UPDATED: Weed Enlightenment or Wishful Thinking? Thailand's First High Season with Cannabis
Will the new regime of cannabis legalization be a pro-business, consumer-friendly innovation, or a bear trap
Here is an updated version of my latest that more accurately reflects the state of play in Thai cannabis, on the ground, right now. It shows there are a variety of possible ways things could go.
What really happened the day the Thai government said it removed cannabis flowers from its list of outlawed narcotics, that possession of weed was no longer illegal and that prisoners arrested for cannabis offenses were all about to be set free?
A consensus among journalists and legal experts is that things were not at all as they seemed.
The common thread to many predictions has been that the forces against legal reforms will, in the end, win out. With Autumn in the air in much of the West, legal weed pessimism stirs anew, with the news that the Cannabis Act, which spells out the ultimate rules and regulations for cannabis in Thailand, will be presented in the coming weeks.
If the most pessimistic voices are correct, the Cannabis Act will disassemble the explosive new market in dried cannabis flowers, taking with it the evolving ecosystem of cultivators, distributors, developers, retailers and consumers.
A less disruptive regime is possible of course, like requiring everyone to show their prescription or medical marijuana registration. There are more and more bets for a new policy mandate that every dispensary have a licensed health professional on duty or on staff.
Weed or Hemp?
The changes could amount to a minor inconvenience. Or the changes could amount to “a heavy-handed response of the bludgeoning of the recreational cannabis market,” according to one Bangkok attorney. Real pessimists like Dr. Crosio prefer to focus on the Thai Hemp market.
Dr. Paul Crosio, of the Bangkok firm Silk Legal, says he would not be surprised if the Cannabis Act initiates a quashing of the private dispensaries. “Recreational use has received most of the attention, and the potential heavy-handed response [of] bludgeoning the recreational cannabis market may delay any rush to ‘green gold’.”
By green gold, Dr. Crosio means CBD/Hemp products that will continue to be mass-produced in any case. Crosio points out that the Thai “cannabis market for food and beverage was said to quickly reach 10 billion baht (275 million US) and the cosmetic industry several billion baht.”
The market for CBD and Hemp is industrial and high-volume, in which THC-free extract is injected as an additive to other products: CBD drinks, CBD snacks and CBD cosmetics, for instance. The market for these products started with a bang in Thailand just as it did in North America. Whether Thai CBD can escape the collapse of price and interest to which the US market had succumbed by 2021 is an open question. (I talk about the impact of the collapse of Hemp in the US on Thai cannabis tech here.)
“Our CBD soaps and creams collect dust on the shelf,” says Olive Thamaboonyarat, a budtender at The Green House in Rawai, a village at the southern tip of the Isle of Phuket. “CBD oils sell a little better, but tourists usually ignore them because one little bottle can last a month and they don’t want to take it with them on the flight home.” I ask Olive if CBD brings any revenue at all.
She laughs and says, “We sell CBD tea in packets at the cash register, sometimes browsers pick up a packet just for something cheap to buy before they leave.”
What about Dr. Crosio’s suggestion that it is plausible that the Cannabis Act could prompt a campaign by law enforcement against the dispensary entrepreneurs? The weed crowd sees the Act in an entirely different light -- as the starting gun to expand the scope of the market for fresh flowers.
The experts vs. the weed crowd
For Olive and her co-workers, this is a time of anticipation of Thailand’s high season, and the opportunity to cater to the first robust cohort of tourists since the pandemic. I asked Olive if she or the owner where she works is concerned about a crack-down on weed. “We’re more worried that there are so many dispensaries opening up everywhere that it’s going to drive prices down, so we talk about customer experience a lot,” she said.
“Some customers ask 100 questions,” she said. “They are confused and ask us questions about the law that we can’t answer. We tell them no matter what, never smoke in public and you’ll be fine. We tell them they can’t get in trouble for possession, but some customers are paranoid about it. So yea, it will be good when all the grey areas are gone. But this is Thailand, so maybe that’s going too far,” she said laughing.
