What Is the Nominee Trap in Thai Cannabis, and Why Is It Now a Crime?

The nominee trap is the use of a Thai shareholder as a front, holding shares on paper while a foreigner exercises the real control, to get around the 49 percent foreign-ownership cap. It is a Section 36 offense under Thai law, and it is now actively prosecuted. It is the single most dangerous shortcut in Thai cannabis, because it converts an apparently working business into a serious criminal liability.

What the nominee structure is

In a nominee arrangement, a Thai national or entity is recorded as the majority owner, but the arrangement is a fiction: the foreigner actually controls the business and takes the real economic benefit. For years, informal versions of this were common across foreign-invested businesses in Thailand. In cannabis, with its hard ownership cap, the temptation is obvious.

Why it is now dangerous

Enforcement changed. Nominee arrangements are a Section 36 crime, and authorities have moved from tolerating to prosecuting them. That shift means a structure that once felt like standard practice is now a live legal risk that can bring criminal consequences and unwind the business. The old assumption that everyone does it is no longer a safe basis for anything.

The legal alternative

The alternative is not to abandon the market; it is to structure genuinely. A real Thai-majority partnership combined with legitimate non-equity arrangements achieves meaningful foreign participation without the crime. It is more work and entirely safer. The nominee trap is called a trap precisely because it looks like a solution and is actually a liability.