Asia’s budding interest in corporate cannabis

One after another, Asian nations are rethinking their stance on marijuana. Growing commercial acceptance and promised economic gains of legalization have spurred a wave of liberalization that has seen a rising number of industrialized countries allow the use of marijuana for medical and recreational purposes.

Pot has gone from illicit substance to up-and-coming commodity in the span of a few years as global investors, portfolio managers and high-ranking executives tread on what was once the turf of the neighborhood dealer.

Multi-billion dollar growth projections have even started to give pause to lawmakers in staunchly anti-drug Southeast Asia.

Thailand is slated to become the region’s first country to allow the medical use of marijuana after a military-appointed legislative assembly vote on December 28 backed the measure. Though the Buddhist-majority country still plans to retain penalties for recreational use, analysts see the reversal on medical marijuana as a precursor to more liberalization.

Although Southeast Asian nations have until now had little tolerance for marijuana, seen in some the world’s strictest narcotics laws, scientific studies espousing the plant’s medicinal benefits and its fast-growing corporate commoditization have sparked a new debate.

Thailand, which has a centuries-long history of using marijuana in traditional medicine, is ahead of the regional curve. Legislation allowing for medical use is expected to come into effect later this year, spurring the growth of a domestic medical marijuana market that advocates say could be worth up to US$5 billion by 2024.

Industry experts see legalization as a boon for the nation’s reputation as a regional hub for medical tourism and believe Thailand’s tropical climate would lower production costs compared to grow operations in the cooler West.

Patients with drug-resistant epilepsy, cancer and other conditions will be allowed access to cannabis medication under the new Thai law.

Lawmakers are now in a bind over cannabis-related patents lodged by foreign companies eager to enter the market. Some fear their approval would slash cash crop profits and impede affordable access to medication.

With Thailand on its way to becoming a regional outpost for the emerging cannabis industry, change is also afoot south of the border.

Malaysia’s government is reviewing laws on medical cannabis use following a public outcry after a 29-year-old was sentenced to death in August for distributing medicinal cannabis oil to individuals suffering from cancer and leukemia. British colonial-era laws still in use mandate capital punishment for anyone caught with 200 grams of cannabis or more.

Prime Minister Mahathir Mohamad supported a review of the sentence after an online petition calling for its reversal garnered nearly 70,000 signatures. Malaysia’s reform-minded coalition says it intends to abolish the death penalty for all crimes while parliamentarians plan to introduce a bill to legalize medicinal marijuana.

Lawmakers in the Philippines are also debating a law to allow for medical marijuana, a measure backed by President Rodrigo Duterte, who has led a brutal anti-drug crackdown that has seen thousands of drug suspects killed by police. The president appeared to admit to using the substance himself at an official function last month, only to claim later he was joking.

There are even small signs of change in buttoned-up Singapore. Despite maintaining an unflinching zero-tolerance stance toward drug use, the city-state last year announced a research initiative aimed at discovering the therapeutic potential of synthetically-derived medicinal cannabinoids, the naturally occurring chemical compounds in marijuana plants.

Undertaken by the government-run National Research Foundation, the program is part of a broader US$18.2 million initiative to promote the city-state’s biotech industry. Legislators in Singapore maintain the use of the plant in raw form is unsustainable, but ongoing research signals some openness to bringing non-psychoactive man-made compounds to market.

“Marijuana’s medical uses are being researched. But the ways in which people use the drug is not scientific,” said K Shanmugam, Singapore’s Law and Home Affairs Minister, last year. “Until scientists can isolate the medical properties of marijuana, and administer it without the side effects of the drug, we cannot consider marijuana a medical aid.”

The city-state punishes marijuana possession or consumption with large fines, caning or a maximum 10-year prison sentence, while traffickers of more than 500 grams face the death penalty. After Canada legalized recreational use in October, authorities warned citizens and residents that legal use overseas would result in penalties at home.

Studies of medical cannabis conducted in the United States and United Kingdom found evidence for its use as a treatment for chronic pain in adults, chemotherapy-induced nausea and vomiting, and for relieving muscle contractions associated with multiple sclerosis. It has also been found to reduce seizures in individuals with rare childhood epilepsy disorders.