The Green House is five minutes from the beach. The shop is a tiny converted corner rowhouse painted green, with the weed on display downstairs and a green-lit smoking lounge with comfy couches and easy chairs upstairs. Like all dispensaries in Thailand, their business is in high-quality, name-brand fresh dried flowers. The median price range of $17 to $21 US per gram, averaging from $2,500 to $5,000 US in revenue per day.
There are upwards of 200 privately owned weed dispensaries across Thailand. Each shop displays 12 to 25 different strains of weed per shop. Counting only these, and not the over 400 hospital-affiliated cannabis dispensaries providing monitored medicine by prescription, current revenues are between $15 million and $30 million per month. Before legalization day, health minister Anutin said Thai cannabis would be a free market.
The dispensaries are a testament to the health minister keeping his word; their proliferation and success, a proof that leaving people alone makes consumers happy and entrepreneurs rich.
The top of a menu at a weed dispensary in Thailand
Everyone agrees that the Act will restate restrictions already in place and add a few trivial sanctions: illegalization of weed advertising and sales online, prohibition of weed vending machines, and a cap of 15 plants per household.
Some legal experts in Thailand side with the weed crowd; to be sure, their optimism makes them outliers. Laurence Chaney, managing partner at GPS legal in Bangkok, works with several privately owned dispensaries and is confident his clients will be able to carry on selling fresh THC flowers.
“Our expectation is that the rules are going to mirror in a lot of ways what they did with alcohol,“ said Chaney. “There’s nothing there so far that’s giving us any concern. The lawmakers are being allowed to add in or make suggestions as to what they want. I don’t really see anything that’s causing our clients concern.” Chaney is aware that his views are contradicted by most of his colleagues and the international press.
Dr. Crosio says the Cannabis Act will, “restrict the consumption of the plants to medical use (however that is defined) at home or a limited number of well-regulated venues which will dramatically reduce avenues for the sale of recreational cannabis.”
I asked Dr. Crosio if he believes that this means the private dispensaries that have opened across the country will be forced to close. “I think we need to step back and accept recreational cannabis sales will be banned under the new law. It’s a fact, not conjecture. Thailand will absolutely not continue with the current situation, and ‘sale’ of any cannabis product will most likely be limited to prescriptions,” he said.
The problem with this view is that it assumes that all the private dispensaries currently selling weed are selling “recreational” weed. Says who?
I say they are not. They say they are not. They say they are selling weed. Period.
A new franchise blanketing the Isle of Phuket
In mid-August, Attorney Benjamin Hart, partner at the Thai firm Integrity Law, warned his ex-pat clients that the Cannabis Act could snap like a “bear trap”. “They see the fluid situation and view it as everything is kind of open. There is stuff going on in the background and I can definitely see the makings of a bear trap. It’s a real problem. It’s a metaphor but that is how it will feel if you get caught up in something like that. A seemingly easy situation can be deceptively problematic in a long-term context.”
We have been here before. After legalization day on June 9th, international reporting of Thai cannabis seemed to concur with Crosio and Hart. A flood of headlines like Thailand Decreciminalized Cannabis But You Can’t Smoke, Thailand Decriminalizes Weed but not the Strong Stuff, and Marijuana is Legal but not for Recreational Use pointed to stories about how legal cannabis in Thailand is a restrictive regime that could get foreign users into trouble.
These stories went global just as weed dispensaries were opening across the Kingdom.
Right now, most retail weed shops are doing brisk business and new dispensaries continue to take root. Just the other day, a website began a Thai weed dispensary listing. Only a fraction of Thai weed shops are listed currently; more dispensaries are joining every week.
In July, two American cannabis attorneys published blog posts in which they gave themselves the unenviable task of breaking it to their clients that “Thailand is no California”, and that they should disabuse themselves of the fantasy of purchasing weed in Thailand free of constraints. The available cannabis, they warned, is not for smoking and, in any case, no legal cannabis will be worth smoking, as it cannot have a THC content that exceeds 0.2 percent.
