As Thailand's cannabis market starts to take off, the biggest opportunities for entrepreneurs may be in technology and services surrounding cannabis, as opposed to cultivating the plant itself.

"We think the market is going to grow very quickly starting now and are looking at an investment timeline of four years," said Douglas Abrams, managing director of the Southeast Asian venture capital firm Expara. "I think Thailand could be the cannabis tech hub, not just of Southeast Asia but of the world."

Expara, headquartered in Singapore and with an office in Bangkok, is raising US$30 million (920 million baht) to invest in cannabis-related startups, mostly in Thailand but also other areas of the world where marijuana is legal. The firm is in talks with one Thai company that builds LED lights for indoor grow houses and another that makes homegrown bioforming devices that control the lights and temperature for cannabis plants.

Mr Abrams said the fund is banking on Thailand and Asia following the same trends as parts of Europe and North America, where changing attitudes about the usefulness of marijuana led to legalisation of medical use and eventually recreational use. Then the growth of the market could be astronomical.

According to the Asia Cannabis Report, Thailand's legal cannabis market for both medical and recreational use could be worth $661 million by 2024, while Asia's market could reach $5.8 billion.

"I think cannabis tech is going to be big in the next 5-10 years, and companies built around it can create huge returns for investors that move early into this space," Mr Abrams said.

He compared cannabis tech to trends like peer-to-peer apps and ride-sharing services that grew from small startups in 2009 to massive international unicorns like Uber and Grab. His own company was able to get into the fintech craze early in 2008, way before the digital payments market exploded in Southeast Asia in 2016.

Expara sees the same potential in cannabis tech and plans to do most of its primary investing over the next four years.

Better Than Growing

Kitty Chopaka, founder of Elevated Estate, a consultancy, event organiser and incubator for cannabis startups, says legal cultivation of marijuana is less profitable than it appears and there are better opportunities in businesses that support growing.

In some legal markets, a mix of over-regulation and taxation has kept margins thin for growers, leading many operations to continue dealing in the black market.

California, for instance, expected $1 billion in tax revenue after legalising recreational marijuana, but only managed to rake in $345 million, mainly due to high taxes that made legal operations unable to compete with the black market.

For savvy investors, the real money is in everything around cultivation, whether it be soil, sensors, lights, packaging or even blockchain tracking technology.

"Instead of fighting for a piece of the pie, I'm just going to have ice cream," Mrs Kitty said. "While it's probably going to be tough for the little guy to get into cultivation, you could make much more money with all the other businesses that touch cannabis. Growing it doesn't make much money, but the guys selling the soil are making a lot."

Moving into a large excise industry like cannabis could be difficult, especially for a small startup, which could rely on obtaining expensive government concessions along with all the palm greasing that entails.

Much like the beer market, where Thais in effect have only three options (Chang, Singha and Leo), marijuana growing could end up wholly controlled by a small, well-connected group of corporations.

So far the government has issued 334 permits to mostly hospital and research facilities to develop medical extracts from cannabis, according to the Food and Drug Administration.

"The money is in innovation, but a lot of what's coming out of Thailand right now is just copy and paste," Mrs Kitty said. "A lot of new ideas could simply be about combining two existing things. Like we have lights and we have sensors, why not combine them into a product that does both."

According to Mrs Kitty, cannabis is a finicky plant and requires careful attention to climate and lighting in order to grow properly, leading to a constant demand for innovation to simplify and reduce costs in the process.

But she says too many fledgling startups are pitching stale ideas, such as seed-to-sale blockchain tracking, a method of tracking cannabis production from when it is sold as a seed to its final endpoint sale to the consumer, cataloguing each transaction on the blockchain.

This technology is useful for regulating cultivation and preventing product from ending up in the black market, but the technology is already widely available and not particularly lucrative territory for new SMEs.

Mrs Kitty says some large Canadian companies have expressed interest in Thailand as a potential market, and even possibly for exports of cannabis, taking advantage of lower Thai wages to produce cheaper per-kilo value than what can be made in Canada.

