idcOnic Co., Ltd.

Import & Export from/to Thailand

Category: Regulation

Cannabis

On February 19, 2019, by amending its 1979 Narcotics Act, Thailand became the first Asia-Pacific country to legalize medicinal cannabis. While hemp had been approved for use in industry since 2018, the amendment of the Narcotics Act providing for a Thai FDA registration pathway for medicinal cannabis, was largely unexpected.

While the amendments create the foundation for a cannabis industry in Thailand, the true viability and future of the Thai cannabis industry lies in its regulation by both the Thai FDA and the Narcotics Control Board. With the return of an elected government, a new cabinet was sworn in on July 16, 2019, with the Bhumjaithai Party appointed to oversee the Ministry of Public Health (MoPH). The Bhumjaithai Party campaigned on further expansion of liberal cannabis policies, which was well received by the public. With the minister in charge of instituting regulations that further define the scope and use of cannabis for medical purposes, we can only expect further liberalization and clarification.

Some recent clarification was seen by way of helpful MoPH notifications that identified forms of medical cannabis allowed for approved use. These include (i) registered drugs per the Drug Act; (ii) Thai traditional medicines having approved compositions (now 16 formulas); and (iii) drugs approved for Thailand’s Special Access Scheme. Also further clarified were the specific qualifications of Thai traditional practitioners having authority to prescribe traditional cannabis medicines.

Most recently, two additional notifications from the Narcotics Control Board were enacted concerning the labels of medical cannabis products, and the forms for recording inventory movements of medical cannabis.

The exact Thai FDA medical cannabis licensing pathway is to be set out in Implementing Regulations that have been circulated widely for both official and public comment. These are expected to be approved by the MoPH very soon. As the regulations look to move things forward—and the government wants exactly that—no significant change in the regulations is expected before they become law.

As the Narcotics Act and draft Implementing Regulations currently stand, a complex network of who can be licensed for what purposes seeks to ensure control over the process for the beginning stages. There are currently four types of licenses: (1) production, (2) importation/exportation, (3) sale, and (4) possession. There are currently seven entities under both the Narcotics Act and the draft Implementing Regulations who can apply for medical cannabis licenses: (1) public entities, (2) healthcare professionals, (3) private universities, (4) collective farmers, (5) international transportation agencies, (6) traveling patients, and (7) groups to be permitted by further decisions of the MoPH. A further seven entities are set out in the draft Implementing Regulations.

The draft Implementing Regulations also address which parties can engage in which activities. Certain licensed activities are available to some entities, but not to others. For example, a healthcare professional is ineligible for a license to possess cannabis for the purpose of addiction treatment, but can be licensed to possess cannabis for R&D purposes. Further clarification will come with promulgation of the draft, Implementing Regulations. The listing of successful Thai FDA license applicants on the Thai FDA website (as is the case with other Thai FDA regulated products such as human and animal pharmaceuticals, medical devices, food, cosmetics, and hazardous substances) will also provide more clarity.

Foreign participation in Thailand’s cannabis industry is severely restricted for the first five years, starting from February 19, 2019. During this period, only state agencies may obtain a license to produce, import or export cannabis. However, a private entity, with an office in Thailand and at least two-thirds of directors, partners, or shareholders having Thai nationality, may act jointly with a state agency to acquire or share these types of commercialization licenses. In this way, certain companies can be involved in the Thai cannabis industry from its inception. There are no restrictions requiring joint participation in R&D efforts (i.e., non-commercialization).

Fortunately, the Narcotics Act’s aforementioned allowance of new categories of entities (category 7 above) to acquire licenses as the MoPH sees fit is open-ended and, with a party that fought for liberal cannabis policies at the reins, promising. With a population currently in need of medicinal cannabis, the facilities established by the government might not be able to supply enough medical grade cannabis for the current need or to supply it quickly enough. This need for assistance may open the door for foreign entities to enter the market and provide access to enough medicinal cannabis to meet demand.

The current state of regulation provides three basic approaches for any foreign entity looking to enter the Thai cannabis industry. For most of the approaches, extensive work with government regulatory agencies and coordinating joint operations with state agencies will be needed.

The first approach is to import materials into Thailand. Getting the materials into Thailand, whether for distribution or for research & development, will be necessary in the near future as there are no materials to source within Thailand at the moment. This could mean as little as importing finished products ready for distribution, or as much as importing seeds, plants, supplies, personnel, facilities, or other necessities for production or research.

The second approach is to establish domestic manufacturing facilities for the production of cannabis and cannabinoid products. Establishing domestic production in Thailand would be beneficial for several reasons. First, Thailand has a long history of agricultural knowledge in cannabis production, and great facilities for R&D exist through research institutes such as universities and pharmaceutical companies. Second, Thai production comes at a low cost and is associated with a record of safe manufacturing practices for ingestible products. This can be done either by sourcing materials and personnel from within Thailand or by using what was imported in the first approach.

The third approach is to use Thailand as a headquarters for expansion into other Asia-Pacific regions, such as Laos, the next prospective country to follow Thailand’s lead in legalizing medicinal cannabis, or China. Depending on the business model, this could include using production facilities in Thailand to export products throughout Asia-Pacific, establishing networks in the region, or acting as an intermediary between producers and consumers.

APFI Food Safety Regulations Series: Thailand

To better understand the food regulatory landscape in Asia, APFI has spoken to law firms that specialize in food law from five different countries across Asia, which include China, Thailand, Vietnam, Singapore and the Philippines.

