What is going on in Japan – exploring Japan's Cannabis Market: Growth, Challenges, & Regulations
Article Written by Adam Isaac Miller
Japan’s cannabis consumption market has grown consistently over several years. Whilst Japan is known for its hardline and stigmatised view of cannabis use, the population still seems to gravitate towards it. As per the 2023 Euromonitor International report, the cannabis market grew from 4 billion yen (24.2 million euros) in 2019 to 24 billion yen (145.2 million euros) in 2023—that is a sixfold growth! Interestingly, the increase in growth is attributed to the rising use of CBD.
Despite the growth, cannabis use remains relatively low compared to other countries. Based on Euromonitor International, approximately 0.2% of the Japanese population aged 15 to 64 years old consumes cannabis illegally at least once a year. Based on the population of Japan, 0.2% translates to roughly 260,000 people out of Japan's population of 126 million.
What is the Legal Status of Cannabis in Japan – and are changes coming?
Cannabis activities – this includes possession, cultivation, sale, and purchase of cannabis for recreational or medicinal purposes is illegal in Japan under the Cannabis Control Law. However, in 2013, CBD entered a regulatory loophole phase, which allowed for products created from the stems and stalks of hemp to be imported, sold, and consumed. Despite the nearly impossible feat of creating commercial CBD products from these parts of the hemp plant, the loophole has led to a budding CBD market.
In 2023, amendments to the Cannabis Control Law were announced, with the aim to provide guidelines for the CBD market whilst addressing the outdated cannabis use laws. The key changes from the bill included:
Allowing for the use of cannabis-derived pharmaceuticals like Epidiolex for medical purposes.
Allowing for domestic cultivation of hemp for medical and industrial purposes.
The introduction of stricter penalties for the sale of illegal cannabis – including cultivation.
Changing the framework to be compound-specific VS plant part-specific.
The Market Looming Issues
Earlier this year, the Japanese government launched an initiative to allow for public consultation regarding the draft legislation. The consultation generated a lot of interest due to the incredibly strict amounts of THC and CBD allowed in products – which included:
Oil/Powder: 10mg/kg (0.001% or 10ppm) - This is equivalent to 0.001% concentration
Aqueous solutions: 0.10mg/kg (0.00001% or 0.1ppm) - This is equivalent to 0.00001% concentration
Others (e.g., food): 1mg/kg (0.0001% or 1ppm) - This is equivalent to 0.0001% concentration
Unfortunately, these limits are an improvement from the first draft and still represent the strictest in the world. As one would expect, the CBD industry across Japan has criticised these stringent thresholds, arguing that such low levels would effectively ban most CBD products in Japan and significantly impact the industry's growth.
Dr. Yuji Masataka, Japan's first specialist in medical cannabis, in recent media publications, highlighted several concerns regarding the proposed changes, stating that “the strict limits could lead to a dominance of isolate-based products, potentially eliminating the entourage effect.” Furthermore, if these changes are implemented, “the homogenisation of products could lead to a loss of diversity in cannabis-based offerings”.
Whilst these changes are less than desirable for the market, Japan’s CBD market is still projected for growth according to Euromonitor. Japan’s illicit cannabis market is estimated to be 2.5 times larger than the legal CBD market; CBD sales are predicted to outgrow the illicit market by 2026.
However, if the industry is unable to address the changes related to the current loophole, market growth will be stalled due to a decrease in product options.
Adam has spent over eight years working with unregistered medicines. With a specialization in Cannabinoid Therapeutics, Adam has supported the development, implementation, and market entry of multiple cannabinoid product portfolios in markets such as Australia, New Zealand, Germany, and Brazil. Before working in the medical cannabis field, Adam spent almost a decade building various B2B businesses within education, investment, and medicinal cannabis, with progressive roles including business development, strategy, product development, and project management. He has consulted private and listed cannabis producers and ancillary businesses since 2015 as one of the early entrants and experts in the burgeoning Australian cannabis industry. Adam founded and sat on the board of The Medical Cannabis Council, Australia’s first not-for-profit industry body. He is a frequent public speaker and publishes a widely read industry newsletter. Adam earned a Bachelor of Entrepreneurship from the Royal Melbourne Institute of Technology. Adam has appeared in several major news outlets, including the Sydney Morning Herald, The Australian Financial Review, Nine News, Startup Smart, SBS, SkyNews, MJBizDaily, and other major publications.
Disclaimer: This information is shared with a global readership for educational purposes only and does not constitute medical advice. All patient-related information has been de-identified OR fictional to protect privacy. Nothing in this article is intended to promote the use or supply of medical cannabis to members of the public.