Cannabis is expected to become an economic plant for Thailand’s agricultural industry in the next three to five years, giving a boost to the national economy. The prediction comes as many businesses and investors are turning to research and development of products made from marijuana, and the country’s supply chain, reaching from breed selection and cultivation to researching extracts and medical product development, is said to be ready for a major jump forward.
A significant new grouping provides for cooperation in research and development of cannabis-based products for world markets. The alliance includes Thai Cannatech Innovation (TCI); TAC Consumer (TACC); Rajamangala University of Technology Phra Nakhon (RMUTP)’s Faculty of Science and Technology; and Japanese investor – Shiodome.
Their ambitious plan is to become Thailand’s leader in manufacturing medical products from Cannabis sativa, also known as marijuana or hemp, hitherto an illegal plant grown in clandestine plots for its psychoactive effects in recreational use. The new alliance is thinking of investment of about US$100 million, and is planning to use world-class genetic technologies and DNA plant-tissue cultures to maximize the plants’ production of pure cannabidiol (CBD), which is not psychoactive, but has huge potential in medicine.
TCI President Surasak Suvouttho says his company is involved in cannabis-related businesses all over Thailand. Upstream, it works with many community enterprises throughout the country involved in cannabis cultivation. Midstream, it joins with RMUTP’s Faculty of Science and Technology in studying and researching extracts. Downstream, TCI joins forces with TACC in a plan to develop marijuana-based products.
TCI has also signed a memorandum of understanding for cooperation on technical matters, research, technology and innovation with Sung Noen Hospital in Nakhon Ratchasima province. The agreement involves assistance for research and development of marijuana for treatment of patients, in line with the principles of modern, traditional Thai, and alternative medicines.
“We view marijuana as a new economic plant that can bring extra income for farmers. If we can set standard prices for marijuana, farmers will benefit. But the farming must be in a closed system,” Surasak says.
He believes that within three to five years, marijuana will become Thailand’s new economic plant, with prices varying according to the amount of highly-valued extracts that can be gathered from the plants. Therefore, encouraging farmers to grow cannabis is a very good idea.
At present, there is a popular trend towards growing and studying marijuana, as well as making cannabis-based products. However, Surasak says the focus should be on medical products, to ensure sustainability. All processes must be organic and clinical, from seeding and extracting to researching and manufacturing, because the products are for human use. Prices will be higher when the marijuana is cultivated in a closed system, in line with standards for products made for medical purposes.
Production of medical-grade marijuana extracts begins with careful selection of plant breeds. Innovations in genetic modification are required to acquire a stable strain that produces large amounts of extracts. Cultivation must be within enclosed structures to ensure high quality and maximum yields.
TCI’s project aims to have 100,000 rai of marijuana plantations growing within this year. Cultivation involves enclosed structures measuring 72 square metres, each holding 84 marijuana plants. Harvesting occurs every four months, when the flowers deliver the best-quality extracts.
The Deputy Dean of RMUTP’s Faculty of Science and Technology, Dr. Paisan Kanthang, says his researchers have developed a Thai strain of marijuana and a cultivation method that is fit for medical purposes.
Pure cannabidiol (CBD) with a tetrahydrocannabinol (THC) content of less than 0.01 per cent has been extracted from the plants. It is suitable for medical purposes and has the potential for commercial and industrial production. THC is the principal psychoactive constituent of cannabis.
“We adopted technology called ‘plant tissue culture,’ along with world-class know-how, to improve the cultivation technique. Coupled with our research work and our allies, we are able to control the quality in making products from cannabis extracts throughout the entire process – upstream, midstream and downstream,” he says.
Investors ready to support marijuana research for world markets
The Japanese firm Shiodome focuses on investments in healthcare innovations or the healthcare ecosystem through its three funds, Hikari HC, Jurojin and Taima High. Its chief investment officer, Pankom Kaewmuan, says the funds have seen a good opportunity for big growth in cannabis, with high potential in the medical and food industries.
“Japan is an open market for healthcare products due to its ageing society and reforms of treatment methods, which focus on technologies and information. Japan is among the top-10 exporters of healthcare products and imports as much as 40 per cent of its medtech products,” he says.
“Shiodome’s focus on healthcare stems from the COVID-19 pandemic. After two waves of domestic outbreak, the Japanese government is now looking for startups in healthcare and medtech.
“This is a good opportunity for Thai tech companies to venture into the Japanese market. We see big growth in the healthcare industry as long as the coronavirus exists. So, cannabis is a business area in which we are interested to invest.”
