Marijuana business in Thailand is growing despite regulatory risks

In Bangkok these days, it’s hard not to notice the tourist-friendly marijuana dispensaries that have mushroomed since the government decriminalized the drug last year.

Many of them take advantage of the lax regulations to openly sell dried marijuana flowers that have been illegally imported from Canada or the United States to visitors. One recent afternoon, a store advertised its spicy offerings—marijuana strains with names like “Ice Cream Cake” and “Lemon Cookies”—as “the best in California.”

But these dispensaries could soon close due to competition, oversupply and anticipated new regulations surrounding the cultivation and sale of the drug, several cannabis industry insiders said in interviews. The survivors will sell high-quality, domestically-grown weed, which helps explain why investors have been pouring millions of dollars into high-tech indoor cannabis farms across Thailand.

Although no one knows what kind of regulations the nation’s newly elected leadership will introduce, cannabis industry insiders said the rules will likely give investors more clarity and raise the level of market entry in a way that benefits companies. with the best national supply chains.

“Smart money is going to come,” Sirasit Praneenij, co-CEO of marijuana cultivation company Medicana, said recently at an indoor cannabis farm outside Bangkok. He was wearing a white lab coat and standing near grow rooms filled with LED lights, advanced irrigation systems, and row upon row of young marijuana plants.

Many Thai cannabis growers, “including us, are happy to comply, as long as they are healthy regulations,” added Sirasit, whose $2 million farm produces 55 to 66 pounds a month of dried marijuana flowers, the portion that causes the effect. Some of that is sold at the downtown dispensary of a sister company, Dr. Dope.

As jurisdictions in the United States and other countries steadily liberalize their marijuana laws, the novelty of legal marijuana is wearing off for residents. But the Thai industry is thriving in a region where lengthy prison terms (or worse) for marijuana possession, use or trafficking remain the norm.

Thailand also once had such harsh laws. But when the government removed marijuana flowers from its list of prohibited narcotics in June 2022, a national industry sprang up overnight, beginning with “pot trucks” in tourist districts. Less than a year later, there were about 12,000 registered dispensaries (by some estimates, more than in the United States).

One obvious draw for investors is that Thailand’s cannabis industry meshes well with a primary source of customers: tourists, of whom there were almost 40 million a year before the pandemic, and who are now beginning to return. Producers say tourists, not locals, are their main target market.

But with the Thai legislature yet to pass a law to clarify legal gray areas, the industry is in a state of regulatory limbo. All sales remain technically for medical purposes, even if cannabis is widely used in practice as a party drug, and illegal imports have become so common that some stores openly advertise them.

Oversupply and illegal imports have seen retail cannabis prices fall by around a third in recent months, to the equivalent of around $22 per gram, and some dispensaries have closed during the summer low season for tourism. said Lucksipha Sirithawornsatit, managing director of Vinzan, a Bangkok-based cannabis trading and marketing company.

There is also uncertainty about what cannabis regulations will look like in Thailand. Srettha Thavisin, the new prime minister elected by the Thai parliament on Tuesday, told reporters ahead of the May general election that her political party, Pheu Thai, did not want a “full legalization of cannabis” and would support its use only for commercial purposes. doctors.

Still, foreign and Thai investors are pouring into the market. Precise data on investment is scarce, but Lucksipha said some companies have already built expensive indoor farms across Thailand with investment from the United States, Europe, Australia, Russia and Singapore, among other places.

Several cannabis entrepreneurs said in interviews that they expected prices to stabilize once there was regulatory clarity and that the Thai government would not dare destroy an industry with significant economic potential.

“People now see clearly that we are not going to put Pandora back in the box,” said James Porter, chief executive of Siam Green, a dispensary that has raised about $1 million from investors in Bangladesh, India, Thailand and USA. State.

“Companies that are operating properly, have a good management team and are well capitalized will be the ones that end up staying,” said Porter, who previously worked at startups in New York and Miami.

Siam Green, which plans to open three to four more dispensaries this year, is one of several cannabis companies looking to expand. Medicana and its sister company, for example, plan to spend an additional $5 million on agriculture, retail and product development, Sirasit said.

On a larger scale, Advanced Canna Technologies, an Israeli company that has worked on cannabis farms in the United States and elsewhere, recently opened a $3 million, 2,000-square-meter indoor farm in Bangkok with a local partner and funding from Singapore investors. Or Engler, ACT’s chief executive, said the plan is to start harvesting about 264 pounds of dried flowers a month, starting in October, and become a “serious” long-term player in the Thai market, even if the retail prices for weed drop further. .

Dispensaries are the most visible part of Thailand’s cannabis industry, but the drug has also been prescribed in hundreds of traditional medicine clinics and plays a prominent role in at least one hotel business: The Beach Samui, a boutique hotel in the southern Thailand, has an on-site dispensary and was inspired by plant-based wellness retreats in Europe and Central America.

Other companies are targeting CBD, a cannabis extract that doesn’t get users high but is often advertised as a therapeutic panacea. One is Good Neighbors Biotechnology, a two-year-old Thai company that sells CBD products in dispensaries and plans to eventually target pharmacies.

“This is a good opportunity to earn money and help people,” Sakonpob Kittiwarawut, the company’s founder, said during a tour of his lab in Nakhon Ratchasima province, northeast of Bangkok. The fancy facility—white countertops, glass distillation equipment, scientists in lab coats and face masks—had the look of a pharmaceutical factory and the smell of a Phish concert.

Not everyone shares his optimism. Shivek Sachdev, an industry expert in Bangkok, said two major CBD companies in Thailand had already closed due to a drop in the price of CBD extract, and the market was now “quite saturated.”

As for dried flowers, one long-term risk is that Thai farmers and companies could be forced out of the market by big foreign competitors setting up their own farm-to-dispensary supply chains, said Sachdev, founder of Cantrak, a company that helps Thai cannabis growers with supply chain traceability.

For now, however, the market is still open to small Thai farmers who produce high-quality flowers, said Lucksipha, the cannabis trader. She added that some dispensaries would thrive on good marketing and customer service.

“It’s all about the owner, the vibe and the buds,” he said, referring to the marijuana equivalent of bartenders.

On a recent night at Siam Green in Bangkok, budtenders were explaining the taste and chemical profiles of the dispensary’s marijuana strains to Vera Murcia, a tourist from the Philippines. After considering options like “White Truffle” and “Durban Poison,” she settled on “Candy Crush,” a strain advertised to make smokers hungry, relaxed, and happy.

“I want to be happy and hungry,” said Murcia, 37, who works in the call center industry.

The weed fulfilled her first request in a matter of minutes: she was giggling after a few drags on a pipe.