift to the seventh floor. At the end of the outdoor hall, you’ll find the registration office.
The Application Process
The application form covers three licenses. The fees are THB20,000 for a license to export cannabis to other countries, THB1,000 to conduct medical research, and THB3,200 for the retail license.
While staff will collect a THB20 filing fee with your application and documents, no additional fee will be paid until the license is approved and ready to be picked up, which typically takes about 30 days.
The first section of the application form asks whether applicants are registering as individuals, a company, or as a nominated representative. Registering as a company means the license will cover all duly appointed agents. The second section lists the required documents.
After all the documents – and the THB20 filing fee – are accepted, applicants should expect a notification by telephone and email. If the application is approved, the fee must be paid upon collecting the license.
The license is valid for three years from the date of approval. Once expired, a reapplication is required for an extension.
Please note that the application process might change in the future. There are plans to make the application process available online and to make it more accessible to English speakers.
Conclusion
Thailand’s burgeoning cannabis industry offers a plethora of opportunities for both local entrepreneurs and foreign investors. Despite a complex regulatory landscape and the need for significant local participation, there are clear avenues for foreign stakeholders to invest and participate in this promising market.
The so-called ‘Green Rush’ has attracted numerous American and Canadian cannabis businesses, contributing to Thailand’s emergence as a global hub for the cannabis industry. However, this influx of foreign businesses has also stirred controversy and raised significant concerns among local growers who are grappling with the competition posed by cheaper, illegal imports.
The legal framework surrounding cannabis business in Thailand is intricate and multifaceted. It is crucial for businesses to understand and adhere to the regulations stipulated by the Thai Narcotics Act and the Thai Food and Drug Administration (FDA), among others.
Setting up a cannabis business in Thailand involves several steps, including incorporating a Thai Limited Company, obtaining necessary authorizations, registering for growing cannabis, complying with import regulations, and adhering to THC content limits for food, drink, or cosmetics containing cannabis extract.
Navigating the process of obtaining a cannabis license can be complex and time-consuming, but with due diligence, thorough understanding, and a well-planned strategy, it can be a rewarding venture.
In the face of this ‘Green Rush’, it is incumbent upon foreign businesses to respect and support the growth of local cannabis businesses. It is equally important for the Thai government to establish and enforce a robust regulatory framework that ensures fair competition and sustainable growth for all stakeholders in the industry.
In conclusion, the Thai cannabis market is a landscape ripe with opportunity, but also fraught with challenges. For those willing to navigate the complexities of Thai regulations, it can provide substantial rewards. As the global cannabis industry continues to evolve, staying informed, compliant, and innovative will be key to success in this exciting new frontier.
FAQ
Who can apply for a cannabis business license in Thailand?
Under the current law, individual applicants must be Thai nationals and domiciled in Thailand. For companies, the entity must be registered under Thai law, and at least two-thirds of the directors, partners, or shareholders must be Thai nationals. The entity is also required to have an office in Thailand.
Can foreign businesses operate in the Thai cannabis industry?
Yes, foreign businesses can operate in the Thai cannabis industry, but there are specific regulations they need to comply with. For one, at least two-thirds of the directors, partners, or shareholders of the business must be Thai nationals. This means that while foreign investors can hold a significant minority stake in a Thai cannabis business, they cannot hold a majority stake.
Where can I apply for a cannabis business license in Thailand?
The application process for a cannabis business license in Thailand varies depending on the location of the business. Businesses located in Bangkok and Nonthaburi province can apply at the main ministry campus, the Department of Thai Traditional and Complementary Medicine at the Public Health Ministry in Nonthaburi province. For businesses located in other jurisdictions, applications must be made at their respective provincial public health office.
Are there restrictions on the types of cannabis products that can be sold in Thailand?
Yes, there are restrictions on the types of cannabis products that can be sold in Thailand. Importing products that contain cannabis and hemp extracts is illegal, as is the possession or sale of extracts or food products that contain over 0.2% of THC.
What is the process for obtaining a cannabis business license in Thailand?
The process of obtaining a cannabis business license in Thailand involves several steps. It typically begins with the business submitting an application to the appropriate licensing authority, which is usually the Department of Thai Traditional and Complementary Medicine at the Public Health Ministry or the provincial public health office, depending on the location of the business.
The application must include detailed information about the business, including its proposed activities, the qualifications of its directors and shareholders, and its operational plans. Once the application is submitted, it will be reviewed by the licensing authority. If the application is approved, the business will be issued a license that allows it to legally operate in the Thai cannabis industry.
Can the Thai government revoke a cannabis business license?
Yes, the Thai government has the authority to revoke a cannabis business license. This can occur if the business violates any of the conditions of its license, fails to comply with the regulations governing the cannabis industry, or engages in activities that are detrimental to public health or safety.
What are the penalties for operating a cannabis business without a license in Thailand?
Operating a cannabis business without a license in Thailand is considered illegal and can result in severe penalties. These can include fines, imprisonment, and the confiscation of property. The exact penalties will depend on the nature and severity of the violation.
Is it legal to import and export cannabis products in Thailand?
Importing and exporting cannabis products is subject to strict regulations in Thailand. Businesses wishing to engage in these activities must obtain a special license and comply with specific requirements, such as providing detailed documentation about the origin and destination of the products, as well as ensuring that the products meet Thailand’s quality and safety standards. Violation of these regulations can result in severe penalties, including fines and imprisonment.
Are there restrictions on advertising cannabis products in Thailand?
Yes, there are restrictions on advertising cannabis products in Thailand. The regulations surrounding advertising and promoting cannabis products are stringent, as the government aims to prevent any potential misuse or abuse of cannabis. Advertising cannabis products in a way that promotes recreational use or targets minors is strictly prohibited. Any advertising or promotion of cannabis products must comply with the guidelines set by the relevant authorities, and businesses must seek approval before carrying out any advertising activities.
Are there restrictions on the cultivation of cannabis in Thailand?
While the cultivation of cannabis is allowed in Thailand, there are specific regulations and restrictions in place. Thai companies have no restrictions on the cultivation of cannabis, but foreign-owned entities face limitations on agricultural activities. Cultivation for personal use without a license is still considered illegal. Businesses interested in cultivating cannabis must comply with the requirements set by the Thai authorities, including obtaining the necessary licenses and adhering to strict cultivation and security protocols.