Canada's Canopy Growth, considered the world's largest cannabis company, already has a presence in Asia-Pacific with an office in Australia (a country with legal medical weed).

"We obviously only operate in countries where it is federally legal, so before we get involved in a new market our investment has to be based on local demand," said Renee Shingles, who manages Asia-Pacific communications for Canopy Growth.

"In Thailand it's still very early," she said, "but we see opportunities, local demand and have partners to work with us. It would definitely be a consideration."

Boom Or Bust?

Daragh Anglim, managing director of Prohibition Partners and author of the Asia Cannabis Report, said the world is already seeing a consolidation in the cannabis industry, whereby large companies, usually from Canada, are starting to move into Europe to buy up cannabis companies or going to Latin America and Africa to acquire low-cost cultivation operations. He says the trend will likely continue in Asia.

"It will be difficult for countries to be able to shift towards low-cost, high-yield production of cannabis," Mr Anglim said. "Instead they should look into more value-added products and extraction branding where different nations can carve out a niche for themselves."

If big players like China and India move in, alongside the large multinationals, it could be difficult for Thailand to compete.

Thailand must develop a niche, perhaps with its own strains native to the country, that can be marketed as a geographically indicated product. Cannabis could also be combined with other popular Thai food and medicinal products.

Even with the Asia Cannabis Report's generous growth forecast for Thailand (with $237 million worth of medical marijuana), Mr Anglim said success still depends on access.

"There is a rush to maybe adopt legalisation, which is great," he said. "But these countries also need to make sure doctors are educated, because in many countries doctors aren't prescribed to relevant conditions or are reluctant to prescribe."

Former drug dealers should be recruited and trained to produce safe, legal cannabis if the UK decides to legalise marijuana, the head of an American programme overseeing the sale of the narcotic has urged.

The Commissioner in charge of legal cannabis sales in Massachusetts has said Britain should follow her state’s example of recruiting ex-drug dealers and people from communities involved in what was once the underground market for marijuana.

Ahead of talks with parliamentarians at Westminster this week, Shaleen Title, along with two other US experts on drug liberalisation, revealed that a project is under way in their state – which legalised the drug in 2016 – to retrain former cannabis dealers to enter the now legal marijuana industry.

Title’s call echoes that of Michael Semple, the EU’s one-time special representative to Afghanistan and negotiator with the Afghan Taliban, who said that a future British government would have to open “peace talks” with drug gangs if the UK goes for legalisation.

He told the Guardian he believes that government, police and other authorities must open dialogue with dealers who face going out of business.

Semple said British policymakers would not be able to ignore “the people most directly affected” by making drugs legal.

“Given the sheer number of people involved in drug dealing, and, internationally, the scale of violence associated with the ‘war on drugs’, it should not be difficult for drugs policy makers to envisage a peace process with drugs gangs.”

On the Massachusetts experiment, Title said they had recruited 150 people so far, both ex-dealers and people from areas of Boston and the wider state where drug arrests have been highest.

“They have skills already of course gleaned over a long number of years. It is a way to give people and the voters that backed legalisation in our referendum what they wanted. They did not want to hand the industry over to a few giant corporations that are going to exploit it.

“We are on our first project with 150 people and we put out a bid to vendors who can teach them how to produce cannabis that is regulated. It also includes an ownership programme to train people who were once entrepreneurs in the underground market.”

Title defended the project to absorb ex-dealers and those with drug convictions, saying: “The general model not only in Massachusetts but also in Illinois and California is to reinvest the now legal industry into those communities because it’s a fundamental issue of fairness and justice.

“If for years under drug prohibition you have this security focus on these communities then after legalisation you can hardly say to them, ‘oh never mind now, big corporations will take this business off you, they will take it from here.’ How is that fair?”

Title addressed the Lords this week along with two other American drug liberalisation experts, Sanhoo Tree, from the Washington DC based Institute for Policy Studies, and Kathryn Ledebur, the director of the Andean Information Network in South America. They argued for the need to liberalise the UK’s drugs laws as many US states are doing. New York and New Jersey are expected to be next two states to legalise cannabis use.