The World Health Organization (WHO) is currently conducting a “critical review” of cannabis since robust scientific information about its health effects have come to light. While the United Nations agency acknowledges studies verifying the therapeutic effects of cannabinoids, it also maintains that pot use impairs cognitive development and psychomotor performance.

The WHO’s review will decide if the drug’s strict scheduling next to cocaine and heroin under decades-old international drug control conventions is appropriate as global support for legalization rises. Industry watchers believe rescheduling could bring about revisions of UN conventions that underpin prohibitory cannabis laws around the world.

Ja Lee, a senior intelligence analyst at CB Insights, a private research outfit, believes the rise of cannabis-based therapeutics in the United States and Canada could herald a global attitude shift towards cannabis as a legitimate industry.

“The biggest challenge for both entrepreneurs and advocates of medical cannabis in Asia may be the uncertainty surrounding legalization, which affects the legitimacy of their entire industry,” Lee told Asia Times. “Convincing the general public opinion on cannabis’ therapeutic use cases will continue to be a challenge.

“However, countries such as Thailand and South Korea are moving towards achieving medical cannabis legalization, which will be a big moment where more rigorous scientific research can be conducted.”

South Korea’s national assembly voted to legalize medical cannabis in November, in another a significant milestone for the emerging industry.

“Legalization will certainly have an impact on how the public views cannabis as a substance, facilitating a shift from an illegal substance to a medication associated with treating disorders.” Recreational use of cannabis, she says, will “continue to fight an uphill battle in the current environment.”

Lee expects medical marijuana to be fully legal throughout the US within the next 10 to 15 years, while a larger recreational market depends on future legislation. As legalization finds general acceptance in the West, she believes more countries in Asia will move toward approving medical cannabis while pursuing research into therapeutic use.

According to the US business consulting firm Grand View Research, the global medical cannabis market will reach US$55.8 billion by 2025, making up a third of the overall legal marijuana market, projected to be worth a stunning US$146.4 billion by the same year. The global market for industrial cannabis, or hemp, is expected to hit US$10.6 billion in 2025.

Hemp, a variety of the cannabis sativa plant, is an agricultural commodity with only trace amounts of tetrahydrocannabinol (THC), marijuana’s key psychoactive compound. It does, however, contain cannabidiol (CBD), a non-psychoactive relaxant used to treat a wide range of conditions such as epilepsy and Parkinson’s disease.

“It’s a very exciting time right now in this sector, and the industry is moving at lightning speed,” said Glenn Davies, co-founder and chief executive officer of industrial hemp grower and biotech firm CannAcubed. While the company’s production operations are mostly located in Yunnan, China, its choice of Singapore as the host for its global headquarters has garnered attention.

“Firstly, raising capital for a cannabis company, headquartered in Singapore and [with] operations in China comes with its challenges. We chose Singapore as we believe the country represents a world-class platform to build our business on,” Davies told Asia Times. “Singapore is a world leader in the biotech field and we hope to be a part of that.”

Though production, trade and consumption of cannabis are illegal in China, authorities have supported limited industrial hemp production in Heilongjiang and Yunnan provinces for commercial purposes. CannAcubed cultivates hemp from permitted growers and exports CDB products to Europe while producing hemp textiles and garments, among other things.

“A lot of countries in Asia are watching the space closely, conducting their own due diligence and internal research, and making well-informed decisions on the benefits, effects or otherwise of cannabis,” says Davies, adding that some stricter countries would not likely proceed beyond research at present.

“There hasn’t been much interest so far from the Singapore investment community, we are just now starting to hear from the business community. That said, we have something extremely unique and scalability second to none which is incredibly exciting. We are pioneering the Asia cannabis market and extremely proud of it,” he says.

Though the global cannabis sector is still nascent, Davies sees current trends pointing to massive growth which will see cannabis products widely used in medicines, bio-degradable plastics and even clean energy. While market sentiment increasingly turns in marijuana’s favor, regional legislators are cautiously turning over new leaves on the issue.