2023: Can Thai Cannabis Become a Global Leader?
2023: Can Thai Cannabis Become a Global Leader?
The long, strange 7-month trip of legal weed in Thailand
By Carl K Linn
Is Thai cannabis the chaotic disaster portrayed by western media? Or can it teach the rest of the world how to avoid the botched legalization efforts in North America that have expert growers loading flowers into woodchippers?
January 9th is the 7-month anniversary of the legalization of weed in Thailand. The Thai Cannabis Act was supposed to be passed by the time weed was declared legal. It was not. It is still not. That makes the Cannabis Act 7 months overdue. There is a media narrative that says legalization before regulation is the reason Thai legalization has failed. Has it?
An earlier version was published last week @ the site for a Thai cannabis startup I’m behind: https://cannabox.store/
I
The explosive growth of Thai cannabis: How Long Can It Last?
Last year at this time, I predicted that Thailand would either provide transparent legalization of weed in 2022 or the campaign for cannabis legal reform will be dead by 2023. This year the question is whether the explosive growth of cannabis and hemp can be sustained.
In 2022: Cannabis On The Edge: The slow & possibly suicidal walk of Thai Cannabis, I said:
Thailand is attempting to “slow walk” full cannabis legalization the only way they know how, through misdirection and vague talking points that don’t add up. The term slow walking is used to refer to states in the US that kicked off their cannabis sector with medical marijuana, with strategic minds reckoning that, once the political culture adjusted to the change, they would be open to the lifting of cannabis bans more broadly.
The tactic is copied to this day. And it has worked astonishingly well. Global cannabis sales will exceed USD 37.4 billion in 2021. Total cannabis sales are estimated to reach USD 102 billion by 2026.
We’ll know how Thailand handled its cannabis moment of opportunity by the end of 2022.
It turns out that Thailand’s slow walk was not suicidal at all. And here at the beginning of 2023, we do indeed know how Thailand handled cannabis.
Rational exuberance over legal weed has been answered by a crush of retailers hoping to become the type of store earning $10,000 USD a day, every day.
“Rational”, in that people are willing to pay a premium to be the first to casually buy weed in the same tropical paradise that has warned cannabis lovers for decades that possession can lead to decades in prison.
“Exuberance”, in that it is thrilling to witness and participate in the first moves of the Asian cannabis revolution. The tectonic shift in cultural norms and personal freedom that will spread globally throughout the 2020s begins here.
Of course, exuberance, whether rational or not, is fleeting: before the retail markets stabilize, many weak dispensaries will be on the chopping block.
The Moratorium on Dispensary Licenses & Near-Term Pain for Thai Dispensary Owners
2023 will be the year of the rout of Thai dispensaries. Many cannabis dispensaries will be forced to close. The reason will not be, as many legal experts predicted, government coercion. Few will run afoul of the law; for those who do, one can assume that they were failing to comply with a few simple, affordable requirements.
Up until December 2022, there existed virtually no barrier to entry. 5000 dispensaries later or, as locals say, now that there is a dispensary “on every corner and another one between the ones on the corners”, retail licenses are no longer available.
The days of poorly planned dispensary businesses are numbered -- to roughly 120 to 150; the upside is, today, Thai cannabis growers, manufacturers, retailers and consumers are among the freest friends of cannabis on earth (at least domestically).
And ganja lovers should remain free, even if the few proposed additional restrictions on flower sales ever manage to appear in the chronically absent Cannabis Act. For now, Thai weed and CBD are booming; Thai hemp is just beginning to stretch its wings globally.
Last April, I told the Guardian that I was optimistic that cannabis will help Thailand rebuild its economy post-Covid. “Nothing as small as the cannabis sector can save [an economy], but I think it could provide a spark.”
I think the data will support that this is what we see happening currently. Thai cannabis has successfully provided the spark to the sputtering economy. Let’s break down the impact of this successful legal reform — that extends beyond dollars and cents:
Low-income patients get the cannabis they need.
In less than one year (not counting people who have been in cannabis for a long time) Thai cannabis created 100,00 jobs.
Over 3,000 men sentenced to years in jail for cannabis are now free.
All 3 impressive social benefits were manifested from cannabis legalization that raced ahead of the bureaucrat and the tax collector.
At least the small dispensaries that will stay and struggle can fight without one hand tied behind their backs. In the Kingdom with legal cannabis, there are no random special extra taxes, no costly restrictions and no banning businesses from the banking system.
Of course, the Thai government will not leave all those tax dollars on the table forever. They will begin requiring data collection from all dispensaries so that a tax regime can emerge gradually.
