Baker & McKenzie: Cannabis Outlook: What’s on the Horizon?

Authors

Panyavith Preechabhan

Partner, Healthcare & Life Sciences, Baker McKenzie, Bangkok

Email: Panyavith.Preechabhan@bakermckenzie.com

 

Praween Chantanakomes

Senior Associate, Healthcare & Life Sciences, Baker McKenzie, Bangkok

Email: praween.chantanakomes@bakermckenzie.com

 

 

As we approach the second anniversary of the historic amendment of the Thai Narcotics Act to allow the use of cannabis for medical purposes for the very first time in Thailand, the first country in Southeast Asia to do so, we take this opportunity to assess and forecast the outlook for the cannabis industry in Thailand and the region.

With the increasing awareness and recognition of the benefits of the cannabis plant and in particular, hemp, from more research and use of the plants, in particular the active ingredient cannabidiol (CBD), we saw the Thai government easing restrictions that it had traditionally placed on cannabis and hemp. Towards the end of 2020, certain parts and extracts of the cannabis and hemp plants with low levels of tetrahydrocannabinol (THC) (i.e. the main psychoactive compound in the plant) were no longer regulated as “category V narcotics” and most recently, hemp seed oil and hemp seed extracts meeting the criteria issued by the Ministry of Public Health can now be used in cosmetics.

Nevertheless, due to the legacy of cannabis and hemp having been strictly regulated as narcotics, the laws and regulations and their interpretation and enforcement by the authorities are not straightforward.

Against this backdrop, here are some of the trends we are likely to see in 2021 and beyond, and our forecast for the cannabis and hemp industry in Thailand and the region, as well as the regulatory implications.

 

  1. Growth in industrial hemp: hemp in cosmetics

Although cannabis and hemp both derive from the species Cannabis sativa, hemp with a lower concentration of THC and possibly a higher concentration of CBD, and arguably the “safer” of the two strains, has been the focus of the liberalization efforts in Thailand, with various new regulations being issued in order to develop the market for industrial hemp, including the recent policies from the Thailand Board of Investment (BOI) to promote the manufacture of oil, extracts, active ingredients and related products from hemp. Therefore, this article will focus on industrial hemp.

One area where the application of hemp is allowed is in the area of cosmetics. Studies have shown that hemp seed oil is rich in high essential fatty acid content, making it an ideal ingredient for cosmetics, and in particular, skin care and body care products. Due to this essential property of hemp, various cosmetics and skin care products have been launched in the international market, such as body lotion, lip balm and massage oil.

With the new Ministerial Regulation allowing the production and sale of cosmetics with qualified hemp seed oil and hemp seed extracts in Thailand, coupled with more guidance from the Thai Food and Drug Administration (FDA) to assist business operators with the marketing authorization (including labeling and advertisement requirements for cosmeceuticals, namely products which are essentially a combination of cosmetics and pharmaceuticals and making the related health claims), the laws and regulations and policies of the regulators seem inclined to encourage more investment in the area of cosmetics containing hemp and its extracts.

 

  1. The next anticipated area: hemp in food

With hemp having cleared the regulatory hurdles for use in cosmetics, naturally, the next area is the applications of hemp in food. With hemp seed, hemp seed oil and hemp seed extract already exempted from being regulated as narcotics, the market is currently waiting for the much-anticipated implementing regulations to be issued, currently expected to be within the first quarter of this year, to allow product licenses to be obtained for the production and sale of hemp-based food products. With hemp seed being high in protein and also a great source of iron, there is also a lot of business potential for hemp seed, hemp seed oil and hemp seed extract being used as ingredients in food products, such as granola and hemp milk and other CBD-infused beverages.

 

  1. Cannabis and hemp for modern medicinal use

Following the development of the legal regime for cosmetics and food containing hemp and the related industry, we anticipate to see developments in the industry and legal regime for modern medicine containing extracts from cannabis or hemp. Although a rigorous study of cannabis as a medicine was not possible given its previous narcotics status and the drug will need to go through the phases of clinical trials before it will be approved by the FDA, with more and more studies claiming the safety and efficacy of cannabis and its CBD (e.g. in the treatment of seizures and anorexia associated with weight loss – the therapeutic uses of certain drugs approved by the US FDA), we may soon see a new marketing authorization being issued for a new cannabis-derived drug product in Thailand.

 

  1. A regional business: export of hemp products

When thinking about a potential business model for cannabis and hemp and the demand for the products, it is also important to factor in the possibility to export the products. Although the Thai regulations contemplate these products being approved for export, business operators must also bear in mind the regulations that apply in the importing country. For example, different countries may accept different levels of THC content in a cannabis-derived product or may even have different definitions for THC and may have different regulations on the labelling and advertising requirements for these products.

 

  1. Thailand as medicinal cannabis tourism destination

Although this might be a little difficult to recall given the current COVID-19 pandemic, with Thailand already being a regional medical hub, with the growing interests in alternative treatments, the growth of medicinal cannabis tourism in Thailand may not be far-fetched after the situation with the current pandemic improves.

With more progress made in its regulatory framework when compared to other Asian countries and other promising features, such as its strategic position as a regional medical hub and prominent medical tourism sector, Thailand has the potential to become a leading player in the medicinal cannabis and industrial hemp market. Additional subordinate rules and regulations, as well as supportive environment for the business sector, would help ensure the realization of Thailand’s potential and its promising position in this market.

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Author Bios

Canada
Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Nicaragua
Elvin Rodríguez Fabilena

USA

General
Julie Godard
Carl L Rowley -Thompson Coburn LLP

Arizona
Jerry Chesler – Chesler Consulting

California
Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Colorado
Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Florida
Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

Illinois
William Bogot – Fox Rothschild

Massachusetts
Valerio Romano, Attorney – VGR Law Firm, PC

Nevada
Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Oregon
Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Pennsylvania
Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild