The cannabis market in Thailand was decriminalized a couple of years ago, leading to a boom in both the production and sales markets. In this article, Grodan's Daan Berkers takes a closer look at the current situation in Thailand and the expectations for the future, drawing on input from the company's two official distributors.
Up until a couple of years ago, the cultivation and use of cannabis in Thailand came with a high risk of severe punishment. This all changed when it was decriminalized by the government in 2022. "The change in the legal situation in Thailand opened up new opportunities for us to move into that market. We and our distributors have a strict policy of only supplying to cannabis cultivators who are licensed in line with their specific country's regulations," states Daan Berkers, Senior Account Manager New Crops MJ International at Grodan. "To help us explore the emerging Thai market and provide top-quality service on the ground, we've appointed two local distributors. They are now the only official source of guaranteed, authentic Grodan products in Thailand."
©Barkuna Cannabis Inc
One of those distributors is Barkuna Cannabis Inc. "Cannabis is now sold openly for recreational use at around 10,000 'recreational cannabis dispensaries' throughout the country," says Christopher Fenn, who moved to Thailand from North America to set up the company just before the legislative change. To help him, he assembled a team with 70 years of combined global experience in cannabis cultivation.
"Because of the tight restrictions up until then, there was no legacy market to start from, so in 2022 there were very few local cultivators. Prior to legalization, a number of local high-net-worth investors made a move in the extraction business in anticipation of the looser rules. However, when the new law actually came into effect, they were disappointed to discover that only the flowers have been decriminalized, and extraction remains illegal due to the higher percentage of THC," he adds. "Since decriminalization, various established players from other countries have come to Thailand to pursue the cultivation market."
Inferior quality at first
The other official Grodan distributor is Menno Keppel from Agri Solutions Asia (ASA). He has lived in Thailand since 2004, and set up ASA in 2014 alongside his existing business cultivating the premium Take Me Home tomato brand. "When cannabis was legalised here, the government was keen to stimulate the local production industry and made it extremely easy to arrange a cultivation licence. Prospective growers can literally register online and obtain a licence on the same day," he explains.
In fact, according to Fenn, the government even gave away hundreds of thousands of cannabis plants to help farmers get started. However, the domestic product quality was inferior in the early days, so the majority of the cannabis consumed came from illegal imports. "But in the past two years, Thai farmers have come on in leaps and bounds. There are now probably around a hundred high-level cultivators in Thailand, plus many smaller players. As a result, almost everything consumed here is now also grown locally," he comments.
Strong need for knowhow
Through their respective companies, both Fenn and Keppel have contributed to the rapid advancement of the industry. Burkana has worked to help growers to elevate their game, such as by providing free consulting. Meanwhile, ASA shares expertise and advice about the cultivation of all kinds of tropical crops. "Sometimes that's through formal consultancy and training, sometimes it's by inviting people to come and visit our Innovation Centre. Needless to say, in the past couple of years there has been a strong need for knowhow among established Thai farming families that decided to move into cannabis," continues Keppel.
Popularity as a best-in-class brand
Grodan's stone wool growing media solutions form an important part of his advice, Keppel explains: "Grodan has the number-one substrate in my opinion; there's no comparison, which is why I'm happy to represent the company as an official distributor. I have contact with a very diverse range of growers, from small-scale farmers with just a couple of dozen plants to large-scale producers with multiple rooms. Once they have tried Grodan's stone wool products and see the results for themselves, they keep coming back for more."
The Grodan brand is already popular in Thailand, he adds: "Local growers look to international players for inspiration and are keen to use the same best-in-class products, even if they are more expensive than cheap Chinese alternatives. In particular, they are super happy with Grodan because of the strong root formation, the easier steering, the homogeneity, and the improved crop quality, which also reduces their plant losses."
Spirit of collaboration
Fenn is similarly positive about Grodan's quality. "The horizontal root growth is second to none, and the anti-channeling technology reduces the amount of nutrient solution needed, which saves growers money in the long run," he comments. Besides being one of the two official distributors of Grodan's products in Thailand, he also uses them within his own company. "I don't see it as a conflict of interests. If we can support efforts to achieve higher quality in the industry as a whole by working together, it's a win for everyone. And this aligns well with the general spirit of collaboration that characterizes the local culture here in Thailand," states Fenn.
Keppel is impressed by Grodan's own attitude to collaboration: "There is a good fit in terms of the willingness to share expertise and advice to help me and my customers reach the next level together. I feel like more than just a distributor; we're sparring partners who exchange ideas and learn from one another."
Possible changes to the law
There are indications that the new Thai government may be planning to change the law again, to allow cannabis to be used for medicinal purposes only. "However, recreational cannabis has already become an important part of the mainstream economy here, so it remains to be seen whether this will actually happen. And even if it does, the dispensaries will probably find a way around it," comments Fenn.
Keppel echoes the fact that the intertwined legal and economic interests make it difficult to criminalize cannabis again. "Even if the law is changed, I think it will mainly affect how cannabis may be sold rather than how it is produced. Having said that, a better-regulated licensing situation would provide more clarity and control over who is allowed to grow, and where and how. That would improve the overall quality and therefore strengthen the future prospects of the industry."
Export opportunities
"Thailand is traditionally a big exporting country, but the GACP certification requirement for exporting into Europe, for instance, makes things challenging for growers who do not have the right quality mindset. Companies will need to professionalize if they don't want to get left behind," continues Keppel. He is pleased to be working together with Grodan in this context: "We're able to provide the right support so that growers can improve their level of professionalism and increase their yields."
When asked about the implications of tighter rules and regulations, Fenn comments: "I think we will see natural attrition among the bigger players. Farms that fail to meet the necessary standards will not survive. Cultivators need to raise their game by aiming for higher quality and efficiency in all they do. The Grodan products we supply can help them to reduce disease pressure by supporting healthier plants, and also to reduce their use of inputs such as water, fertilizers, and pesticides."
©Agri Solutions Asia (ASA)
Global epicentre
Irrespective of whether the law changes, Fenn foresees some dynamic changes ahead: "I've personally lived through the commoditization of the industry in the US and Canada, and we're already seeing signs of price compression here and globally. Thailand has a number of attributes that strengthen its competitive position. Being close to the equator, we have the optimal 12-hour/12-hour photoperiod (light cycle) virtually all year round. Thanks to the ample natural light, no supplemental lighting is needed in winter, which helps to keep energy costs down, plus the labor costs are advantageous here. As prices continue to come down and local production professionalizes, I believe Thailand can become the epicenter of global medicinal crop cultivation," adds Fenn.
"We share these high expectations for the Thai market," says Berkers. "Together with both of our official distributors, we are looking forward to providing Grodan's high-quality products along with technical support and advice to help local cultivators tap into the opportunities for further professionalization and future growth," he concludes.
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