On the other hand, cannabis prices in Thailand could plummet as they have in North America as soon as March or April when the high season in Thailand dies down. As Leafly’s Senior Editor’s graph of price per gram in the US makes clear, it is not a question of whether prices go down, but rather of how far they drop.
The trimming back of overgrowth is coming soon -- a trade-off of the liberty to buy and sell cannabis in a free market. With the freedom to sell cannabis comes the responsibility of pleasing customers who are free to decide where to buy it.
The retail sector in Thailand is better positioned than in North America and Europe. If there is one point on which everyone agrees, it is that this economy could not sustain a mandate that cannabis companies be "vertically integrated”.
Thai cannabis clinics are free to make their own decisions about how to source their inventories. This practice reflects a respect for the power of free markets to provide the most accurate pricing and clearest incentives to cultivators to discover how best to serve their retailers. The health minister has said on many occasions over the past year that he wants a legalization regime that allows a free market.
There is good reason to believe that a slow crawl of Big Cannabis has already begun and that western companies will continue to invest in Thai weed as they have done in the hemp sector. To say there is no welcome mat put out for Big Cannabis in Thailand would be an understatement; nevertheless, international conglomerates want to allocate assets to Thai cannabis, and so sooner or later (likely later) they will.
The question for Thai cannabis’ future at the beginning of 2023 is: What size problem is created by the absence of the Cannabis Act?
How I Learned to Stop Worrying and Love Legal Thai Cannabis
Some leaders have petitioned for a return to a slightly less inhumane version of the war on drugs – until regulations ensure that minors don’t have easy access to cannabis.
For instance, Koh Ewe of Vice reports that the head of Thailand’s Forensic Physician Association Smith Srisont, says he is an advocate for recreational use in the future but for now, he prefers a return to punishment for all cannabis use outside of a heavily regulated regime limited to hospitals.
Smith is one of the medical experts spearheading the campaign [to petition a return to punishment for cannabis], said he doesn’t oppose recreational cannabis use, but wants the government to ensure that minors don’t have easy access to the drug. The problem, he suggested, was that legislators jumped the gun.
“I think we can use cannabis more freely than any country in the world. In Thailand, they let cannabis free before they had laws to regulate it,” he told VICE World News. “It’s very bad that we let cannabis free before regulations. If we waited for regulations first before [legalizing it], that would’ve been alright.”
This strains credulity. Anyone who realizes that cannabis ought to be used freely will see also that making weed illegal has little impact on its availability. Meanwhile, forcing users to the black market only increases the chances of the plant being tampered with in a way that can transform it into a dangerous carrier of unknown substances -- not to mention the extra crime, violence and death that black markets make manifest.
Are Critics of Thai Weed Sure They Want to Copy the West?
Let’s accept that Smith means what he says. The idea that full legalization will benefit society but only once all regulations are in place is not beyond the pale. After all, it is the default position in North America and Europe.
Has the west benefited from its more methodical approach to legalization? Last May, in Thai Weed is Medicine, I noted that the North American market was in recession:
The North American cannabis sector finds itself in the absurd – and costly – position of boasting record-breaking revenues while admitting it is in regulatory recession.
“Decriminalization is so important to this industry,” said Bloomberg Intelligence analyst Kenneth Shea, “and the can keeps getting kicked down the line.”
What does the regulatory recession in legal cannabis have to do with the word recreation? The word breeds quiet resistance to legalization.
It lets worries of mindless overuse by adults and unsupervised minors fester in the minds of decision-makers steeped in decades of prohibitionist propaganda.
Federal illegalization of cannabis is still in place in the US. BTIG analyst Camilo Lyon puts it this way:
Cannabis, with its many federal and state regulatory restrictions still in place, has been driven into recession by slow-moving policy changes.
The cannabis industry in North America is currently held captive, waiting helplessly for federal reform that never seems to arrive.
Since May 2022, the markets in the west have gone from bad to worse. Before weed could be legal in most states, regulations had to be in place. These include:
Very few licenses are available
Tax increases up to 50% (in California, e.g.)
Many states required vertical integration of supply chains (in other words, enough capital to fund a massive company that is prepared to scale upon opening)
In the case of the US, federal laws keep entrepreneurs’ hands tied behind their backs by restricting access to banks
How long must US cannabis businesses wait to be treated as a non-criminal entity by the feds? According to Hilary Bricken, the cannabis attorney and chair of Harris Bricken’s regulated substances practice group, “It will take forever. There’s all this review and input, from all these federal agencies, that are lobbied by all these private interest groups. As marijuana research has historically been limited, thanks to the drug’s scheduling, it is not clear officials will have the data they need to de-schedule it.”
