Thailand’s cannabis decriminalisation and subsequent unregulated industry

In June 2022, the Thai government took the bold step of decriminalising the production, sale and personal use of cannabis. Huge consequences have followed, and other Asian countries should take notice.

An extensive, largely unregulated industry has quickly emerged, surprising many observers. Specialised retail outlets selling cannabis products have proliferated in large cities. Their number seems comparable with conventional pharmacies.

3000 new retail outlets officially registered

The 3000 new retail outlets officially registered include both small-scale Thai firms and foreign-owned firms with prior experience in the Amsterdam and California cannabis industries. Foreign firms are especially significant in cities receiving the most foreign tourists.

There are websites dedicated to listing the new retail establishments. The northern city of Chiang Mai has 220 outlets listed and is gaining a reputation as one of the world’s top cannabis tourist destinations. Cannabis purchasers also openly include many local Thais, whose consumption was previously hidden. Since decriminalisation, black market prices of cannabis have fallen radically — well below legal dispensary prices.

The new policy was promoted by Minister for Public Health Anutin Charnvirakul. Anutin is the leader of the populist Bhumjaithai Party and is a potential candidate for prime minister in the upcoming national elections, expected in May 2023.

Campaigning is already underway. Based on media reporting, the new cannabis policy has not yet become a major election issue — but this could change. Groups opposed to Anutin and his party may yet weaponise popular disquiet about the cannabis policy. The opposition Pheu Thai Party has promised to clamp down on ‘narcotics use’ if it wins the elections. This may signal an intention to suppress the new industry.

Decriminalising cannabis

Several factors contributed to the decision to decriminalise cannabis. The country’s tourism industry was devastated by the COVID-19-related shutdowns and the policy change was seen as one way to attract tourists, especially young adults. Advice from the Ministry of Public Health supported the change as it impacted the medicinal use of cannabis.

For some consumers, including older Thais, cannabis was expected to offer medical benefits, including pain management and treatment of chronic sleep disorders. Long-term negative effects of cannabis use were considered real but minor in most cases.

Widespread recreational use

Conversely, the head of the Psychiatric Association of Thailand, Dr Chawanan Charnsil, observed in August 2022 that the recreational use of cannabis had become widespread since it was removed from the narcotics list. He remarked that this was very different from the medicinal use of cannabis envisaged by the Ministry of Public Health and warned it placed people with existing mental health disorders at greater risk.

Political opposition was expected, from conservative Thai groups questioning whether cannabis users are the kinds of tourists Thailand should want, to the country’s vast alcohol industry, and presumably from the criminal groups controlling the previously illegal cannabis market.

Inadequate legislation

The government judged that the most expedient way to adopt the policy change was to introduce it suddenly, with minimal notice — hence its use of an administrative, rather than legislative, mechanism to enact it. A consequence is the inadequate legislation regulating the new industry, combined with a lack of enforcement.

Point-of-sale restrictions officially preclude purchases by persons under 20. But as with tobacco and alcohol products, cannabis use by children and adolescents is difficult to control. Products on sale include not only various kinds of cannabis buds for smoking, but also cannabis oil and cannabis-infused food and beverages.

The active ingredient in these food and beverage products is insufficiently controlled, and these products have possible pesticide and herbicide contamination.

New opportunities for Thailand’s farming population

Cannabis decriminalisation potentially offers new production opportunities for Thailand’s economically disadvantaged farming population. The highest-quality product requires irrigated greenhouse conditions that require substantial investment. Unsurprisingly, smallholders have generally lacked the capital for these investments.

Following the shift in cannabis policy, multiple sources have reported that there has been a large decline in the street price of methamphetamine pills. Methamphetamine is highly addictive and long-term use is known to cause serious harmful effects.

Two possible explanations have been offered for the fall in methamphetamine prices. Methamphetamine supply could have increased, forcing prices down, as a strategic response by dealers to the threat of reduced demand. There may also have been an actual fall in demand as some recreational users shifted to cannabis. Yet the two drugs are pharmacologically different, and a demand shift of this kind is unlikely among long-term methamphetamine users.

If the second explanation — reduced demand — is correct, its effects could falsely resemble the first — increased supply. By lowering the price of methamphetamines, lower demand among recreational users could coincide with increased consumption among other users. The latter could also be misinterpreted as an increase in supply. Without careful quantitative study, these problems of causal attribution cannot be disentangled.

It remains possible that demand has shifted towards cannabis and away from more dangerous drugs like methamphetamines, used by both younger Thais and foreign tourists. If so, that impact is potentially very significant.

Thailand’s policy shift is an experiment that other countries with serious methamphetamine problems, such as the Philippines, should consider carefully. But arguments based on anecdotal reports are incapable of sorting out the causal relationships involved. For effective policy lessons to be drawn, careful and rigorous studies, based on reliable data, are needed now to analyse the economic and social effects of Thailand’s policy experiment.

Peter Warr is John Crawford Professor of Agricultural Economics Emeritus at the Crawford School of Public Policy, The Australian National University.