Pankom says that although cannabis production may not be able to meet the demands of the health market at present, the opportunities are growing, particularly with the Thai government’s interest in cannabis. The plants can now be grown and active ingredients extracted in Thailand, which is interesting for investors looking to develop a wide range of cannabis-based products. Such products can be made for both mass and high-end markets, depending on the research and development technologies involved.
“We are not the ones who come up with the ideas,” Pankom says. “As investors, we take care of the business format – how to create value and bring good returns for investment. It depends on the size of investment that is required to support the research and development technologies.
“More importantly, the business model must be sustainable and distribute the benefits to all of the sectors involved. We believe in a win-win-win business model, which means everyone must benefit, so there is cooperation and a sustainable ecosystem. For instance, hilltribe people who grow cannabis cannot survive if the buying prices are lowered, and if they don’t survive, the company in turn will be short of raw materials for production. In the end, there is no sustainability.”
Pankom believes cannabis will be a “game-changer” for Thailand’s healthcare industry, and also for Shiodome as an investment manager.
“We will lead cannabis-related businesses into the Japanese market. We have talked with the Japan External Trade Organization (JETRO) and the leading Japanese e-commerce company, Rakuten.
“In the real world,” he explains, “things are not easy for investors. You cannot just take any company with you. We are not taking companies to hawk their products. Doing business that way does not work today. We opt to become allied with large companies like Rakuten for business involving cannabis. We also need to consult regulators to find out what can and cannot be done.
“Every country has different restrictions. For example, if you want investment from JETRO, you need to set up a company in Japan and do your research there. This way, you get both capital and know-how, as well as a network of allies.
“Doing research in Japan covers joint research work with Japanese universities. With such cooperation, Thai products made from cannabis will become a key raw material in the treatment of cancer or unusual diseases unique to the Japanese.”
Pankom says his company often consults its large network of investors on many matters.
“Concern often revolves around trends in relevant Thai laws. Can this medicine be a cosmetic? If so, what type or category of FDA approval is needed? What must we do if it’s regarded as a medicine? Who should we be allied with? All of these things are what we, as investors, give to the business that we invest in. Funds alone cannot bring sustainable growth to a business. We have to look at the whole ecosystem – what benefits they receive from us, what we offer them, and what we get in return.”
Shiodome’s investments come mainly from institutional investors in Japan. It has three major funds under its management, and all are private-equity funds. Investors often focus on projects with a long-term time horizon, from five to 15 years and more.
“The world is flooded with money now, but we cannot take advantage of this. The money is invested in the Bitcoin digital-currency market, stock exchanges around the world, and financial products in the primary and secondary markets, as part of risk management and distribution. However, there have been no substantial returns into the real sector.
“In Thailand, there is no business model capable of causing a global impact, given the capital size and the fact that Thai startups begin in the Seed stage of funding before gradually moving to Series A, B and C. They have to fight for themselves to find allies.
“What we do is focus on individual startups and help them to spin off one by one, with enough money to allow them to do many things,” Pankom says. “Due to our network, we can invest in projects that startups can turn into a business platform. In some projects, we invest in an entire ecosystem, and not just a single company.”
As an investor, Shiodome looks at the big picture, deep and wide, and makes decisions about where and how to invest. As every business varies, the firm also helps to build a business model that suits the investment. Then, to ensure the healthy growth of the business it invests in, Shiodome finds them good, strong allies, as well as securing credit support for their large projects that require a lot of cash-in-hand.
“That is why we can bring Thai companies to venture into the Japanese market, which is big, sustainable and highly standardized. If a firm is able to enter Japan, it can go into any market in the world,” Pankom says.
The company currently has two or three deals on its hands, “some middle-sized, others quite large,” and it is aiming at an initial investment of about US$100 million in the cannabis deal.
Pankom says there are good business opportunities in the cannabis deal that are capable of transforming Thailand’s image as an agricultural country. It could be an “upgrade” for Thailand because it involves the use of innovations to build new standards.
Basically, cannabis involves agriculture that is based on technology and medical-industrial-grade genetics research. Production requires an enclosed system with high-end, high-grade quality controls – all of it involving technologies.
More importantly, Thai businesses related to cannabis need to expand overseas. He pointed to “many hidden opportunities” in cannabis on which to base new research, create related businesses and inspire new startups. The plants can be used in making medical products, cosmetics, foods and beverages, among other things.
“We bring in tech allies to help, while also developing our own technologies, to be used in the areas of business, industry and agriculture. When farmers can produce quality products backed by technology, the prices go higher, with more profits and sustainability,” Pankom says.
“There are many hidden opportunities to be discovered, depending on the timing and alliances, as well as the laws involved,” he said.
