“The cannabis market in Thailand is vastly oversaturated. There are more dispensaries in some areas of Bangkok than there are 7/11 stores, which is pretty hard to do. Cultivation is happening on an absolutely enormous scale, maybe far more than the country could support once it all comes online,” said Nathan Wood and Sukhprem Sachdecha of WSR International. The law firm is located in Bangkok and has been helping a lot of cannabis companies navigate the new adult-use cannabis market, which is currently quite a Wild West. “The issue is that adult-use cannabis became legalized without a proper framework in place to control the market. Now, people think they can do anything here, and there is a green rush happening: people are rushing in to make money without the proper knowledge, planning, and protection. Yet there not being any regulations is a misconception. There are still restrictions and laws that people need to be aware of.”
A Wild West
There have been many reports of the new adult-use market in Thailand being quite chaotic, and Nathan and Sukhprem can definitely affirm that. “First of all, there is a huge glut of illegally imported cannabis all over the marketplace, mostly from Canada and the U.S. At the same time, a lot of the local growers are now coming online with their first crops. There is also an enormous amount of product in the ground right now that will come to market in the next 6-12 months, which will lead to a huge oversupply. The quality of the product is all over the place, from really bad outdoor grows to some high quality indoor grows happening locally.”
But it’s not all bad news, as the new industry has been a huge boost to the economy in Thailand. “Around a third of every storefront is a dispensary in some areas. That means that there is a lot of competition. At the same time, the companies are doing well. There is a lot of demand, the market has drawn a lot of tourists, and retail prices have not yet gone down a lot. There is a massive amount of foreign investment money flowing into the country that wouldn’t have previously, and new jobs have been created. So it’s definitely not all negative, the market has had a major positive impact as well.”
Proceed with caution
From a business perspective, Nathan says it requires caution to get into the Thai cannabis market. “This is not something where you can jump on the bandwagon to make a quick buck. If you’re a serious business operator or a very high-quality grower, there’s always room for that in any market. Yet you need to have proper planning and knowledge, which is exactly what is mostly missing now. It is comparable to what happened with cryptocurrency. People get excited, thinking they can make big money in this new market. So they jump in without any knowledge of the industry. Usually, those companies won’t make it in the end. Poor planning, poor protection, and poor execution are death to any business.”
This poor planning and lack of knowledge can be seen across the Thai market. “There are some growers who are just focusing on 1 or 2 strains. One farm, for example, was producing 500 kgs of one strain and then selling by the kilo. When a dispensary can only afford two kilos, they are not going to be interested in that product, as they can’t operate a dispensary with two strains.”
Total deregulation?
When Thailand removed cannabis from the narcotics list in June 2022, there was not a proper framework in place to control the market. According to Sukhprem, this has given many people the idea that they can do anything. Yet that is not the case. “There is a misconception that the market is completely deregulated, but there are still bits and pieces of different cannabis laws. For example, people are no longer allowed to smoke in establishments, cannabis flower cannot be sold online, and you’re not allowed to advertise cannabis flower.” There is a cannabis bill submitted, but it failed to pass Parliament before the recess. “By the time cannabis comes back on the table for discussion, it will maybe be November or even later. We’re expecting the Thai market to be a Wild West for at least another 16 months.”
“Yet there is also law out there that may not be directly designed for cannabis, but can absolutely be used to govern the cannabis industry,” Sukhprem says. “The Foreign Business Act is probably the highest risk point right now. Under this act, some businesses are restricted to foreigners, which includes agricultural businesses. This is critical because a lot of people that are coming over and investing and starting up businesses are foreigners. They are ignoring the fact that cultivating cannabis is agriculture. There seems to be a general feeling among people that they can do anything they want because cannabis is decriminalized. That is why proper consultation with law firms who truly know about this market is essential.”
For more information:
WSR International
www.wsrlawgroup.com