The nascent cannabis market in Japan has reportedly seen a massive increase in recent years. 

That is according to a newly published report by Euromonitor International, which revealed a “staggering growth in Japan’s cannabis market over the past four years.”

The market, according to the report, expanded “approximately sixfold from JPY4 billion (USD26.3 million) in 2019 to JPY24 billion (USD173.8 million) in 2023,” a surge that was “attributed to the rising demand for products offering relaxation, sleep improvement, and stress relief.”

Euromonitor International, a market research firm based in the United Kingdom, said that initial “investment and entry into the cannabis market by major Japanese companies has not been aggressive due to legal uncertainty until now, along with the negative image surrounding its use.”

That changed, the company said, in 2024, when Japan amended its “Cannabis Control Law” for the first time in more than 70 years. 

“This amendment is expected to significantly change the potential and accelerate the use of cannabidiol (CBD) in diverse fields, including medicine, health, beauty, beverages and edibles in Japan,” the company explained.

“While Euromonitor International estimates that 0.12% of the Japanese population are consumers who use illicit cannabis at least once a year, which shows a low figure compared to Western countries, Japan witnessed a surge in illegal cultivation and smuggling operations, particularly among younger generations. Despite the long-standing legal framework, the domestic illicit cannabis market in 2023 was estimated to be 2.5 times larger than the legal CBD market.”

The revision to the country’s cannabis law came in December, when Japan’s House of Councillors moved to essentially end the prohibition on medicine derived from cannabis. The amendment also ushered in new penalties for cannabis use. 

The punishment for illicit cannabis is severe, carrying a prison sentence of up to seven years.

That didn’t sit well with some Japanese lawmakers.

“What previously had no penalties will now be harshly punished, with a maximum of seven years in prison. I opposed the bill because there is a serious problem here,” Rep. Taro Yamamoto said at the time.

The change to the country’s cannabis law also allows for the cultivation of hemp, a bid to reduce Japan’s imports of the products.

According to Euromonitor International, the “momentum for regulatory change in Japan gained traction due to the relaxation of cannabis regulations in other countries, prompting the Ministry of Health, Labour and Welfare to establish an expert panel to review the Cannabis Control Law in 2021.” 

“The amendments are mainly twofold: strengthening regulations, and lifting the ban on the use of cannabis-derived medical products,” the company explained. “First, unlike CBD, which is a legal ingredient that can be imported and sold if it is produced overseas, THC, one of the main components of cannabis, will continue to be regulated as a narcotic. In addition to authorised cultivation, the sale and possession of cannabis, which have been punishable up until now, will incur stiffer penalties. Conversely, the government’s decision to permit the practical use of Epidiolex, a CBD-based antiepileptic medication, signals a significant shift in policy. Additionally, hemp cultivation, previously restricted to fiber and seed collection or specific purposes, is now authorized for medical use.”

Euromonitor International said that Japan’s “CBD market has been growing rapidly recently, but is still in its early stages.”

“CBD products remain relatively unknown to most consumers, with limited understanding and adoption,” the report said. “Concerns over product safety and regulatory compliance persist, highlighted by incidents such as illnesses linked to CBD-infused gummies containing HHCH which are reported widely in the nation in 2023, prompting tighter regulations. The revision of the Cannabis Control Law is expected to usher in clearer guidelines for CBD product sales and distribution, attracting major companies from various sectors to enter the market by 2024. Despite challenges in ensuring quality, complying with regulations, and educating consumers, CBD sales are projected to outpace the illicit cannabis market by 2026, driven by increasing health and wellness awareness among consumers seeking alternatives to traditional products like cigarettes and alcohol.”

The company said that it is a crucial time for Japan’s burgeoning cannabis market.

“The year 2023 marked a pivotal moment for cannabis in Japan, signaling a potential turning point for the country’s CBD market. Recent legal reforms have opened doors for further CBD establishment and development, with the sector gaining attention as a high-growth industry. The increasing utilization of CBD across various sectors, including health, beauty, beverages, and edibles, is expected to reshape societal perceptions of CBD and cannabis. Nonetheless, lingering concerns persist among Japanese consumers, fueled by reports of health issues linked to CBD products. Key to the market’s success will be companies’ ability to educate consumers about the benefits of CBD products, emphasizing compliance, quality control, and scientific evidence,” the report said.

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