In the second part of the series, we look at food safety regulations in Thailand. Alan Adcock, partner and deputy director, intellectual property and regulatory affairs, Tilleke & Gibbins, shares his advice.

How do food regulation and registration vary depending on the product or category?

The Thailand FDA classifies food products into four groups, depending on the risk level of the food, as follows:

  1. Specially controlled food:The foods in this group have a high risk level. This food group defines all quality standards, including labelling and production processes, and is tightly controlled. It includes foods for consumer risk groups such as infants.

The foods in this group are modified infant milk and modified infant milk formula, infant food and infant food formula, supplementary food for infants and young children, weight-control food, food additives, cyclamates, and steviol glycosides.

  1. Standardized food: This group comprises foods with a medium risk level. There are quality and labelling standards for each category of food, as in the first group. However, product owners are directly responsible for ensuring their products are in accordance with FDA regulations (i.e., regulations on formula, labelling, and safety and quality standards).

The foods in this group are coffee, edible salt, vitamin-fortified rice, alkaline-preserved egg, cream, electrolyte drinks, chocolate, tea, herbal tea, a few kinds of sauces (i.e., tomato sauce, chili sauce, papaya sauce, and flour sauce), ice, soy milk, drinking water, fish sauce, honey, peanut oil, butter oil, palm oil, coconut oil, fats and oils, mineral water, vinegar, butter, cheese, ghee, margarine and fat spreads, soy sauce, jam, jelly and marmalade, semi processed food, brine for cooking, royal jelly, royal jelly products, food supplements, beverages, cow’s milk, flavored milk, milk products, yoghurt, ice cream, and food in sealed containers.

Royal jelly products, food supplements, beverages, cow’s milk, flavored milk, milk products, yoghurt, ice cream, and food in sealed containers are tightly controlled.

  1. Food with labelling: This group comprises foods with a medium risk level. The FDA was formerly responsible for approving the labelling of food in this group. Currently, this group is no different from the second group. Product owners are directly responsible for ensuring their products are in accordance with FDA regulations (i.e., regulations on formula, labelling, safety, and quality standards).

The foods in this group are bread, husked-rice flour, sauces, meat products, flavoring, gelatine and jelly desserts, chewing gum and candy, ready-to-cook and ready-to-eat products, irradiated foods, GMO foods, and specially purposed food.

Specially purposed food (e.g., medical food, food for special persons, etc.) is tightly controlled.

  1. General food: This group comprises foods with a low risk level. Foods in this group do not require food product registration with the FDA.

The foods in this group are animals and animal products, plants and plant products, extracts or synthetic substances, nutrients, flour and flour products, premixed food for ready-to-cook products, seasoning, sugar, and spices.

In addition, the Thailand FDA provides basic levels of food safety that food manufacturing companies must adhere to in the form of ‘good manufacturing practices’ issued as notifications by the Ministry of Public Health. These are mandatory and discrete to certain food products. It is important for manufacturers to check regularly whether any are applicable to their products.

Have you seen a growth in the number of food and beverage companies entering the markets in Thailand?

We have seen growth not only in Thailand but also across the growing economies of Southeast Asia. Many clients encouraged us to expand our legal and regulatory services to other jurisdictions in the Association of Southeast Asian Nations, which we did in 2013 by opening our own fully independent law offices in Indonesia, Laos and Myanmar and subsequently in 2015 in Cambodia.

We find that more and more of our clients are looking for a ‘one-stop shop’ that can, for example, handle registration of their highly regulated products in multiple jurisdictions, which we provide with our cross-office Regulatory Affairs practice. We are also seeing more foreign clients pursuing patent litigation cases as local laws get tougher.

Food supplements and nutraceuticals are also becoming more prevalent in Southeast Asian markets. Interestingly, there is a growing number of local and foreign collaborative research and development projects focusing on indigenous flora for possible food and cosmetic applications.

We have seen a marked increase in the number of these projects across our offices here in Southeast Asia and we advise on the agreements, benefit-sharing assessments with local communities, plant variety and patent assessment and registration and, of course, manufacturing and distribution.

Which regulatory hurdles should manufacturers be aware of when entering the food market in Thailand?

Non-English language regulations require constant monitoring and vetting for importance to clients. Our regular involvement in local domestic industry associations also gives us opportunity to participate in regulatory drafting, consultation and bringing client perspectives to the attention of the regulators.

Regulatory non-compliance can result in fines and/or imprisonment depending on the violation and the type of product involved.

Will there be any major changes in Thailand’s food industry in the next few years?

The Thai legislative agenda can be difficult to predict, due to the changeable nature of Thai politics. However, the current government has been very enthusiastic about promoting the food industry as a driver of economic growth, and has made particular efforts to encourage startups in the industry.

In mid-2016, the government announced the establishment of a National Science Technology and Innovation Policy Office, which launched the Food Innopolis initiative. The initiative comprises a specifically designed science park, at which research and development companies can benefit from substantial tax incentives and various other forms of government support, many of which are guaranteed for between five and eight years.

This is indicative of a number of policies which the government has been seen to support, and it is reasonable to assume that the result will be a substantial increase in technologically innovative food and agricultural startups in the coming decade.

Source: https://www.tilleke.com/resources/apfi-food-safety-regulations-series-thailand

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