In his post, Thailand Decriminalizes Cannabis, But Not Really, American cannabis attorney Fred Rocafort intended to give some perspective to his readers. “Thailand’s ‘decriminalization’” he said, “is akin to the removal of hemp from the legal definition of marijuana in the United States. In any case, the 0.2% cutoff is way too low: Even in the United States there are efforts to raise the analogous limit to 1.0%.”
Thai cannabis is just Hemp, says Rocafort, and smoking any of it is forbidden. “In addition, the recreational use of cannabis remains illegal, even in the case of low-THC cannabis. The Thai authorities have issued clear warnings in this regard, with the country’s health minister telling tourists to stay away if they are looking ‘to smoke joints freely.’ Hardly the stuff of which Thai Stick dreams are made.”
In mid-July, the cold water that Mr. Rocafort’s tossed on enthusiasm for weed legalization was followed by a bucket of the same by fellow cannabis attorney at the firm Janve Sobers, in her post, Thoughts on Thailand (Sort of) Legalizing Cannabis.
Ms. Sobers says she wants to correct reporting on Thailand’s cannabis legal reform. “We’ve seen some bad reporting on this, along the lines of “weed is legal in Thailand!” The new Thai regime is not that progressive.” These claims have proven to be false.
(I talk about the trouble caused by the shaky legal distinction between recreational use and medical use here.)
At the time Sobers’ post was published, to say “weed is legal in Thailand” was to state a simple fact that anyone could see. The same situation exists today. The only difference is now there are many more privately owned dispensaries than there were one month ago.
The great experiment in Thai weed
Weed dispensaries of Thailand represent a radically independent sector emergent within a context of free decision-making. It was created ex nihilo, that is, it has come out of nowhere with no help or hindrance from anything outside itself. In this sense, it is a global rarity.
The private dispensaries derive their branding, products and pricing from preceding examples from North America and the Netherlands. Yet their stunning immediate success, and the obvious likelihood of sustained growth, is more a result of how legal Thai weed differs from what came before.
No special tax. No mandates for vertical integration. No product verification protocols. No reps from the department of health poking around. Shuttering the dispensaries would end an extraordinary experiment. The growth in jobs and revenue of the legal market reflect a trajectory of a mere 3 months. That is how long it has taken an unsubsidized, unplanned and unmonitored domestic network to emerge from nothing. Reintroducing the prohibition of cannabis flowers would have an immediate economic impact.
The most visible job losses would be in the retail sector, as around 200 private dispensaries have popped up since the 9th of June to sell primarily dried flowers with natural combinations of CBD and THC, (weed) typically open 9 hours a day, 7 days a week. Each dispensary requires between 10 to 20 full-time employees, while the owners and operators have agreed to leases, real estate deals, and sources to whom they transfer capital. The immediate toll on retail would be between 2,000 and 4,000 job losses, a raft of new bankruptcies and breached contracts scattered across the country.
A Thai weed dispensary illuminated in the color of weed in Thailand
Less visible yet much larger job losses would occur among the cultivators, manufacturers, developers, distributors and sales forces that have initiated a free-market network to meet the demand of the new dispensaries. To keep up with demand, cultivators currently provide retailers with 1,500 kilos of fresh dried flowers each month. These additional jobs dedicated to meeting that demand would be lost as soon as dispensaries stopped paying vendors.
Unlike other countries where weed has been legalized, Thailand has no developed legacy market beyond a very small black market for inferior weed smuggled in compressed tablets from Laos. The market for this product, named “ditch weed’, small as it was, has collapsed. Both the temptation and risk of creating a new black market in high-quality weed would be great.
The earnings of the Thai weed dispensary sector are even more impressive when one considers the odds. First-rate weed is available everywhere in this middle-income country that saw its GDP contract by 6.2% in 2020, due to a decline in external demand affecting trade and tourism and anemic domestic consumption. Thai weed is bounding out of the gate, into its first post-Covid low season.
