Next Generation Thai Ganja Just Arrived
Multi-nationals deploying assets into Thai cannabis angers some. Free market weed or centrally controlled cannabis? Closing the Thai ganja market to the world made it disappear, for a second.
Groundwork Series 2nd of 5
Traditional bamboo bongs on display at Highland Cafe in Bangkok. The word bong comes from somewhere in the Tai family of languages, which includes Thai but also Lao, Shan, and others. (David Luekens for Leafly)
This Groundwork Series is intended as a resource. It scratches surfaces of major themes that will trend in coming newsletters (the regular, weekly ones right after the Groundwork Series). For a full intro to the series, see Special Groundwork Series Issue #1.
How I learned to stop worrying and love big ganja
No sentient being who knows a jot about how Thailand works would refuse to take corruption concerns seriously. And there are myriad ways for the corruption to grab hold and to spread.
My sense is that there are private elements in place that can mitigate corruption enough to provide the conditions for a healthy cannabis market. Private in the sense that entrepreneurs are at liberty to operate in a market place
Where transactions can happen.
Where ideas can be tested in the workaday world
Where the price of ganja will play out on the decisions that people in the marketplace make about how much things are worth.
Thai long-timer and writer David Luekens managed to have a conversation with a highly esteemed Thai cannabis expert, Kitty Chopak, at the right time â 6 months after medical use was legalized in 2019. I recommend the whole thing (below). She was worried about corruption in Thai ganja, and suggested a solution: limit foreign involvement.
In Thailand, opinion on cannabis is changing. How far will it go? - Leafly
Last year, Thailand became the first Southeast Asian country to legalize medical cannabis. Now advocates want the country to reclaim its place as a leading source of landrace strains.
www.leafly.com  â˘Â Share
Miss Chopaka, was skeptical about the economic benefits of legalized Thai Ganja; she wondered whether there would ever be such a thing as a Thai cannabis market.
Often backed by significant capital, speculation from both Thai and foreign business interests is cascading into how this industry will take shape. Thai advocates are now fighting for the formation of a grassroots cannabis industry, which they hope will benefit the millions of Thai farmers living under precarious financial circumstances.
The problem is that people who donât have enough knowledge are in positions of power, not having a basic understanding of the plant, âĤ entrenched nepotism, corruption and bureaucracy are not helping.
Mrs. Chopaka worries that Thai farmers will be cheated out of their opportunity to form the new Thai ganja sector. There are millions of farmers who could benefit from the new industry, and that benefit is put at risk by foreign business interests.
Free market weed or centrally controlled cannabis?
Possible reasons for believing that farmers need protection from international cannabis firms (that would like to hire them to grow cannabis):
foreign interests will be in competition with farmers
foreign interests will be in competition employers of farmers
Since the farmers are no match for the wealthy foreigners, the farmers will either work for lower wages than they otherwise would, or they would be left unemployed by the multi-nationals who would bring farmers from outside (?)
Are these the beliefs that should drive regulation of Thai ganja? Is this sound reasoning about how to grow the Thai ganja sector?:
Farmers need protection
Multi-nationals are a threat
Laws need to be written to forbid foreign ownership of Thai ganja enterprises
One of the first things I want to ask Miss Chopka is why she suggests that âcapitalâ threatens the life of the âgrassroots cannabis industryââ as if these are two opposing forces. Understanding this way of thinking is important if only because it is behind the regulation prohibiting non-Thais from owning a commercial cannabis license.
Prior to the 5-year ban, British giant GW Pharmaceuticals and Japanâs Otsuka Pharmaceutical applied for marijuana-related patents only to be turned away when the ban was executed.
If you ask why there is a 5-year ban on granting licenses to foreign entities, the reply is that it is for the protection of the Thai ganja startups (including, I guess, farmers). The regulation goes like this:
Foreign participants are precluded from any participation in an approved cannabis business until a five-year ban on foreign participationâcounting from the initial delisting in February 2019âhas passed. This means that only the Thai government and its authorized partners have standing to apply for a commercial license until February 20, 2024, which is when foreign parties will be allowed to obtain a commercial cannabis license.
Who do you worry about when you imagine a future with a thriving Thai cannabis industry â farmers? Young entrepreneurs? Either way, the protectionist thought behind the regulation is that safety lies in prohibiting the deployment of foreign capital in the sector.
Keep in mind, this does not preclude other reasons for keeping licenses deep in the pockets of the ruling class; it does however, give them cover under concern for Thai entrepreneurs and farmers.
Is it the case that the best outcome for the ones we care about will come from designing a cannabis sector so that it grows at an exceedingly slow pace. Is that the idea? You canât get there â a thriving Thai cannabis industry â from here â a collection of co-ops shut off from the global market and subsidized by Bangkok.
Closing the Thai ganja market to the world made it disappear, for a second.
The 5-year ban on exports and license ownership has been partially repealed, out of sheer necessity. Thai cannabis attorney Wirot Poonsuwan outlines the cause (the ban) and the effect (acute shortages):
The law also forbids companies from applying for a license to grow cannabis plants or manufacture cannabis medicine from the date the law came into effect on February 19, 2019 until five years later, ending on February 19, 2024.
As a result, there has been an acute shortage of supply of medicine containing CBDâthe cannabidiol chemical compound extracted from the flower of marijuana and hemp.Â
Patients that would like to be treated by CBD oil have no access to the medicine and hundreds of cannabis sale licenses granted to doctors, dentists and pharmacists have been rendered useless as there are no drugs to prescribe.
