The seed’s been planted – where’s it going from here?

By Aiden Jewelle Gonzales

For Gaurav Sehgal, the Senior VP of Operations of Eastern Spectrum Group, Co., Ltd. (ESG), one of Thailand’s leading cannabis companies, the grass is definitely greener on his side of the fence – in a very literal sense. Having grown up in Thailand and worked in FMCG and agriculture, Gaurav saw an opportunity in CBD’s recent legalisation in Thailand, and after meeting ESG’s founding team, he decided it was the right place to be. “I’ve been in the organic agriculture business since 2014, and I strongly wanted to be a part of the cannabis industry,” he tells me. “I’ve been taking CBD for years for general health reasons, and am walking proof of its efficacy.”

Since Thailand broke ground by becoming the first country in the region to legalise medical marijuana, its legalisation of cannabis for other uses has since made great strides. The Thai government has vowed to prioritise this new cash crop, and cannabis research firm Prohibition Partners has estimated that the Thai market alone will be worth THB 21 billion by 2024, an estimate backed up by Gaurav. “The total cannabis market size is expected to reach heights of USD 105 billion by 2028, while today’s overall cannabis industry is approximately USD 34 billion, split between medical cannabis, CBD, and industrial hemp.

“Thailand is an innovative country, and Thai businesses tend to be resourceful when it comes to capitalisation. We’ve seen the restaurant and FMCG sectors joining in, particularly using leaves and terpenes (cannabis fragrance) in their products, and now that CBD is legal for skincare and cosmetic products, we are beginning to see more of this as well.” Gaurav cites ESG as an example of having vertically-integrated cannabis cultivation, covering the full range of specialty and consumer products in its planned or current arsenal, from seed to sale. “We strongly believe that cannabis is the backbone of future society, whether it be in business, health, or sustainability, so our core resides in industrial-scale cultivation of cannabis and the extraction of cannabinoids,” he explains.

Led by CEO and co-founder Thanisorn Boonsoong, and the founding team which includes Thai-Indian Somil Sawansukha, ESG also offers a range of other services, from partnerships with research programmes and local universities, to THC remediation services in the future, underscoring both a vision that stretches further than cannabinoids, and Gaurav’s predictions for CBD’s future in the country. “CBD can support all angles of life, so as time goes on and the legal doors gradually begin to open, this compound will be found in nutraceutical, exercise, recreational, cosmetic, and even pet products,” he predicts.

He speaks to Masala about how to enter the industry, its misconceptions, and how this new ‘green rush’ is spreading its roots throughout the country.

The CBD industry has only arrived in Thailand this year, and is still misunderstood by many. Can you give a brief overview of the industry, what it entails, and what is and isn’t legal in Thailand?

CBD is just one part of what cannabis offers, but it has become the second most famous part, closely following its counterpart, THC, which gained a lot of attention during the 60s and 70s. What many people don’t know about THC is that the euphoric high is just a side effect of its medicinal properties, such as relief from pain, insomnia, and loss of appetite.

As of today, as defined by Thai law, cannabis is split between the high-THC variant (containing more than 1 percent THC and known as marijuana) and the low-THC variant (containing less than 1 percent THC and known as hemp). Regardless of which variant is used, non- viable seeds, leaves, stems, and roots are legal in Thailand, as long as they come from a licensed producer. Many of these items are used, and have been used for thousands of years, for what we would label as industrial hemp products – textiles, rope, and so on. Minimal cannabinoids are found in these parts of the plant.

Cannabis is a highly-regulated space that entails a partnership with a public institution or the formation of a community enterprise. Because of this, many businesses, such as ESG, focus on hemp, an industry that is open to private enterprises. The hemp flower is the golden goose which contains high amounts of CBD. Right now, CBD itself is only legal for use in medicine, cosmetics, and herbal products. Everything else is currently under legal consideration.

What are some common misconceptions about CBD that you would like to address, and do you believe the stigma against cannabis-related products in the country is waning?

The big misconception about the cannabis plant is that it is a drug. Despite the Narcotics Act B.E. 2522, and the subsequent negative propaganda, abuse of the plant was the key driver of these laws, as the euphoric aspects were very popular with the youth in the 60s and 70s. This is how the stigma of cannabis spread worldwide. What is often forgotten is that cannabis is one of the most sustainable plants on the planet: it provides medicinal benefits, such as providing relief or even cures to very serious health conditions; reduces deforestation, coal mining, and the levels of carbon dioxide in the air; and at the same time, helps to make the ground it grows on healthier. THC is a very small part of the plant, and even that has positive health benefits. I could go on! I think we are still quite far from de-stigmatisation, but it is on the horizon.

Another misconception I hear from people is, “CBD doesn’t work for me – I tried it once, and I still didn’t sleep well that night.” People should understand that CBD is more like a vitamin than a drug. If you take vitamin C one time, you can’t expect anything. If you take it every day for six months, however, you will start to notice improvements in your immunity. The same goes for CBD – after taking it regularly for a few months, you will likely notice that you’re sleeping easier and deeper at night, your stress levels have decreased, and your body and mind are much more balanced. There is a multitude of research that claims CBD has drastically helped with issues such as high blood pressure, diabetes, cancer, and epilepsy.

Lastly, and this is a very common misconception, is that cannabis, hemp, and marijuana are all the same. This is false. To clarify: cannabis is the overarching plant name. Under cannabis, there is the hemp species, and the marijuana species. Hemp in its original form tends to grow taller and stalkier, and has a high amount of CBD and a low amount of THC, whereas marijuana tends to have high amounts of THC and low amounts of CBD. Whether we are discussing CBD or THC, most of these compounds are contained in the plant’s flowers. There will be trace amounts of these compounds in the leaves, but those are mainly good for antioxidants, vitamins, and minerals. The seeds are loaded with protein, omega-3, omega-6, fibre, and vitamins and minerals.

