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Understanding Cannabis Business Activities and Licenses in Thailand
22/06/2023
As the global perception of cannabis undergoes a significant transformation, Thailand has emerged as an unexpected player in the rapidly evolving cannabis industry. With its rich cultural heritage intertwined with the plant’s historical significance, Thailand has embraced progressive reforms to unlock the potential of cannabis for medicinal, research, and industrial purposes.
While Cannabis is now legal in Thailand, the recent elections resulted in a change of Government. It is important to note that nothing about the laws relating to Cannabis has changed at the moment. However, the new Government may change the regulations in the future. Our team of experts will continue to monitor any developments closely.
In this guide, we explore the regulatory framework, application process, and key considerations for entering the cannabis industry in Thailand, including cannabis business activities and licences.
Key points
- Cannabis business activities in Thailand include importing seeds, producing cannabis products, extracting cannabis for medical and academic purposes, cultivating cannabis, and distributing certain parts of the plant.
- Importing other parts of the cannabis plant (except seeds) and possessing, selling, or distributing cannabis extract with more than 0.2% THC is illegal in Thailand.
- Different licenses are required for various activities in the cannabis industry, such as production, distribution, processing, export, and import.
- License validity varies, with distribution, export, and processing licenses lasting three years and production licenses having no fixed expiration date.
- Eligible applicants for cannabis licenses in Thailand include Thai citizens and companies registered under Thai law with majority Thai ownership.
What are the available cannabis business activities in Thailand?
Businesses in Thailand that want to work with cannabis can undertake the following activities:
1) The import of seeds:
Companies may import cannabis seeds (for both Thai and foreign-owned entities). To do so, companies must apply for the appropriate licence from the Thai Plant Quarantine Department.
2) Production of products with cannabis:
The production of products containing cannabis, however, is subject to various licence requirements and obligations depending on the type of product. For example, food products require a licence for food manufacturing from the Food and Drug Administration (FDA).
3) Extraction of cannabis:
The extraction of cannabis is only allowed for medical and academic purposes. Licence requirements state that the licence will only be issued to medical service entities or academic organisations. Such organisations must have at least two-thirds of Thai nationals’ shareholder and management positions.
4) Cultivation:
There are no restrictions for the mass cultivation of cannabis as a business operation for Thai entities. Business owners are required to register cannabis cultivation with the FDA through the application “Plook Gan”. However, a foreign entity may be restricted from agricultural activities under the Thai Foreign Business Act.
5) Distribution of cannabis :
The distribution of the following parts of the cannabis plant is possible for Thai entities with no licence requirements:
- leaf,
- branch,
- roots and
- trunk.
The distribution of the parts of the plant will require a licence from the plant quarantine department.
For fully owned foreign-owned entities, the distribution of cannabis is subject to the agricultural activities’ restrictions under Schedule 1 of the foreign business act.
It is also important to note that the distribution of products containing cannabis may be subject to further obligations and requirements depending on the type of product.
What business activities are illegal for cannabis businesses?
Companies in Thailand cannot undertake the following activities:
Importing other parts of the plant other than seeds:
Importing other parts of the cannabis plant (except for the seeds) is prohibited, regardless of whether it is for personal business use. These restrictions apply to both Thai and foreign entities.
Possessing, selling, and distributing cannabis extract with more than 0.2% of THC:
Cannabis extracts with more than 0.2% THC are considered a narcotic substance. Possessing, selling, and distributing this without a licence is criminal. Such licences can only be obtained for medical, research, and academic activities.
What are the cannabis business licences available in Thailand?
The cannabis industry in Thailand is highly regulated, and different licences are required for certain activities. Which licence you need depends on the activity you carry out. The licencing process is typically a multi-step process with various requirements for the applicant, its shareholders, and its business operations.
Production licence
Cultivating cannabis requires a cannabis production licence from the Thai FDA. The licence is applicable for each cultivation site. If you wish to have a few locations for cultivation, you must have a licence for each cultivation site.
Distribution licence
The sale of cannabis flowers/ leaves is subject to the business obtaining a cannabis distribution licence. Other parts of the cannabis plant, such as seeds or the stem, will require the business to obtain a controlled seed distribution licence from the Plant Quarantine Department.
Please note the requirement for obtaining a Distribution licence applies to both wholesale and retail businesses.
Processing licence
The processing of cannabis requires a licence from the FDA. When processed cannabis is used in producing other products, a licence must be obtained from the relevant authority. For example, producing cannabis beverages, the producer must apply for a beverage production licence.
Export licence
The exportation of cannabis flowers/ leaves is subject to the cannabis export licence. Other parts of the cannabis plant, such as the seed or stem, will require a controlled seed export licence with the Plant Quarantine Department.
Import licence
You can only import certain parts of the cannabis plant e.g. the seeds and stem. Such production is subject to licence requirements from the Plant Quarantine Department. The importer must provide such a licence to the Customs Department before the importation.
It is not possible to import other parts of the cannabis plant.
Please note that the licences mentioned above only cover activities relating to cannabis flowers/leaves. The distribution, import, and export of the other parts of a cannabis plant that can be used for cultivation are subject to a controlled seeds licence from the Plant Controlled Department.
How long is a cannabis business licence valid?
Licences for distribution, export, and processing are valid for three years. Licences can be renewed 60 days before the expiration. As it stands, the licence for the production of cannabis does not have a fixed validity period and will not expire. However, this may change in the future.
Who can apply for a licence?
Eligible applicants for licences relating to cannabis in Thailand include Thai citizens, companies registered under Thai law (with the majority of shareholders being Thai nationals), and community enterprises governed under the Community Enterprise Act B.E. 2548 (2005).
For a company, the representative whose name appears on the application (and license, if successful), must be a Thai national who is at least 20 years old; they must also have a domicile or office in Thailand and must fulfil the basic requirements of legal capacity (i.e., competency) and financial solvency.
How can Belaws help?
For more information about starting a cannabis business in Thailand, why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
Our consultations last for a period of up to 1 hour and are conducted by expert Lawyers who are fluent in English, French and Thai.
Consultations can be hosted via WhatsApp or Video Conferencing software for your convenience. A consultation with one of our legal experts is undoubtedly the best way to get all the information you need and answer any questions you may have about your new business or project.
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Frequently asked questions
What are the two primary types of shares available for companies in Thailand?
The two primary types of shares in Thailand are ordinary shares and preference shares.
What rights do ordinary shareholders have in a company?
Ordinary shareholders have the right to attend general meetings, exercise one voting right per share owned, and receive a share of profits proportionate to the amount paid for each fully paid share.
What rights do preference shareholders have in a company?
Preference shareholders have the right to attend annual general meetings, priority rights to receive dividends, and their voting rights may be the same as, less than, or greater than those of ordinary shareholders, as specified in the company’s articles of association.
Can preference shares be canceled once issued?
Preference shares cannot be canceled unless a capital decrease is performed.
Are nominee shares allowed in Thailand?
No, the use of nominee shares is illegal in Thailand under The Foreign Business Act (FBA).
Can ordinary shares be transferred in a company?
Yes, ordinary shares can be transferred, and certain requirements must be met for a share transfer to be legally recognized.
What is required for a valid share transfer of ordinary shares?
A share transfer instrument must be documented in writing, signed by the transferor and transferee, attested by at least one witness, and the transferee’s name and address must be recorded in the shareholder’s register.
What are share certificates in Thailand?
Share certificates are issued by Private Limited companies in Thailand upon completion of a share transfer. They contain the company seal and include details such as the company name, number of shares, amount paid on each share, and the shareholder’s name or a statement indicating issuance to a bearer.
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