What’s Happening with Cannabis Reform in Asia?

It has taken a few years for cannabis reform to begin to enter Asia. However, momentum is clearly picking up.

In the middle of December 2018, New Zealand announced its plans to legalize recreational use in 2020 during the country’s general election. As such, the country may well become the third country in the world (after Uruguay and Canada) to fully legalize the drug (although Luxembourg might yet pip the Ozzies to the post).

The news is also clearly already having a domino effect regionally and was not the only intriguing canna news out of Asia in December. South Korea moved to legalize medical use literally days before New Zealand’s announcement, although this will probably be an import led market in its early days. It is also not expected that the market here will liberalize dramatically. In fact, as of October, the government even issued warnings to its citizens about consuming cannabis on visits abroad (most notably Canada). South Korea’s decision was clearly influenced in turn by the stated intent of Thailand earlier in the year to also move forward on medical reform. And on Christmas Day, in fact, the Thai government finally voted to legalize medical production and even more intriguingly, export the same (along with Israel).

Malaysia is also expected to follow suit, with government ministers beginning to explore the idea of medical reform as of last fall.

The green tide is clearly turning if not rising, finally in Asia.

The big question that still remains? When will China move? The great, green slumbering giant has begun to allow farmers to produce hemp industrially again. No matter what its Asian neighbours do, this one country, with low labour costs and now in a trade war with the U.S., could easily redefine the global game, and in a big way, in the years to come.

The Significance of Asian Reform

Asia is widely heralded as the birthplace of medical cannabis. The history of the drug here stretches back millennia, and its use was documented and incorporated into medical texts. It is also thought that the Scythians, travelling bands of nomadic warriors, carried use and knowledge of the drug through Europe.

During the 19^thcentury, the drug was commoditized, like tea, by the British East India Company in both China and India. In the 20^thcentury, of course, communist anti-drug policies in China tended to follow those in the West, with one critical difference. Drug crimes in this part of the world became associated with even harsher punishments – including the death penalty.

Alone in Asian countries, at least for now, Thailand appears to be ready to step into the export market. The country was, of course, a leading exporter of illegal cannabis during the 1980’s. Now, it appears that the government, like many others around the world, wants to cash in on the multibillion global medical market now exploding in the rest of the world along with reducing an exploding prison population. That said, recreational users will still face harsh penalties.

This is also likely to be the course of reform in other places regionally, including China.

What Does This Mean For Foreign Companies And Investors?

Given the focus on medical use, and remaining draconian fines for recreational use if not “drug trafficking,” foreign entrepreneurs and investors should tread carefully. This is also likely, as a result, to be one of the most complicated places for foreign companies to obtain licenses for production if not ex-im permission.

Added to that, of course, is the likelihood of protectionist measures implemented along with reform, as is likely in Thailand, where the market will be highly protected to preserve both domestic ownership and the benefit to the economy of the same.

It is also highly likely that any foreign investment in such markets, as they liberalize, will be required to partner with local producers.

Regardless, it is clear as 2019 dawns that no part of the world is immune to cannabis reform. The Green Revolution is, five years after market start in Colorado, truly global.

About Marguerite Arnold