Producers and retailers in a healthy marketplace know where they stand in relation to the law and regulatory compliance. Again, from Vice: “I feel very nervous that they will change the law,” Chet Chuthong, owner of cannabis shop Kush House Phuket. “I feel like if [cannabis] is already legalized, it’s not easy to make it illegal again. But they will be more strict.”
So is Thailand’s Forensic Physician Association correct? Was it a blunder to legalize weed before all the regulations were fully worked out?
Did Thailand Blow It By Legalizing Before Regulating?
The Democrat party in Thailand hopes older conservative Thais will be attracted to their announcement that they would destroy the new Thai cannabis market and return to the way things were before the 9th of June, 2022. International media went into feeding frenzy mode when the Thai Democrats made their anti-cannabis position public.
International reporting of Thai cannabis seemed to concur with the pessimists who predicted catastrophe. Here are samples of the stories I said were misleading in Weed Enlightenment or Wishful Thinking? Thailand's First High Season with Cannabis, back in September:
These headlines point to stories about how legal cannabis in Thailand is a “bear trap” that could get foreign users into trouble. The narrative started taking shape globally just as weed dispensaries were spreading across the Kingdom. Every story is chock-full of misinformation, cannabis stigmas and alarmism. It’s weird. It was like a cognitive contagion led to a narrative untethered to reality.
Why did the western media side with anti-cannabis politicians? To fabricate controversy? To stoke fear? To relieve an unconscious resentment of a middle-income country in the tropics making legal cannabis work, while their rich countries’ political leaders have created one of the most unnatural, ridiculous markets in the world?
Does legal weed in Thailand without the Cannabis Act put profits over people? I would think that the two young lads in the clip below would be mystified by the pearl-clutching and public panic over the cannabis threat to “poisoned minors”.
Does legal weed in Thailand without the Cannabis Act ignore the harm caused by cannabis? Unlike coffee, alcohol, sugar and cigarettes, using weed has never once been shown to be addictive. One recent study suggests that when it is consumed by youngsters whose brains are still developing, weed can cause minor obstacles to learning. The question is how best to ensure that weed is kept away from minors.
If a politician says that adults should forgo the pleasures of cannabis and erase it from society in the name of keeping the children safe, he or she assumes that the medicinal value of cannabis is overblown.
I think the best response to such a claim is the personal experience of cannabis patients. Here is a viral clip of the impact of a single drop of cannabis oil on the well-being of a man with Parkinson's:
The health minister of Thailand -- the key person behind the legal weed campaign for many years -- does not seem troubled by the amount of time it is taking to make the Cannabis Act relevant.
Naturally, the health minister would like to see the Cannabis Act approved with legally binding sanctions that create a secure investment environment. People in a healthy marketplace must know where they stand in relation to the law and regulatory compliance.
On the other hand, let’s assume, as does the health minister, the following to be true:
Anti-cannabis politicians are opportunists hoping to inspire votes at the margins, and
Cannabis supplies multiple paths to wellness and increased quality of life. Would it not be more effective to focus on the people in the market -- the providers and the consumers -- rather than regulations, restrictions and laws that cannot seem to pass?
What would legal reform that assumed that cannabis was a social good that should be available to all adults, (except pregnant or recently pregnant ones), look like?
Walk the streets of any tourist area in Thailand and you will begin to see the answer.
A Random Walk Down A City Street in Thailand
Dispensaries are open late. The popular ones have shops full of consumers up to closing time. The shops with smoking areas are full of the friends of cannabis. All ages laughing and chatting. (Relax, no kids.)
The best smoking lounges are off the street and in the open air. Smoke is contained. Strangers compare strains and prices. They share their weed. Papers, bongs and grinders on tables like salt and pepper shakers, with a bit of tobacco for those who want to roll them dirty.
The most popular spots do not serve alcohol. They are not coffee shops. (Both of these types of venues may soon be forced to close by law enforcement.) The best dispensaries focus on cannabis. They may have some cold drinks to grab on your way to the huffatorium.
There are no degenerates or juvenile delinquents smoking weed up and down city sidewalks. No “poisoned 9-year olds” hitting major bong tokes while they wave at cars in the middle of a hot afternoon. The most salient aspect of Thai cannabis right now is the efficiency in the voluntary transfer of wealth from western countries to this struggling middle-income nation. (95% of dispensary customers are tourists and ex-pats.)
So far, Thailand’s rollout of its legal cannabis regime has been the most successful the world has seen. This view may seem controversial to those who read international reporting on Thai weed, but not to the friends of cannabis on the ground in Thailand.
