The Tobacco Authority of Thailand (TOAT) is teaming up with the Government Pharmaceutical Organization to produce hemp and cannabis extracts for medical purposes.
Deputy Finance Minister Santi Promphat said the authority has been instructed to partner with the drug agency to supply hemp and cannabis from which extracts can be produced for use in medicine and other products.
The partnership aims to raise the income of tobacco farmers after TOAT cut its purchases of tobacco leaves as profit slumped based on the tobacco tax structure.
At present, a two-tier system is applied for excise duties levied on cigarettes.
A 20% tax rate is applied to the retail price for packs costing up to 60 baht. If the retail price exceeds 60 baht per pack, a 40% tax rate is applied.
Mr Santi said TOAT buys only 13 million kilogrammes of tobacco leaves a year from farmers, down from 30 million kg a year in the past.
The authority's profit per pack used to be 5-6 baht, but fell to 50 satang, he said.
"With the new laws allowing individuals, legal entities, government offices, community enterprises and companies to register to use the legal parts of cannabis and hemp for medical purposes, as well as in the textile, pharmaceutical and cosmetics industries since Jan 29, tobacco farmers can earn more income if they shift to grow hemp or cannabis in lieu of tobacco," said Mr Santi.
He cited a study by the authority that revealed income per rai from cannabis production averaged 150,000 baht per rai, far above the 23,000 baht per rai for tobacco production.
According to Mr Santi, tobacco farmers have a competitive edge over other groups of farmers in hemp and cannabis cultivation, given their long experience with tobacco cultivation.
TOAT governor Panuphol Rattanakanjanapatra said earlier this month the authority is drafting a ministerial regulation to give the organisation the authority to grow and produce extracts from cannabis and hemp that can be used in medicine and cosmetics.
Although the Tobacco Act stipulates TOAT can produce tobacco leaves and other plants, clarity is needed on TOAT conducting R&D on cannabis and hemp for commercial purposes.
TOAT discussed with the State Enterprise Policy Office and the Office of the Council of State issuing a ministerial regulation for TOAT to be involved with cannabis and hemp businesses.
While cannabis contains a psychoactive substance, tetrahydrocannabinol or THC, it also contains the medically beneficial substance cannabidiol or CBD, which has no psychoactive effects.
The business value of cannabis and hemp could reach tens of billions of baht, which can compensate for the decline in tobacco income stemming from the current tobacco tax structure, said Mr Panuphol.