Authors:
Peerapan Tungsuwan
Partner and Head of Healthcare & Life Sciences, M&A, Bangkok
peerapan.tungsuwan@bakermckenzie.com
Panyavith Preechabhan
Partner, Healthcare & Life Sciences, M&A, Bangkok
panyavith.preechabhan@bakermckenzie.com
As the global battle against the Covid-19 pandemic wears on amidst the increasing production of vaccines and research into the most effective “booster shots,” most of us contribute to this battle by isolating ourselves at home. While this may have caused some impact on certain sectors of the economy, some businesses have benefited from this pandemic – one of these businesses appears to be the cannabis industry.
In more “developed” cannabis markets, such as Canada, the US or the UK, increased stress and anxiety, no doubt caused by the pandemic, have reportedly led to more people turning to “alternative” medicines or treatments, such as medical cannabis and CBD, to alleviate these symptoms. For example, according to Statistics Canada, which has conducted a series of web panel surveys to see how Canadians are reacting to the pandemic, in the January 2021 survey panel, among Canadians who had previously consumed cannabis, more than one in three (34%) said their consumption had increased, compared with the pre-pandemic period. Among this group, stress (65%), boredom (58%) and loneliness (39%) were most frequently cited as factors contributing to increased cannabis consumption. Interestingly, factors related to ease of access to cannabis also seemed to have contributed to an increase in consumption, with 29% of respondents citing ease of access, which includes online shops, as associated factor for increase in their consumption.[1] Although we may not see the same variety of cannabis products available in the nascent Thai cannabis market yet, the value of the Thai hemp market is expected to reach THB 15.8 billion (or almost USD 480 million) over the course of the next five years.[2]
With the pandemic pushing businesses and consumers to move online, resulting in an explosive growth in online sales and digital platforms, the cannabis market will also be faced with the issue of how to regulate online sales of cannabis products.
In late August 2021, the Thai FDA, together with the Office of the Narcotics Control Board (ONCB) and the Thai police, announced the arrest of two individuals who illegally manufactured and distributed cannabis oil on a social media platform. The wrongdoers’ excuse was simply that they had thought that doing so was possible as the Thai government has already removed cannabis and hemp from the narcotics list. They were charged with jointly manufacturing Category V Narcotics (cannabis) for sale without the approval under the law on narcotics and manufacturing unlicensed cosmetics.
Relevant regulatory issues and requirements
As the regulations still only permit the use of certain parts/extracts of the cannabis or hemp plants in certain types of healthcare products (including food and cosmetics), it is essential to ensure that only such parts/extracts are used as ingredients of the cannabis or hemp based products and that the products comply with the permissible THC and CBD content for such products. The required licenses should also be obtained prior to the manufacturing and sale of such products.
Given the various types of healthcare products being separately regulated under other specific laws and regulations, business operators will need to bear in mind the applicable requirements regarding the quality or standards for each type of healthcare products, as specified by the FDA. Further, care should be taken to ensure that the products comply with the requirements relating to the sale of the products, especially those with respect to labelling, display of health claims and advertisements.
The issue becomes more complex if these products were to be sold online. It would also be important to be reminded that not all types of healthcare products can be sold online. For example, the sale of certain types of drugs online is prohibited by law and such drugs may only be sold at pharmacies. Additional licenses may also be required for the applicable e-commerce operation.
While this emerging new industry is presenting undeniably exciting opportunities, at a time when e-commerce is booming like never before, business operators are reminded to move with caution. This is not only because of the legality surrounding certain business activities but also because cannabis or hemp-based products are subject to various control and regulations applicable to each industry that those products belong to, be it cosmetics, foods, drugs or herbal products, as well as the laws governing the sale of products through both physical and online channels, as the case may be. Engaging in this business, therefore, will require a well-designed business model with thorough understanding of the relevant laws and regulations, both in relation to the specific industry sectors, as well as e-commerce. Any misstep could be costly, particularly as regulations in this new industry remain complex and are continuing to develop, while enforcement by the regulators, including the police, remains active. Business operators in this space would be well advised to ensure that their business activities and products adhere to all applicable laws and regulations or seek professional advice to avoid potential liabilities and pitfalls.
[1] Statistics Canada (2021, March 4), Alcohol and cannabis use during the pandemic: Canadian Perspectives Survey Series 6. Retrieved from https://www150.statcan.gc.ca/n1/daily-quotidien/210304/dq210304a-eng.htm
[2] Chaiwat Sowcharoensuk, Hemp: A new cash crop that brings both challenges and opportunities, Krungsri Research (July 2021).