Thai weed is a remedy for economic distress
Thai weed cultivators are scattered across the country but congregate mostly far from tourist areas, in the rural North and Northeast. Northeast Thailand (Issan) is where Thailand grows its hallucinatingly delicious jasmine rice. Anupong Thongkaew was born a farmer’s son in Issan and is an agricultural products trader and exporter of Jasmine rice. Today Anupong manages a cannabis cultivation project in Issan with eight contiguous provinces there in coalition to attract investment and train already accomplished rice and fruit farmers in the new craft of cannabis cultivation. The project covers 12,00 hectares next to the Phuphan mountain range near the border with Laos.
Anupong scoffs at the idea the Cannabis Act will be the beginning of a crack-down. “The people who say that weed will become illegal again are all farangs (foreigners) who don’t understand the Thai way,” he says. “The government will never say recreational use is OK because it would be shameful. Recreation to Thai people means being lazy and getting in trouble partying and doing stupid things. The leaders only say cannabis is good. Then they leave it up to you to use it the right way.”
Anupong believes that there will be additional rules, however. “The people who sell on the streets or in bars with no license are going to get in trouble. Ganja trucks are not going to last much longer. But right now any Thai can get a license to grow if they have some land, and sell weed with no problem if they show they can get a dispensary. Do you think the FDA doesn’t know they sell weed in those places? No way that’s going to change. And besides, it’s the first time people see the government doing something they like,” he said chuckling.
“We have been growing outdoor weed for Thais, but the market tells us that the farangs want indoor weed, so we are moving in that direction now,” he said. Anupong and his colleagues are cultivating cannabis in a pilot program that they intend to scale to 7 additional provinces. They aim to develop thousands of acres of cannabis, manufacture dried flowers and extracts on site and distribute these throughout Thailand and the world. To do this, they will need workers. “During the lockdowns, many younger people who had left their family farms to work in Bangkok came back home because they had no way to support themselves. And they are mostly still here.”
The Northeast region, home to the highest numbers of people living in poverty, was the hardest hit when, in 2020, Thailand’s 40-year trend of poverty reduction went into reverse. Rural poverty in a middle-income country is the harshest imaginable. A reversal in the trend of poverty reduction in human terms means more poor families are sliding into lives of chronic malnourishment, disease at all ages and early death.
The individuals who find themselves coping with these horrors are the ones who previously witnessed them, experienced them, and, for a short time, were free of them. “Life can be hard in Issan but many people feel cheated with city life. Many people say they want to stay [in Issan]. The lockdowns changed their thinking. They really suffered, sometimes going hungry for many days,” he said.
Anupong has grown several harvests of Hemp and saw his profit margins steadily decrease as supply backed up. “THC cannabis is the opposite. Now the challenge is to keep up with the demand, and the business has to expand strategically,” he said. “Issan is filled with ambitious young adults who want to make money. They want to work and because they are from Issan we know they are great farmers. All of a sudden, we have this big pool of labor to draw from that wasn’t here before. It’s the silver lining of Covid for us.”
Cultivating and manufacturing weed indoors requires a blend of agricultural understanding and high-tech skills. Anupong plans to train new employees on the job. He intends to build up an agribusiness workforce to rival that which already exists 400 miles to the west in the Northern region of Thailand.
If the real pessimists turn out to be right and it is “a fact, not a conjecture” that the private dispensaries are all on the chopping block, these remedies to poverty in Thailand become the enemy of the state under the Cannabis Act. That would entail the government snuffing out the economic spark that is setting Thailand back on its decades-long path of poverty reduction.
Or registration requirements could be placed on all buyers that would not amount to that much — assuming that qualifying as a patient was easy and followed the “light touch medical ID” that I recommended to whoever is listening around 4 months ago.
Or a new mandate for health professionals could add hassles and expense for the entrepreneurs, but they would live. Or something in between.
If Anupong and his colleagues, and others like them, can pursue their plans for Thai weed, the young adults of Issan and other rural climbs will no longer be forced to choose between working on their parents’ rice farm or working at menial jobs in the city. “Once we begin to scale the business, our employees can stay in Issan and work in the cannabis business or go to our other indoor sites outside Bangkok once they learn the skills,” he said.
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