While downstream industries have carried out research and development on cannabis extracts for a long time, particularly related to cosmetics and beverages, Pankom believes the significant value of cannabis lies with medical use. He says, as an example, that none of the ongoing research efforts to find a medicine against cancer in the United States have yielded success. Thailand could become the source of a key medical ingredient from local research and development of extracts from cannabis – as long as patent rights are held by Thais.
While research for products like cosmetics may take only a year to complete, research for medicinal drugs often takes between five and 10 years. In the past, Thai researchers were funded by foreigners, so they were unable to control the content or object of their studies.
Pankom says that with Thailand being the potential source of an important medical ingredient, future developments depend upon the Thai government’s awareness of the significance of research and development. Funding is highly essential for R&D, because it is pointless to invest in an innovative business with no investment in R&D. With the changing market environment due to COVID-19, R&D has become even more necessary today, he says, adding that Thailand has many capable researchers but often lacks the budget for R&D.
“We may set up joint labs with highly capable universities in Thailand and overseas, such as Japan, to acquire knowledge with commercial potential,” he says.
TACC’s Chief Executive Chatchawee Wattanasuk says a “megatrend” for the health and wellness sector came after Thailand’s Public Health Ministry recently allowed commercial manufacturing of cannabis-based products containing CBD extract with a THC content of less than 0.02%.
He says consumers in many countries welcomed the relaxation, and recognizing the potential of products made from CBD extracts, TACC joined the research and development alliance aimed at supplying the market with goods made with legal CBD content.
The CBD extracts will come from a joint project with TCI and RMUTP. New products made from the extracts will be launched into the market, and TACC will thus become a fully-fledged player in the health and wellness market.
Genomics and DNA sequencing specialist Dr Richard Fong from New Zealand and American Association for Genetics research says that research in his field plays an important role in boosting the potential of works involving medical cannabis plantation plant and development that define the parameters of cannabinoid profile and terpenes production which characterize the characteristics of our cannabis seeds.
Dr Richard Fong further commented the key to successful medical cannabis lies within the cultivars where possibility of developing an incredible portfolio of diverse, premium cannabis younglings resulting in desires potency, flavor, and aroma for the best therapeutic results. This process is key to optimizing what is referred to as the ‘entourage effect’ in medicinal cannabis plants with the correct ratio of CBD, TBH and Terpenes combined together to give best synergistic outcome. Furthermore, this way we can guarantee our our plants are of higher quality and consistent product while dramatically mitigating the risk of pathogens within the operation.
In addition, he further commented the traditional method of genetic modification have raised many concerns on the legal aspect in modifying genetics compounds that may lead to undesired short-term gain for mass cloning propagation in which future seedlings tend to have diminishing compound compare to their mother plants. Dr Richard Fong suggested the best approach is adopting modern innovative research and solution emphasizing on using cutting-edge epigenetics technology to make a version of the cannabis plant that is easier to cultivate, higher potency and easier to farm. Epigenetics is a state-of-the-art third-generation breeding technology, that focuses on revealing hidden parts of the DNA of the plant and enabling select genes to manifest themselves naturally via DNA methylation without synthetic modification.
With genomics technologies, growers can adopt innovations that result in the development of strong cannabis strains that are not only resistant to disease and higher potency, but are also able to yield better quality extracts. More importantly, they are organic and safe which is beneficial to everyone.
Dr Richard Fong further added “We are here as a technology alliance of TCI and here to bridge between traditional and modern science for Medical Cannabis for better commercialization based on the philosophy “Better and Stronger Plants Lead to Better Profits and Outcome”. We bring know-how on genomics and cannabis DNA to help upgrade the potential of Thai cannabis. With improved cultivation processes and research and development, Thailand’s cannabis-based medical products can be at the forefront of the global market,” he says.
Shiodome, which invest in innovative green-tech startups, also sponsor forums on knowledge management and innovations, such as the Global MIKE Awards. Such events can inspire new Thai and regional companies with fresh ideas and knowledge for development, such as that seen in a world-class corporations.
Shiodome has become major sponsors of the Global MIKE Awards at national, regional and global levels. Beyond discovering medicinal formulae and manufacturing new products, this year’s project offers the companies the goal of becoming a global-brand health-tech hub and the manager of innovations for business expansion.
The Chief Organizer of the Global MIKE Awards is Associate Professor Dr. Vincent Ribière, who is also managing director of Bangkok University’s Institute for Knowledge and Innovation Southeast Asia. He says that with good know-how management, Thai companies taking part in research ventures are capable of expanding into many other businesses relating to medical technologies, and not just cannabis-based products. Technologies prove helpful from the early stages of strain selection and cultivation to the processing of products and delivery to purchasing countries. This is not just about farmers selling their agricultural products, he says, because successful innovations can instill a mindset of global growth in new regional companies in the health-tech sector.