For anyone who visited Thailand in 2022 and 2023, it is clear that the sector of medical cannabis is flourishing. After the end of the global pandemic, Thailand is a leading country in Southeast Asia region attracting foreign investment and the new medical cannabis sector is playing a notable role in the acceleration of the national economic recovery. In addition, the new policy is aiming to improve the health of the people and also prevent the inappropriate use of cannabis.
There are plans to make Khaosan Road to be the center of cannabis business in Thailand. There are not only commercial purposes behind this, but it is under consideration setting up a sandbox for the cannabis business to make Bangkok the new Amsterdam in Southeast Asia.
In order to clarify key aspects of the regulation for medical cannabis in Thailand, we talk with Mr. Surawit Sattawon, Associate lawyer at H&P in Bangkok who has been advising several foreign investors in this sector since the very first beginning of the legalization. Mr. Surawit will discuss which are the most common misunderstanding and legal aspects to take in consideration for foreign investors who are planning to enter in Thailand in the medical cannabis business.
There is a lot of inaccurate information on internet about the emerging medical cannabis business in Thailand, especially on the Plookganja app. Can you tell us about your comments on this?
Plookganja is an application, where both individuals and companies can register using their Thai ID Number or juristic person number. It takes around 5 minutes to complete the registration, but it is not useful for everyone.
Foreign individuals can not register in this app as the system is designed to request 10 digits of their ID Card or company number.
The only way a foreigner can access to this app is by establishing a Thai company in DBD so the foreigner can have access to Plookganja.
Is Plookganja a real solution for foreigners who want to start a business in the medical cannabis sector in Thailand? What is positive and negative compared with obtaining a license?
The business you can engage under Plookganja are: A) For industrial and commercial purposes B) For traditional Thai medicine purposes C) Personal use and D) For research purposes.
The Plookganja does not replace the protection you have by holding a license. Plookganja just provide information to the Thai Government that you are in possession of cannabis, and this can have a legal consequence by Thai Law at any time in the future.
If you hold a license to operate a medical cannabis business, then you are protected by the Law and you protect yourself regarding future amendments in the Thai Law. For the Thai Government the legalization is under medical purposes, international cooperation and aiming to gain medical developments.
A business with a license can protect the rights of a foreigner, even when the law is amended or eventually in a feasible future scenario where the Government does not allow more applications to obtain more licenses. The Thai Government cannot revoke a license, because you have rights before they change the laws. Please noted that the law can be changed in anytime. But this government will try to finalize the cannabis law within their term.
Thailand moved from a very punitive regulation regarding cannabis to accomplish enormous structural changes on this field. There are lot of foreign investors requesting more information on the process and licenses for importation of seeds. Can you explain about the compliance and the requirements to obtain a license to import the seeds?
Let me start with the company structure and director requirements. 2/3 of the company’s directors, shareholders, or partners must have Thai nationality.
The applicant must register both with the FDA and the Thai Customs office. The company can register at Customs via the director and some documents need to be notarized.
The director cannot be an individual with previous criminal records on narcotics or whose license has been suspended or revoked.
Based on our experience, if all the supporting documents are ready, the timeframe is 30 days. The government fee is 100,000 Baht for the import license, and the license is valid for 3 years. There is a temporary import license but its not operative for most the businesses for well-known reasons.
Nowadays the FDA only allows you to import seeds into Thailand, not extracted cannabis, plants or flowers.
We see dozens of medical cannabis retail shops opening every day across Thailand, especially in touristic hubs such as Phuket or Bangkok. How is this business structured and what are the licenses?
There is a lot of wrong understandings about the restrictions of participation of foreigners in this business line. But we need again that 2/3 of the company’s directors, shareholders, or partners must be Thai. This license is under the control of the FDA. Therefore, we must ask for permission from the FDA.
The timeframe if all the documents are well prepared is 1 month. The government fee for selling is 5,000 Baht and is valid for 3 years.
In case of retail, the seller should not sell to a person with age less than 20 years old nor to a pregnant woman. Otherwise, you will be fined not exceeding than 300,00 Baht, but you will be imprisoned not exceeding more than 3 years in jail.
There are exemptions in case you are a doctor or a Thai traditional medicine practitioner.
Of course, there are other restrictions such as certain advertisements, online selling, or vending machines.
If you are already advertising, the FDA can issue orders to amend your adds, restrict your ads or even ban your adds.
Many foreign investors, come with an experience and knowledge from the countries where they come from, and they believe that the future of the business arises from the cultivation and plantations, not only from the retail business.
Yes, many clients believe that registering at the government app is enough but it’s not. In my opinion the app registration is more likely for personal use than commercial and industrial use.
You need to have memory and remember what happened in the past with other apps in Thailand. The government wants to know how much cannabis is registered in the system. In other words, it’s just and easy way to control and the app registration does not protect you in the future in contrast with holding a license to operate a business in short and long term.
There is no limitation related to planting cannabis, but you must provide a secure location with the CCTV for the plantation. In addition, you must develop the plantation in the exact area as it was declared with FDA and you must report FDA of any incident related to the plantation within 30 days.
The timeframe to obtain a license for cultivation is 1 month if the documents are correct, and with this license you can prepare it parallel other license applications. The government fee is 50,000 Baht and valid for 3 years.
Based on your experience, would you recommend a foreign business to obtain a license for this business?
Of course, the risk is you don’t have a license. Today you might be able to plant without limitation but if the government changes the law or limit the sector whatsoever, then you must follow with the law immediately and your lucrative business model and investment can be damaged.
On the other hand, if you can structure your business in a correct way and you obtain the license, even the law change, you will be more protected. You must remember what happened with the lifetime driving license which was cancelled 20 years ago. Today if you have that lifetime driving license, you don’t have to renew it anymore like the rest of the persons.
Lawyers in Thailand always advice to do things correctly, especially if you are a foreigner, from the very first moment but unfortunately this is not always the case. If you do things correctly, then nobody can damage your business and the FDA cannot revoke your license as you have rights.
Another interesting topic is what are the limitations and compliance in Thailand for manufacturing food and cosmetics with cannabis?
As far as the Cannabis Act is concerned, “Advertising” means everything you publish to the public for profit, but it is different if you publish for different purposes.
There are no limitations. The license to manufacture is the license to produce cannabis. You can produce as many as you like according to the plan that FDA and MOPH approves.
The director, shareholder, or partners of the company two in three must be of Thai nationality.
The most important requirement for all licenses is the business plan. You must declare every part of your production plan with the FDA.
You must choose the appropriate location starting with the planting/cultivation license. If manufacturing, you also must have a warehouse, you must provide security, whether the warehouse is for keeping the cannabis seed or the cannabis plant.
If you need legal advice on medical cannabis in Thailand, please contact to our Bangkok Law firm at [email protected]