Tree pointed out that even the US capital, Washington, has legalised cannabis “where the sky hasn’t fallen in, where people still go to work and where kids still go to school”.

Ledebur, whose area of expertise includes programmes to allow Bolivian farmers to continue cultivating the coca plant from which cocaine is produced, said in “the shift from a US imposed violent eradication of the plant in the so-called war on drugs to a model where coca is rationed, farmers are allowed to grow it for alternatives and it actually works in creating basic farm incomes rather destroying entire crops”.

The trio were guests in London this week of the Transform Drugs Policy Foundation, which campaigns for the legalisation and regulation of drugs in the UK.

New Zealand might be world-renowned as a producer of high-quality reggae, but cannabis — the plant so hallowed in the musical genre’s sub-culture — remains tightly controlled in the country.

Cannabis is defined as an illegal substance under New Zealand’s Misuse of Drugs Act and cultivating or supplying the drug can land you as many as 14 years in prison – and even possession could get you three months.

Even in the medicinal market, the usually-progressive Kiwis maintain a reasonably hardline stance. Just one cannabis-based medicine — multiple sclerosis treatment Sativex — has been approved for doctors to prescribe to patients in New Zealand. All other medicinal cannabis products need ministerial approval before they can be prescribed.

But all that may be about to change with a vote slated for November 2020 that could see the floodgates opened to a booming recreational market. In handing down the nation’s budget in May 2019, Prime Minister Jacinda Ardern announced an $13.4 million allocation to hold a referendum on legalisation of cannabis — and one Australian company looks set to capitalise.

The emerging green fields of New Zealand’s cannabis industry

Fresh off the heels of its deal with Canadian company EPHS to cultivate cannabis in Australia, Sydney-based Greenfield MC is turning its attention to New Zealand.

The company has announced a joint venture with New Zealand’s Wepiha Health Co. and EPHS to cultivate the drug, making it the first Australian-owned company to do so across the Tasman, it announced in a statement to the media. The project will initially be for research purposes only, in line with current regulations, with a specific focus on developing cannabis treatments for health conditions that disproportionately impact indigenous Maori communities.

But Greenfield could also see itself moving well beyond the research, and even medicinal, market if the legal environment changed — as it very well could.

“If [the 2020 referendum] is passed into legislation then Greenfield MC will be ideally positioned on the ground in NZ to branch out into new areas beyond medicinal cannabis,” a Greenfield spokesperson said in an email.

The spokesperson clarified to Business Insider Australia the primary focus of any foray beyond medicine would be on the “nutraceuticals and wellness products”, which are considered recreational under New Zealand law.

But when asked directly whether Greenfield would consider supplying product to recreational dispensaries if a ‘yes’ vote was successful, the company’s CEO Nicholas Hanna — a lawyer with a lot of experience navigating Australia’s drug regulations — left the door open.

“Greenfield MC is currently focused on the medical and wellness markets, though will adapt as the industry evolves,” Hanna told Business Insider Australia.

If they were ever to go beyond wellness products and push further into the recreational market, it would be somewhat at odds with comments the company’s chief medical officer Sree Appu has previously made.

Dr Appu, a top oncologist, previously told Business Insider Australia that Greenfield’s competitive advantage is its medical clout and clinical credentials.

“There’s a lot of buzz around the enormous potential of the medicinal cannabis market and people from all walks of life are jumping on board … however, we’re talking about medicine here — we’re talking about a product that needs to be prescribed by doctors and dispensed by pharmacists,” Appu said.

Asked whether the medical board he chairs would support the use of cannabis for recreational purposes, Appu said Greenfield’s doctors wouldn’t be involved in that side of the business were it to eventuate.

“The role of the medical board is limited to advising on the medical applications of cannabis, including patient access and drug efficacy,” he said.

Greenfield’s directors declined to answer whether it would support legalisation of recreational marijuana in Australia.

But of course, any ambitions the company — or anyone else — may have to supply weed to customers for recreational use in New Zealand is at this stage entirely hypothetical. The ‘yes’ vote would first need to win the referendum.