Thai cannabis is a microcosm of the great voluntary wealth transfer from West to East that economists have been predicting and tracking since the 1980s. In the long run, it may be economically safer to wait for regulation before legalization; however, in the long run, we are all dead.
Thailand is Not the New Amsterdam
There is only old Amsterdam, with its dark cafes selling officially illegal cannabis along with food and drink to mostly naive tourists with no questions about what they are smoking, how it compares with other products, where it’s from or what its effects are. By contrast, in Thailand 2023, it’s all about the weed.
Last February, I mocked the guidance coming from the health ministry that smoking spaces would not be cafes. I said:
Public space design. Following the only guidance from the Health Ministry, how should the first cannabis user spaces be designed? Seriously, the only guidance on public spaces from the Health Ministry is this sentence:
“They won’t be cafes.” Not sure how that works. A space for adult use with others that does not appear to be a café… Can several friends sit around consuming cannabis and drinking coffee without the place being a “cafe”? Will we miss much if we register this absurd puzzle as a rather low priority? I doubt it.
Boy was I wrong. Within today’s framework of Thai cannabis 2.0, weed and café culture do not mix well. This is a sociological phenomenon that merits its own newsletter. Suffice it to say, I’ve tried both and, like most cannabis users here, I only visit smoking lounges that do not try to create a café culture. And bars are even more awkward.
Adding weed to a menu of food and drinks seems disrespectful to the power and potential of the plant; what’s more, consuming cannabis in the presence of others who may not share your passion for the plant just doesn’t feel right. But I digress.
II
2023: Thailand Has Lessons to Teach Developed Nations -- and a Model to Offer Other Middle-Income Countries
Cannabis investors, policymakers and entrepreneurs around the world see Thai cannabis as an industry that will be a potential supplier, customer and competitor. But they should also know it as a teacher.
Three important sets of ideas the west can learn from Thailand are described in this article. They could have a far-reaching impact on the viability of the industry for entrepreneurs, avoiding counter-productive regulations and fending off the threat of re-stigmatization and prohibition.
What are the most important concerns of the leaders of North American and European cannabis? We can agree that cannabis industry leaders in the west would rank the following very high on the list:
1. Providing fresh dried cannabis flowers at least as good as those available in legacy markets
2. Confronting criticism that weed has become too strong, and has led to similar negative outcomes as hardcore drugs; and that recreational weed doesn’t care about wellness
3. Building attractive, profitable cannabis companies that serve the needs of cannabis users
If Thailand can stay positive and continue to destigmatize cannabis while ignoring those with unfounded fears, 2023 will be the year Thailand establishes itself as an, or even the, world leader in cannabis, by helping countries focus less on regulating and taxing and more on healing and guiding.
Here are the 4 main lessons that Thailand will be able to teach as long as it does not go wobbly:
Leave entrepreneurs alone and they will make your country richer
No supply chain mandates
Stop Using the confused distinction between medical and recreational weed
Provide inexpensive licenses generously on a first come first serve basis
Last December I said that Thai cannabis was at a turning point that would determine its survival:
If Thailand can leverage cannabis to sweep away some of the bureaucratic rot and old, double-talking ways - creating a new cannabis sector in the process - it stands to gain
a) a new sector with infinite possibilities
b) growth of private enterprise generally
If Thailand cannot muster enough market transparency to attract foreign investment, cannabis capital only has to veer a few degrees due East to reach Cambodia or Laos.
Meanwhile, Malaysia is close behind with legal reforms grinding through the courts and research ramping up in the universities. Speculation about the future of Thai cannabis exists on a continuum with two poles, let’s call the two end-points the Sad Ending and the Happy Ending.
Sad ending: completely insignificant in every way, a big letdown. If Thailand does not or cannot stop its public relations runaround and start giving the cannabis sector sensible regulations, a world-historic opportunity could be lost for the obvious reason that it’s presented to a political economy that suffers from poor economic policies.
Happy ending: a booming market, impacting too many sectors to count, as it forges a new network of entrepreneurs, grow specialists, production specialists, cannabis scientists and others.
The end is coming in 2022; the question is will it be happy or sad.
Rejecting the western "medical vs. recreational” in favor of the traditional Thai “use vs. abuse”
Over the course of 2023, Thailand must unlearn the false dichotomy between medical and recreational use; instead, Thai cannabis experts need to return to the Traditional Thai cannabis categories of effective use and abuse.
All Thai weed is medicine. It can be used correctly or it can be abused.
