Thailand reevaluates cannabis regulation: investors fear million-dollar losses

A potential setback in Thailand's cannabis regulation is worrying investors and market industries, who may face significant losses if the government proceeds with plans for recriminalization. The Thai Hemp and Cannabis Industry Association (HCIA) has warned that this measure could result in an investment loss exceeding $274 million.

The recent bill proposed by the Thai government aims to severely restrict CBD businesses and other hemp flower-derived extracts. As highlighted by HCIA President Tossaporn Nilkamhang, this measure could deter investors and weaken confidence in future government initiatives, directly impacting manufacturers of these products.

Prime Minister Srettha Thavisin's government plan, which seeks to tightly regulate the production and sale of CBD, limiting its use to medical products and research, represents a significant departure from the previous government's policies, which allowed broad CBD application in food, beverages, and cosmetics.

Thavisin's government, associated with the center-left Pheu Thai Party, proposes a focus on using industrial hemp for non-psychoactive products like seed-based foods, textiles, and construction materials. However, this shift in direction concerns established sectors that benefited from the previous regulations.

HCIA argues that instead of recriminalizing cannabis, the government should collaborate with market operators to create legislation that promotes hemp and marijuana as new economic crops while establishing rules to prevent drug abuse and youth access to cannabis products.

Proposals for the new Law

Nilkamhang suggests that the new law should classify CBD products with less than 0.2% THC as over-the-counter health products, not medications. This would allow the legal production, advertising, and sale of these products, encouraging market development without compromising public health.

Since 2020, Thailand has allowed the production of hemp seed oil-based cosmetics and other derivatives, later expanding their use to food and beverages. Estimates show that even before full legalization, the CBD market in Thailand had already reached $55 million in 2021.

A growing market

In the first quarter of this year, there was a 33% increase in CBD product registrations, including dietary supplements, beverages, herbal palliatives, and cosmetics, totaling 707 registrations. This demonstrates the market's growth potential, which now faces uncertainties with possible regulatory changes.

Since the removal of hemp and marijuana from Thailand's Narcotics Act in 2022, the market has seen expansion despite the lack of a comprehensive regulatory framework. The current reevaluation of cannabis regulation by the government could therefore represent a significant step back for an emerging industry, jeopardizing millions of dollars in investments and the future of the cannabis market in Thailand.