SET-listed Gunkul Engineering, a renewable energy developer that diversified into the cannabis and hemp business three years ago, is suspending further investment in cannabis based on its nearly 2-billion-baht budget, pending clarity from the government regarding its policy on the drug.
The company, through its subsidiary GK Hemp Group, spent almost 500 million baht developing facilities for the project, but is freezing the budget for development as the Srettha Thavisin administration announced it is considering reclassifying cannabis as a narcotic.
The previous administration decriminalised cannabis in 2022, hoping to build the cannabis economy as oil extractions can be used to develop new products, but a lack of enforcement led to calls for a policy volte-face.
"Authorities should come up with regulations stating clearly that cannabis must be used for medical or recreational purposes, putting an age limit on buyers and allowing sales only in certain areas," said Sopacha Dhumrongpiyawut, chairperson of Gunkul.
Cannabis contains cannabidiol oil, also known as CBD, which can be used to treat many ailments.
Gunkul earlier announced a plan to turn 200 rai of land on its wind farm in Nakhon Ratchasima into a cannabis plantation and production facility, with a projected capacity of 1.1 tonnes of cannabis per day.
The company aims to sell CBD to businesses infusing the oil in medicines, food and cosmetic products, but the government allows for only low levels of CBD content, which hinders the development of products with the intended ingredients, said Ms Sopacha.
Gunkul earned 4 million baht from the cannabis business last year and expected to make 100 million baht in 2024. The firm posted revenue of 10 million baht in the first quarter.
The impact of the change in the state policy on its cannabis business should not affect overall business performance because most of the company's revenue, making up 99% of total earnings, comes from core businesses, including energy, said Ms Sopacha.
Gunkul saw a sign of the policy flip-flop after a bill to control cannabis usage could not be passed by parliament.
The U-turn on state policy could cause cannabis product retailers to stop investment and even shut down their businesses, said Ms Sopacha.
"But we can still change this problem into an opportunity as well as build the cannabis economy if the government manages to enforce the cannabis control law," she said.
