It may come as no shock to economists but when you give a million people a license to grow cannabis in a country where only a few licenses previously existed, the price of a kilo of cannabis on the open market drops like a stone.
Yes, before Thailand legalized cannabis in 2022, the only way to grow cannabis here was to get a special license from a medical center, hospital, or university and thus, the product was scarce.
Cannabis leaves were selling for around 15,000 Baht per kilogram, that’s about $450 per kilo, and the stems were going for about 10,000 Baht per kilo ($300).
While there may be a party mood on the streets in most of Thailand due to legalization, one group of people who aren’t so happy are the farmers in Nakhon Phanom.
That’s because they now get around 3,000 Baht per kilo (that’s around $90) for the leaves and about 1,000 Baht ($30) for their stems per kilo.
As you can imagine, this is a huge loss of revenue for these farmers who had been making between 50,000 and 100,000 Baht a month ($1,500 – $3,000).
The president of the Medicinal Herbs Community Enterprise of Na Kham said, “As anyone can grow cannabis today, they do not have to get permission to grow the plant, so we have more competitors who drive cannabis prices down.”
These farmers are now demanding legislation for price protection to ensure they get the continued rewards they had come to expect.
But Is This Really Bad News For Growers?
One of the first things I noted when visiting a cannabis cafe here in Chiang Mai was the incredible retail pricing of cannabis in Thailand, right now.
Sure, some of the strains are imported but when a gram of weed is selling for an average price of 700 Baht (around $20) and many are selling for up to 1,400 Baht (around $40) there’s a problem.
The average wage in Thailand is about 15,000 Baht a month ($500), yet, the early prices of weed here are in excess of the prices in Amsterdam or California, where wages are much, much higher!
In order for the cannabis industry here to serve the local market, it needs to be priced accordingly. This will, of course, also help the tourist market for Thai cannabis.
Yes, there is going to be a market recalibration of prices, if the industry is to grow and thrive. It seems unlikely that the government is going to guarantee any kind of minimum price to growers.
And to begin with, the market here is now oversaturated, which means that some growers are going to struggle to sell their wares at a profit.
But this is normal market economics. This means that some growers will stop growing and turn their hands to more profitable activities. And it means those that are good at growing and who can turn a profit will survive and thrive.
It is this group of growers that represent the future of Thailand’s cannabis industry and for them, this price correction is simply what the market needs, right now, to put them in a place to succeed for the long-term.
And in that future, while cannabis prices may be lower, volumes will be much higher to compensate, and there will be plenty of folding green to be made around the sale of the green herb for decades to come.