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February 21, 2023

Laos Approves Hemp-Related Activities

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On December 28, 2022, the Ministry of Health of Laos issued Decision No. 3789/MOH on the Control of Hemp for Medication and Products (the “Decision”). The Decision approves the regulated cultivation, extraction, production, processing, storage, distribution, utilization, import-export, and transport of hemp. The Decision also authorizes the use of hemp and hemp-related products by the general population, although use of certain products is limited to those with medical prescriptions.

Background

In 2019, the Lao government established an ad hoc committee to consider the legalization of cannabis, as reported previously. The government permitted certain local companies to grow cannabis in specific zones under pilot programs, although it continued to strictly prohibit the use and commercialization, as well as consumption, of cannabis-related products, regardless of the level of psychoactive tetrahydrocannabinol (THC) in the products.

Overview of the Decision

The Decision was issued by the Ministry of Health (which led the ad hoc committee) and permits authorized companies to engage in certain activities involving the use of hemp and the consumption of hemp and hemp-related products. The Decision defines hemp (“porkeo” in Lao) as a “plant that belongs to the same family as ganja and bears the scientific name Cannabis Sativa L. (Cannabis sativa L. subsp. sativa var. sativa) which is a subspecies of ganja (Cannabis Sativa L.).” This definition aims at differentiating hemp from the general definition of ganja or marijuana, which continues to be listed as a prohibited narcotic in Laos.

The Law on Narcotics (2007) and the Penal Code (2017) still prohibit the production, trade and use of all types of cannabis. These laws will need to be amended to ensure that they are aligned with changes set out in the Decision.

 Authorized Hemp Activities

The Decision allows approved companies to engage in the cultivation, extraction, production, processing, storage, distribution, utilization, import-export and transport of hemp. A company intending to engage in any of these authorized activities must obtain approvals from the Ministry of Health and the Ministry of Planning and Investment. Depending on the activity, there are different requirements for obtaining approval. For example, seeds used for cultivation must be registered and facilities used for extraction must be inspected by the Ministry of Health. Engaging in an activity without approval may constitute an offense under the Law on Narcotics and the Penal Code.

The Decision also sets out general requirements that apply to companies engaging in these authorized activities, including that they must employ a registered pharmacist or chemist who holds a bachelor’s degree from a “relevant institution” and has at least five years of experience. It is expected that further regulations on specific hemp-related activities will be issued in the future.

The Decision does not impose restrictions on foreign investment in hemp-related activities, beyond the general restrictions that apply to foreign investment in Laos (for further information please refer to our regional guide Investing in Mainland Southeast Asia).

Sale and Distribution of Hemp Commodities

The Decision regulates the distribution and sale of hemp and hemp-related products in Laos and sets specific requirements for different categories of product.

Medical Prescription Required

Certain hemp-related products may only be distributed and used under a medical prescription. These include:

  • Dried flowers, which must contain no more than 1% THC by weight; and
  • Hemp-related products for use for medical purposes, which must contain no more than 0.2% THC by weight and must contain at least four times as much non-psychoactive cannabidiol (CBD) as THC.

Hemp-related products for use for medical purposes must be registered with the Food and Drug Department (FDD). The Decision does not contain a clear definition of what constitutes a “medical purposes”; further guidance will be required on this point.

Medical Prescription Not Required

Certain hemp-related products can be distributed and used generally, without a medical prescription. These include:

  • Health supplements, which must contain less than 0.2% THC by weight and must be registered with the FDD;
  • Cosmetics containing primarily CBD, which must contain less than 0.2% THC by weight and must be registered with the FDD; and
  • Beverages that contain CBD or hemp essential oil, which must be registered with the FDD.

Conclusion

The climate and fertile soil in Laos have been recognized as providing ideal conditions for growing hemp. It is therefore welcome that Laos follows many other countries in the region and around the world in approving the production and use of hemp. This move is expected to benefit the agricultural industry and raises the prospect that hemp-related products made in Laos can be exported worldwide, contributing to reinforcing “Made in Laos” as an indication of high-quality CBD products from Laos. The recent liberalization of cannabis in Thailand could serve as a model for Laos going forward. Please see our Cannabis and Hemp Business Guide – Thailand for more information on the legal landscape for cannabis in Thailand.

However, it is important to note that several aspects of this new system remain to be clarified, including the process for analyzing the THC percentages of hemp and hemp-related products, ongoing reporting requirements, and the contents of feasibility studies that must be submitted to the Ministry of Health. It is likely that such matters will be clarified through subsequent administrative practice, rather than through further regulations.

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