Shutting out the world to start Thai ganja led to the sector being finished before it ever began: Thai ganja ran out of all its ganja. There was nothing available to consume. Not good.
The good news is that just like the Bolsheviks right after the Russian revolution, as soon as the elites saw how laws against capital and growth were causing the system to collapse, they changed the laws â just a little. Otherwise, what would be left to consume?
Multi-nationals and farmers. The examples Iâm seeing now do not suggest that foreign capital is anything to be afraid of. For instance, in June 2021 MPX International entered into an agreement with Salus Thailand, a Thai medical cannabis company. The agreement was based on a secured loan of up to $9 million US. Read the full announcement, gagged in the US, here.
On October 4, 2021, the deal closed at $10 million US. Salus Thailand is a Swiss multi-national jointly owned by MPXâs subsidiary Salus International and a consortium of Thai businesspeople (names and bios).
SALUS BIOCEUTICAL (THAILAND) CO., LTD.
Salus Bioceutical Thailand
www.salusbioceutical.co.th  â˘Â Share
Big ganja: a kind of certainty. Unless something unexpected and/or dumb happens, MXP will know where their capital flows, and they will have a grip on the outcome. MXP must have a license. But only Thai community enterprises are allotted licenses. So MXP signs up to be a member of a community enterprise. MXP joined the team.
Its presence will be hard to miss since itâs pretty much bankrolling this whole ganja fest. At this point, some cannabis advocates will say, âhold on a second â thatâs a multi-national corporation, right? Come on, that will corrupt the process, and screw-over the cannabis farmers.â
MXP and farmers. Farmers stand a much better chance as ganja cultivators in a full-fledged community enterprise that aims for profit then as a group of farmers growing ganja for the government.
As far as I can see, the community enterprise in which MXP just invested $10 million US is what the formation of grassroots cannabis in Thailand looks like.
I think the MXP presence alone should imbue the objective observer with rational optimism about the transparency of early Thai Ganja.
Yet the urge to pit big foreign capital against small domestic investments ala David and Goliath springs eternal. Look at the first line of this old article from Reuters on Thai cannabis protectionism:
Weeding out foreigners: strains over Thailand's legalization of marijuana | Reuters
Thailand is set to become the first Asian country to legalize medical marijuana, but a battle is brewing between local and foreign firms over control of a potentially lucrative market.
www.reuters.com  â˘Â Share
Where is this battle between local and foreign? I donât see it. No one in the industry talks about it. Ever. Iâm inclined to say that Reutersâ framework for understanding Thai cannabis is an entirely mistaken way to comprehend the situation.
No one thinks that MPX is going to spread lies and cheat its cultivators and then high tale it out of Thailand, do they? Then what are people so worried about?
The subsidiary will provide the Thai team with:
1.     Design, construction and technical support
2.    Ongoing management support in exchange for management fees
It also brings leadership to the community enterprise, in one W.Scott Boyes. Scott is Currently Chairman, President and CEO of MPX International and is an expert in the sector with deep operational and legislation experience and strong track record in revenue and profit development.
The investment choices that MXP made are decisions within a framework laid down by the Thai weed industry. And they say their interest is in the Thai market â and its positioning to engage with other markets in other countries:
 With its population of almost 70 million and its history of using cannabinoid-based medicines, Thailand could quickly become one of the worldâs largest medical cannabis markets, perhaps second only to the United States.
MPXIâs entrance into the Southeast Asian market further diversifies its opportunity to participate in global cannabis markets, complementing its European projects in Switzerland and Malta, its cultivation in South Africa, its distribution plans in Australia and its current and growing operations in Canada.
Salus International will fund the construction/ management/ cultivation/ processing/ distribution facility in the Northern province of Chiang Mai, the region along with Chiang Rai that is fast becoming Thailandâs capital of ganja. This is good, no?
Salus Bioceutical Facility under construction in Chiang Mai, Thailand
If anything, the MPX example is a kind of insurance against the nepotism, corruption and bureaucracy. Iâm not saying itâs like perfect insurance or fool-proof or even that itâs real insurance. Itâs a metaphor.
If nepotism, corruption and bureaucracy rule the day in the MPX deal, MPX would lose profitability and then uncover illegal activity. That would make everyone sad.
It would trigger litigation between a multi-national corporation and a community enterprise that was one of the first global players in the Thai cannabis industry.
The community enterprise involved would splinter apart, leaving team-members unemployed and some higher ups indicted. That looks like a cause for rational optimism, no?
R&D: The tie that binds
The central player in the MPX deal (a multi-national with expertise in all aspects of cannabis vertical supply chains) will be linked exclusively to Khon Kaen University (one of Thailandâs âtop-5â) Cannabis Research Institute, in the heart of the Northeast, (home to most of Thailandâs remaining rural poor). What impact do the elements of this transaction have on your assessment of whether and to what extent the processes will be corrupt?
Community enterprises are a good way to have farmers interact with the other players in the community enterprise â learning from their expertise, as they in turn pass on their growing acumen â planting the seeds of a rural workforce with skills and knowledge that add value.
Community enterprises do things with knowledge; vibrant ones capture, create, verify, codify, utilize, share and transfer knowledge. To the degree that a community enterprise fails to leverage the knowledge of its members, it will become less competitive.
Besides, multi-nationals have a very good track record teaching valuable skills on the job in neighboring countries. I donât think there is any reason to fear the torrent of an international Thai ganja market. I donât think it helps anyone to slow the growth of Thai ganja. I think we should embrace it.