Does Thailand have too many cannabis shops?
The short answer is yes.
According to various sources, anywhere between 6,000 to 8,000 cannabis shops have been established since the plant was removed from the class-5 narcotics in June 2022. While this rush to market was predictable, especially in the wake of the economic hardships brought on by the government’s reaction to Covid-19, there will be a natural shedding of a larger number of these shops in the coming year. We are already seeing this occur in major tourist areas such as Bangkok, Pattaya, and Phuket where the fervor for this product is greatest. Depending on which source we look at, approximately 3% of the world’s population consumes cannabis recreationally. That would mean about 2,250,000 people in Thailand (adjusted for foreign population) consume this product. With an average estimate of 7,000 shops, that’s 1 shop for every 321 users. This ratio is further diminished when we add homegrown products, direct-to-consumer purchases from larger distributors, and black-market purchases. To put it simply, there are far too many cannabis shops in Thailand. For the time being and notwithstanding the passage of restrictive cannabis legislation, we foresee a race to the bottom in pricing by operators until enough shops are forced from the industry to create a healthy balance.
Should you consider opening a cannabis shop?
At Siam Business Brokers, we believe small businesses are the life blood of any economy and that they help keep community bonds strong. It may be an old-fashioned way of thinking about things, but knowing the people who you are conducting commerce with is much better than the blank stare of a corporation. Relationships matter and small businesses help us to achieve them.
So yes, if you are passionate about the cannabis business you should participate in the industry in Thailand. However, you should be aware of the current situation. The number of shops in Thailand is an obstacle, but our belief is that good operators and owners always rise to the top. With persistence, a solid business plan, and creative marketing breaking through the pack is achievable. One thing that may be out of the hands of prospective operators is the state of current legislative being considered by the Thai parliament. Draft legislation has been put forward that would prohibit the recreational use of cannabis amongst other government regulations. It is tough to assess whether this legislation has enough gas to get across the finish line and it will face an uphill battle from an industry that has grown by leaps and bounds over the last two years. Not only will there be pushback and potentially protests from shop owners, but also from every operator in the value chain. Distributors, consumers, delivery servicers, growers, and importers, just to name a few, will push back on any legislation that would injure the industry or drive costs hire due to government regulations.
At Siam Business Brokers, we vigilantly track important news and updates for business owners in Thailand so you can make more informed decisions. If you are interested in acquiring a business in Thailand or looking to sell your current business, please contact today!