New Zealand’s hazy record of honouring the outcomes of referendums

Prime Minister Jacinda Ardern is applauded after speaking during the 2019 budget presentation which included $13.4 million for the referendum on the legalisation of cannabis.

And even if Kiwis do vote in favour of legalisation, there is conjecture over whether the vote would even be binding.

Even though both Prime Minister Jacinda Ardern and Justice Minister Andrew Little have described the vote as a “binding referendum”, public broadcaster Radio New Zealand points out that technically it is not and that the country has a chequered history of implementing the wishes of the people.

Of the seven non-binding referendums held in recent years in New Zealand, just once did the government and parliament act in accordance with the positive vote, RNZ reminds us.

Maybe that’s why — more than 12 months out from the vote — the campaign for hearts and minds on the topic of recreational marijuana is well under way.

Former Labour Prime Minister Helen Clark has been vocal just this week in favour of the proposition. In an article published by The Guardian, Clark makes the case that prohibition “doesn’t work anywhere” and especially not in New Zealand, where she says the Maori population has been particularly victimised by the hardline stance.

“A ‘yes’ vote in the 2020 referendum will be positive for social justice and equity, contribute to reducing the country’s excessively large prison population, and enable those health issues associated with cannabis to be dealt with upfront,” Clark wrote, following a report by her public policy foundation which came to a similar conclusion.

Clark also notes that 76.7% of New Zealanders have tried the drug by the age of 25 despite its illegal status and harsh penalties, indicating the market opportunity may be especially large for recreational marijuana.

No wonder medicinal cannabis companies like Greenfield are considering taking the toke.

The marijuana stock market has grown substantially in the past few years. In the past few months, however, we have seen some instability overall. This volatility is something that some investors look for as it gives two potential benefits. For one, it offers a chance to potentially buy a company at bare bottom prices. The other opportunity comes as it allows for greater potential gains. It is important to keep in mind that there is a greater potential for losses as well with this heightened volatility.

Regardless, these marijuana stocks to watch are creating big waves in the ever-shifting cannabis market. With so much competition, it seems as though doing the proper research into a company is the best first step. With all of the knowledge in hand, one can make an accurate assessment about a given pot stock to watch. All in all, cannabis stocks continue to show large projections for the coming years.

A Diversified Marijuana Stock to Watch

AgraFlora Organics (AGRA Stock Report) (AGFAF Stock Report) is a growth-oriented and diversified company working out of both the international and domestic cannabis market in Canada. The company has stated that they are a joint venture partner with Propagation Service Canada for a very large 2.2 million square foot facility. In addition to this, they have their own indoor cultivation operation currently underway in London, ON.

With this, they have been able to grow large quantities of cannabis which has helped to make them a key player in the marijuana stock market. The pot stock has continuously illustrated its potential for building up shareholder value. In addition to this, AgraFlora Organics is pursuing as many opportunities in the cannabis industry as they can. For this reason, they remain a key pot stock to watch.

A Big Announcement For AgraFlora Organics

The company recently announced that they have entered into a non-binding letter of intent for the commercialization of CBD products. The agreement stands with one of the largest Canadian food retailers in the nation. This adds a layer of brick and mortar stores to AgraFlora’s reach which is a big step in the right direction.

The letter states that the former will supply the retailer with a wide variety of CBD-based products. The non-binding Letter of Intent should help the pair to move further into providing the Canadian public with proper high-quality cannabis and CBD-infused products.

A REIT Pot Stock to Consider

Innovative Industrial Properties (IIPR Stock Report) is a company that has managed to have quite a huge uptrend with the exception of the past few weeks. The company has seen some large selloffs over the course of the last week or so which has led to low prices for the profitable company.

This presents an interesting opportunity as Innovative Industrial Properties has one of the highest rates of profitability in the pot stock market. Despite this, the company has lost a large portion of its value in a short period of time. This, however, could be viewed as an opportunity as the prices seem to be lower despite future projections moving up.