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August 29, 2023

New Developments in Thailand’s Cannabis Law

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Since the June 9, 2022, delisting of all parts of the cannabis plant according to the Narcotics Code, there has been an explosion of cannabis dispensaries operating in Thailand. The Department of Thai Traditional and Alternative Medicine (DTTAM) has issued more than 12,000 cannabis dispensary licenses to businesses in Thailand. A license allows a dispensary to sell cannabis flowers legally. In addition, the DTTAM requests the cooperation of dispensaries in submitting monthly reports about the sourcing, selling, and inventory of cannabis flowers. The DTTAM may suspend the selling license of dispensaries that fail to submit these reports.

Apart from the enforcement duties and administrative acts of the DTTAM, the enactment of the laws and regulations pertaining to cannabis seemed to be drastically winding down. One of the reasons was that Thailand had delays in the process of forming a new government following the general election of May 14, 2023. These delays dampened Thailand’s thriving cannabis industry.

In particular, the industry has concerns about the uncertainty of the nascent cannabis law. On August 11, 2023, the Narcotics Control Division of the Thai Food and Drug Administration (FDA) posted the Draft Regulation Re: Application for Approval and Approval for Manufacture, Importation, Exportation, Distribution or Possession of Narcotics under Category 5 (Extracts from Cannabis or Hemp Plants Only). This may be the first regulation that the newly formed government implements with regard to cannabis extracts. Unlike the DTTAM’s enforcement activities, the Thai FDA requests that a domestic manufacturer, importer, exporter, or seller of cannabis extracts apply for a license. The Thai FDA, as the authority, will consider granting a license only in the following cases:

  1. For medical benefits;
  2. For commercial or industrial benefits;
  3. For the benefit of medical or scientific analysis or research; and
  4. For use by the government for preventing and suppressing narcotics-related offenses.

Nonetheless, there is currently a restriction period of five years in place, limiting the importation of cannabis extract to cases 3 and 4 in the above list.

There are also some notable limitations for a legal entity applying for a license:

  • The entity must obtain corporate registration under Thai law;
  • The authorized signatories binding the legal entity (authorized directors) must have Thai nationality with an age of at least 20 years old;
  • If the entity is a limited company, it must have Thai shareholders holding at least 51% of the total number of shares; for legal entities in other categories at least two-thirds of the partners must be Thai nationals; and
  • The entity must have a physical office located in Thailand.

These limitations are likely to impact cannabis business operators engaging in the extraction of cannabis and the preparation of CBD/THC for both domestic and exportation purposes. If the regulation is implemented as written, business operators should review the structure of their legal entities carefully.

For more information, please contact Dr. Atthachai Homhuan, director of regulatory affairs, at atthachai.h@tilleke.

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