Cannabis Business in Thailand

The Thai people for many centuries used cannabis for medicinal and dietary purposes. Then in the 1930s, cannabis was classified as a class 5 narcotic (prohibited for sale, production or consumption). Then with the adoption of the 1979 Narcotics Law, the regime became particularly tough. In 2003, the Government continued a conservative anti-drug policy, with 2800 extrajudicial executions (drug-related crimes).

Only, since a rectification of the narcotics law in 2018, the Thai Government decriminalizes parts of cannabis. Therefore, it is now possible to produce, sell and consume certain parts under certain conditions. Indeed, the sale, production and consumption are only possible in the medical, research or food context. In addition, in March 2021, Thai households were allowed to cultivate six species of cannabis to supplement their income and supply public hospitals and other establishments in the field of food and cosmetics.

It is important to remember that the use of cannabis for “recreational” purposes is strictly prohibited and punishable by a one-year prison sentence and/or a 20,000 baht fine. In addition, any person in possession of more than 10kg of cannabis for the purpose of selling it, without having a license, is liable to 15 years imprisonment, as well as a fine of up to 1.5 million baht. In fact, the sale of cannabis in Thailand without a license can be considered a crime and Thailand has an extremely restrictive policy in this area. It is therefore particularly recommended to regularly check the regulations in force for safety reasons.

It is important to note that the export of cannabis is forbidden and the production of cannabis is not accessible to foreign companies. Yet, despite the restrictions on foreign companies, the cannabis and CBD market is accessible to foreigners through the registration of a Thai company.

Since 1979, Thailand has prohibited the possession, sale, import, export by a law ” Narcotics Act ” which classifies cannabis as a category 5 narcotic (last category of narcotics).

Thus, since this date, producers, importers and exporters are liable to a prison sentence ranging from two to fifteen years and/or a fine of 200,000 to 1.5 million baht. And the simple possession of drugs is punishable by a maximum sentence of 5 years and/or a fine of up to 100,000 baht.

Nevertheless, only public hospitals were allowed to deliver CBD cannabis oil to patients suffering from chronic diseases and undergoing chemotherapy, on medical prescription. Cannabidiol or CBD is one of the many cannabinoids found in cannabis flowers.

The Thai Government in 2018, legalizes cannabis for medical, scientific, research and development use. This new industry allows Thailand to capitalize a multi-billion dollar global industry. The Narcotics Act B.E 1979 was amended by the Narcotics Act BE 2562 (2019). According to this amendment, certain parts of the cannabis plant are no longer considered narcotic, such as bark, trunk, fiber, branch, root, leaf without bud or flower, extract containing cannabidiol (CBD) and tetrahydrocannabinol (THC) not exceeding 0.2% or residues that after extraction do not exceed 0.2%. However, these parts of the plant must come from cannabis grown in Thailand.

In addition, the major change in this law is the transfer of licensing authority from the Ministry of Public Health to the FDA (Foods and Drugs). This authority will not treat one product differently from another and will make it easier to issue licenses, without case-by-case issuing.

However, given the disproportionate competition from foreign companies on Thailand’s local economy, the government has sought to prohibit the issuance of licenses to foreign companies or foreign-owned companies operating in Thailand. However, there are plans to allow the licensing of foreign companies by 2024, when the Narcotics Act is revised. However, this is an unpredictable forecast.

In order to obtain a license to produce, sell and import cannabis, 51% of the shares must be owned by Thai nationals. And thanks to a system of preferential shares, you will be able to maintain the management of your company at 100%. In addition, two-thirds of the management and two-thirds of the capital must be held by Thai nationals. With this configuration, the legislators thought that some of the technology and competencies of foreign companies could benefit Thai nationals, for the development of pharmaceutical products for local distribution or export.

Firstly, before entering the country you will need to obtain a visa and a work permit. It will then be recommended to register a company in Thailand. Then, you will have to apply for a license from the FDA (Food and Drug Administration). For medical or research purposes, you will need to approach an applicant for a license.

