Cannabis grows 6 times in 3 years in Japan; market makes 145 million euros

The cannabis market in Japan has shown significant expansion with a growth from 4 billion yen (24.2 million euros) in 2019 to 24 billion yen (145.2 million euros) in 2023, 6 times more, according to a report by Euromonitor International. This increase was largely driven by the increasing demand for CBD products, which offer "relaxation, improved sleep, and stress relief".

As of the 2022 report, major Japanese companies have been cautious about entering the cannabis market due to legal uncertainties and the still negative stigma associated with its use. But the amendment of the Cannabis Control Law, made last year, changed the scenario. This significant reform was set to accelerate the use of cannabidiol (CBD) in various sectors, including medicine, health, beauty, beverages, and edibles in Japan, which encouraged investors.

However, in May 2024, the Ministry of Health, Labor, and Welfare proposed a new limit for residual THC (tetrahydrocannabinol) of 0.0001%, a significantly stricter number than international standards.

Growing CBD Market

The CBD market in Japan has been experiencing rapid growth, but it is still in its early stages and faces threats of making the use of flowers unviable due to strict THC limits. Concerns about product safety and regulatory compliance persist, highlighted by incidents such as illnesses linked to CBD-infused gummies containing HHCH (hexahydrocannabinohexol) in 2023. These incidents led to stricter regulation.

Despite challenges related to quality control, regulatory compliance, and consumer education, the report predicts that CBD sales will surpass the illicit cannabis market by 2026. This growth is driven by the increasing health and wellness awareness among consumers seeking alternatives to traditional products like cigarettes and alcohol.

The revised Cannabis Control Law is expected to provide clearer guidelines for the sale and distribution of CBD products, attracting major companies from various sectors to enter the market by the end of 2024, the report says.

Increase in Illicit Consumption

Despite legal advancements, Japan has seen an increase in illicit cannabis consumption. Euromonitor International estimates that 0.12% of the Japanese population consumes illegal cannabis annually, a relatively low figure compared to Western countries. However, there is a notable increase in illegal cultivation and smuggling, especially among younger generations. In 2023, it was estimated that the illicit cannabis market was 2.5 times larger than the legal CBD market.

The global trend towards relaxing cannabis regulations led Japan's Ministry of Health, Labor, and Welfare to create an expert panel to review the Cannabis Control Law in 2021. In 2023, the Cabinet decided to amend the law, filling regulatory gaps and combating illicit cannabis consumption.

Content originally published on CannaReporter