From this perspective, small dispensaries can cater to whomever they wish, while they agree to provide expert guidance face-to-face -- like that provided by the dispensary associate in the following clip:
If it can maintain its position as the number one destination for cannabis tourists, Thailand will be able to expand its hemp sector globally, begin inviting large cannabis companies from other countries and grow a network of wellness resorts and education centers.
Pro-cannabis decision-makers in Thailand behave in a strikingly different fashion from their US and European counterparts. Thailand is applying different principles and trying different approaches.
Thai policies, or lack of policies, while not thought out in an articulate way, will be major factors in Thailand’s growth of the cannabis industry over the coming years.
It would be impossible for the cannabis business in the west to imitate Thailand’s policies. Each policy is deeply rooted in Thai traditions and culture. Each applies to the challenges of a legal cannabis market the values and habits developed by the retainers of the Thai clan, by the Buddhist monks in their temples, and by the practitioners of alternative Thai medicine as reinvented in 1962, under the mandate of King Rama the Fifth.
Yet the principles underlying these Thai practices deserve, I believe, close attention and study by cannabis business leaders and policymakers around the world. They may point the way to a solution to some of world cannabis’ most pressing challenges when it comes to making and keeping legal weed excellent and profitable.
Summing Up: The Year Ahead
Thai workers build the Cloud Nine dispensary on Sukhumvit Road in Bangkok, Thailand in December. PHOTO GCT
Clearly, an established set of regulations would be optimal. At the same time, regulations are invitations for corruption, as pivotal players are tempted to wave restrictions for a price. Here someone might ask: What is so important about regulations? In the mid-term and long-term some protocols and best practices are clarity, quality and dependability.
According to a new report from Dublin-based market data and statistics company, Research and Markets, the Thai legal cannabis market size is expected to reach $9.6 billion by 2030. Their reasoning:
After the Thai FDA removed the cannabis plant from the Category 5 narcotics list, more domestic players are exploring the CBD market, including the largest, Charoen Pokphand Group, which will produce CBD-infused food and drinks through its food and beverage arm, Charoen Pokphand Foods. More product and company launches are expected to fuel cannabis industry growth in Thailand, along with the nation of 70 million growing social acceptance of cannabis and its rising disposable income.
Research and Market’s predicts cannabis sales in the Kingdom to expand at a CAGR of 58.4% from 2022 to 2030.
Moreover, key outside players in cannabis are also eyeing Thailand — the first to adopt of legalization in Asia — as the springboard to expand their portfolio and regional domination through mergers and acquisitions, collaborations, partnerships, funding & investments. For instance, in December 2020, Tilray Brands Inc. merged with Aphria and will operate under the name Tilray. Such factors also fuel the Thai industry’s growth. Such factors should also fuel the Thai weed industry’s growth.
Later this year, after fortunes are made from Thailand’s first cannabis high season, the current mandate -- that dispensaries must be licensed clinics and have a Thai traditional medicine practitioner on site – will begin to be enforced, and examples will be made of those who ignored the requirement.
The friends of cannabis in Thailand will have to stand strong against the haters, who will never tire of insisting that Thailand stop everything and have all of laws in place before the state allows anyone to possess this plant. And here we come to Thailand’s upper hand in the spread of international cannabis.
To Do in 2023
In 2023, Thailand must find creative ways to leverage its comparative advantage of the historical-cultural tradition of cannabis medicine through education. The tasks ahead will require investment in:
Education for dispensary employees and employers
An advanced online network of licensed dispensaries that are ready to respond to delivery requests
An active community of friends of cannabis in Thailand
Articulate the “Anutin Doctrine”
This last bullet point requires an explanation. Here is a sketch of what I’m calling The Anutin Doctrine, after the current health minister and deputy Prime Minister.
The Thai health minister executed what can best be described as a Blitz Reform. Love it or hate it, the tactic opened up new flows of capital to Thailand’s Covid-torn economy.
The Anutin Doctrine
1. Objective: Secure cannabis market initiation and penetration via stealth decree.
2. An announcement that weed is essentially legal is backed up by real life straight away. Release all cannabis prisoners. That day! Over 3,000.
3. Decree that no one can be arrested or detained for possession of weed.
4. As for regulatory bureaucracies and tax accountants? Encourage them to try and keep up. Meanwhile nurture the industry and your image as a passionate advocate for legal reform and a friend of cannabis.
Let the friends of Thai cannabis welcome the challenges of a new year with courage and some top-shelf flower. And remember the words of health minister Anutin on the day cannabis was legalized:
We’ve wiped away the stigma. It’s been washed away like removing a tattoo. Don’t let it come back.