Then, to obtain a license you will have to create a Thai company, of which two thirds of the capital of the company will be held by Thai people and two thirds of the management will be Thai people.
In addition, 51% of the shares must be held by Thai nationals, however, thanks to a preferential share system, you will be able to maintain the management of your company.

When a foreigner wishes to work in Thailand, it is necessary to ask for a work permit and a visa. In this case, it will be recommended to hold the non-immigrant visa B.

Article 26/2 of the NAR still restricts the production, import and export of narcotics, except for holding a license.
Thus under the Ministerial Regulation “Application and Licensing for the Production, Import, Export, Sale or Possession of Hemp, published in the Government Gazette on December 30, 2020″, a license may be issued for the following purposes:

Persons eligible to apply for a license must be (NAR Section 26/5):

In addition, the license applicant must not have been convicted of any violation of Thai laws, and must not have a suspended or revoked license with respect to narcotics or psychotropic substances. Your application should be submitted to the Narcotics Control Division of the FDA office (cultivation in Bangkok) or to the Provincial Public Health Office, if the cultivation area is in the provinces. Therefore, your application must be accompanied by the following documents:

Next, your application will be reviewed by a provincial committee and the governor, and then forwarded to the Thai FDA office. During this review, your product will be checked as well as the production site. The review process will take 2-3 months for applications submitted to the FDA office and 4-5 months for applications submitted to the provincial health office.

The Thai Government announced in 2018 to legalize parts of cannabis containing less than 0.2% tetrahydrocannabinol (THC) :

In fact, you can legally use all these parts of cannabis for food. In addition, since March 5, 2021, by a notification No. 425, it is allowed to use hemp seeds: oil and seed protein in food. This follows the Government’s desire to develop the hemp trade. Thus, hemp seeds must not have a moisture content higher than 10% and the CBD contained in the seeds must not exceed 3 milligrams per kilogram of hemp seeds or dried hemp proteins. Also, the oil extracted from hemp seeds must be produced by compression or certain methods supervised by the Ministry of Public Health. The Ministry of Public Health also strictly controls the labeling and packaging of hemp seed products.

On the other hand, according to “Phakakrong Kwankhao” expert in the field of traditional medicine at Chaopraya Abhaiphubejhr Hospital, recommended not to consume cannabis in food or drinks, for six categories of people:

The unauthorized parts are the following:

Regarding the cultivation of cannabis, it is important to know that it must be done in Thailand. The Government wishes to privilege its population to boost its local economy, before integrating the foreign companies within the Thai economy during 2024. If you want to grow cannabis for food, then you will have to follow a classic procedure. Apply for a license from the FDA. However, if you simply want to buy cannabis for food use, then you can apply for a license and approach an FDA-certified producer.

To produce cannabis for medical purposes, you will need to prepare an additional document to your license application: A medical certification. The applicant must have the cooperation and supervision of a Thai licensed in modern, traditional medicine or herbal cures under the separate pharmaceutical law. In addition, the applicant must be a first class medical professional, pharmacist, dentist, veterinarian, and meet the following requirements:

Since the 2018 amendment to the 1979 Narcotics Act, certain parts of cannabis are no longer considered “Class 5 narcotics” and can be legally produced, sold and consumed, under certain conditions.

The sale of cannabis in Thailand is strictly regulated by the government and requires a license from the FDA. It will be easier to obtain a license for the food industry, as it will not require any additional steps with a medical entity. However, the cultivation of cannabis in the medical field is very profitable, so the issuance of a license requires the certification of a medical entity and the presentation of its license.

The production and sale of cannabis is only allowed for Thai companies and is not open to foreign companies. It is therefore recommended to create a company in Thailand and maintain the management with a system of preferential shares (51% of the social shares for Thai people). Finally, it is important to keep a close eye on the evolution of the regulations, as the sale, production and possession of cannabis can be subject to heavy criminal penalties and fines.