The Thai government has recognised cannabis as a cash crop, and has even declared medical marijuana an economic priority. Have there been any government initiatives to help the industry?

The Thai government has been moving rather quickly here, as seen by being the first ASEAN country with this initiative. Altering the legislation on something that has been illegal for decades cannot be done overnight, so we expect it to be a step-by-step process. One thing that the government has done in order to protect local cultivators is implement a five-year ban on importing cannabis products. This allows the local industry to surpass the infancy level and stabilise before allowing international, or more mature, competition.

What are the rules and regulations for local businesses that are hoping to procure a CBD license? Can you give us a step-by-step process?

It’s actually not complicated, in theory. Execution is another story entirely, but that’s to be expected with such a new and controversial industry. The first step is the identification of what area of the value chain you plan to be a part of. The procedures and requirements to procure a license at each stage are extremely different from one another, but what is a common factor is that for players looking to get into the CBD (or cannabis) industry, you have to finish building or connecting your supply chain from seed to sale first, otherwise you cannot qualify for a license. You will also first need to invest in your facilities, including your fencing, security, and structures; you must have a legal source of seed supply; and have a factory that is licensed and able to legally purchase your flowers or other biomass.

In your experience, has it been difficult for ESG to obtain this license?

It’s been somewhat difficult for anybody to obtain a license, and there are many specific licenses, all based on each aspect of the business you’re in: cultivation, extraction, distribution, possession, etc. I am proud to say that we are one of the first companies (one in only seven) in Thailand that have a license to import seeds from overseas as a private entity. This is a huge benefit to us and allows us to, through research and development, breed and discover the absolute best hemp strains that will thrive in the Thai climate, as well as supply local agriculture with good strains at a reasonable price.

All in all, I think we’ve been able to continuously obtain licences (whether it be under ESG or our Public-Private Partnership) because we’ve strictly abided by the law and are doing everything by the book. Legality, safety, and hygiene-compliance are our best friends and of utmost priority, and should be the case for anyone looking to do the same.

Does Thailand offer unique advantages or disadvantages in terms of growing hemp, or producing CBD products?

Agriculturally, there is a huge advantage, especially for outdoor cultivation. Many countries are limited to only 1-2 harvests per year because of the shifts in sunlight hours, and temperatures that aren’t conducive to growing high-yield plants. Comparatively, Thailand’s temperature fluctuates very little, and the sun shines approximately the same number of hours all year round, allowing farmers to grow up to four harvests per year! As harvests are the starting point of any hemp operation, this of course trickles down the supply chain, and provides Thailand with benefits such as being able to also extract and produce products all year round.

Have there been any foreign businesses breaking into the CBD industry? What is Thailand’s stance on CBD foreign direct investment (FDI) and what are the rules, regulations and opportunities for foreign businesses?

Absolutely – the cannabis world currently has its eyes on Thailand as being a cannabis hub for Asia, both in terms of climate and agriculture, but also geographically because of its physical position in Asia. ESG, for example, has tie-ups with several foreign organisations in the cannabis world already. Rules and regulations that apply are the same for any other FDI in Thailand, with majority ownership of the company having to be Thai.

How do these regulations differ from other countries, such as the U.S., that allow medical marijuana and CBD products?

There’s no specific way or formula in which these regulations differ from country to country. Each country will have its systems of control, whether it’s licensing, registrations, spot checking and so on. What we have seen worldwide is that as the market in each country matures and stabilises, the regulations tend to become less controlled, until a certain point where the barriers to the market are lowered, and the products become accessible to a wider range of consumers.

What advice would you give to someone who wants to enter the market of cannabis products?

Start by answering these questions: firstly, what about the cannabis ecosystem is most exciting to you? Do you want to make a difference to the world in terms of sustainability? Help people with health conditions? Reduce anxiety in your pets? Have better focus and recovery when exercising? Or do you simply miss your experimental days in college?

Secondly, what type of role do you want to play as a business and why? Start with the end goal in mind. Do you want to produce ingredients, retail products, food products, or something new and innovative?

Thirdly, who would you want to partner with? The partners you pick in this ‘budding’ industry will either act as rocket boosters, or as handcuffs, depending on their capabilities.

My final piece of advice is, pay special attention to the law and conform to it, based on your specific licensing. Don’t try to find ways around it, as in time this will affect the industry as a whole.

Do you think recreational marijuana will be legalised in Thailand in the next few years, and if so, what effect do you think it will have on the Thai economy?

I do believe this will happen at some point. It all comes down to education and ensuring that it won’t be taken advantage of. Recreational marijuana is not too different from wine. Both have positive health benefits, especially for stress and relaxation. Both are not recommended to be consumed in abundance, although wine is in fact a lot more dangerous than marijuana when consumed in large quantities. Both are enjoyed all over the world, legally and illegally, depending on where you are. I would love to hear people’s thoughts on this.

This would indeed be huge for the Thai economy, which is largely powered by tourism as we know. The big hurdle would be Thailand maintaining a balance between constructive tourism and substance abuse. The government would need to regulate in such a way to always ensure full transparency across the entire supply chain, and to inhibit an underground market.

What are your industry predictions for the future?

I would predict that as the world opens up to cannabis, more work is done in terms of research and development, testing, and innovation. Out of everything this plant can provide, my personal interests lie in the health and sustainability aspects, and within five years, I hope that cannabis will enter the mainstream market from both of these angles.

HAVE MORE QUESTIONS?
Email: gaurav.s@easternspectrumgroup.com
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