As of June 16, 2022, cannabis has been officially classified as a controlled herb according to an announcement by the Ministry of Health. This reclassification brings about significant regulatory changes, particularly affecting businesses engaged in the cannabis industry, including those involved in its sale and export. The regulatory framework for cannabis is detailed in Section 46 of the Protection and Promotion of Traditional Thai Medicine Knowledge Act, which imposes strict licensing requirements on businesses operating in this sector.
If you're considering investing in the cannabis industry in Thailand, let's take a look at the requirements for opening a cannabis dispensary and explore your potential opportunities.
Key Regulatory Requirements
Restrictions on Foreign Ownership: Foreign-owned businesses and those with significant foreign ownership are strictly prohibited from engaging in the production, sale, import, export, and possession of cannabis. This strict regulation creates a notable barrier for foreign entities looking to enter the cannabis market in Thailand.
Local Ownership Requirements: For companies involved in the cannabis industry, the law mandates that:
1. Thai nationals must hold at least two-thirds of the company's capital.
2. Thai nationals must occupy at least two-thirds of the director positions within the company.
These requirements are designed to ensure that the business operations in the cannabis sector uphold local interests and regulatory standards.
Exceptions to the Rule: There is a noteworthy exception for companies that meet certain criteria. Specifically, if a company has 51% Thai ownership and Thai nationals hold the majority of board positions, it can legally engage in the production and sale of cannabis products. This includes cannabis tinctures with less than 0.2% THC. It's essential to highlight that these ownership and directorship requirements apply specifically to the production, import, export, distribution, and possession of Class 5 Cannabis Narcotics—essentially cannabis extracts with THC content exceeding 0.2%.
Distribution of Other Cannabis Parts: For other parts of the cannabis plant, such as seeds and stems (excluding leaves and flowers), different regulations apply. Distribution of these parts may require specific licenses, depending on the exact nature of the plant material. At present, there are no explicit restrictions on foreign ownership or license applications for the distribution of these other parts. However, it is important to consider that such activities might still fall under the Foreign Business Act, which governs foreign participation in various business sectors in Thailand.
Given the complexity and evolving nature of cannabis regulations, staying up-to-date with the latest legal requirements is crucial. The regulatory environment surrounding cannabis in Thailand continues to evolve, with new updates and adjustments being made regularly.
To navigate these intricate regulations and ensure full compliance, consulting with experts who specialize in Thai cannabis law is highly advisable. At Ravenwing, our team of professionals provides comprehensive guidance tailored to the specific needs of businesses operating in the cannabis industry. Our experts are well-versed in the nuances of Thai cannabis regulations and can help you make informed decisions, understand regulatory changes, and successfully manage your business operations within the dynamic cannabis sector in Thailand.
For detailed and current advice, we recommend reaching out to our team.
Disclaimer: Informational Article, Not Legal Advice
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