Japan is about to implement new regulations that could drastically change the country's CBD market. The Ministry of Health, Labor and Welfare has proposed a restrictive THC limit for CBD products, setting a maximum of 0.001% for CBD oils and 1 milligram per kilogram in finished products. For beverages and other products, the limits would be even stricter. This regulatory change threatens a market that is currently estimated at over $170 million (27 billion yen) per year.

Economic and Commercial Impact

Currently, the allowed THC ratio in CBD products in various parts of the world is 0.3%. Japan's proposal to reduce this limit to 0.001% could virtually annihilate the over-the-counter sector, which has grown significantly in recent years. According to Toshiki Inoue of Chillaxy, a Tokyo-based CBD lifestyle brand, "If this happens, I would say that 90% of companies will go bankrupt."

Market and Consumer Reactions

Japanese lawmakers have already signaled last year their intentions to restrict medicinal cannabis to CBD and to require a medical prescription for its use. Consumers who use these products for various conditions, such as chronic pain and relaxation, have started a petition against the proposed new THC limits. However, the expectation is that these efforts will be in vain and that the new regulations will eliminate the CBD market.

A source from the private sector, cited by HempToday, expressed concern that authorities are destroying a growing market by integrating it into the social welfare service, meaning that only doctors could prescribe CBD products.

Benefits for Pharmaceutical Companies

The new rules could particularly benefit pharmaceutical companies like Jazz Pharmaceuticals, based in Ireland. The company produces Epidiolex, a THC-free CBD medication that is approved in the UK and the US for treating severe forms of epilepsy. Limiting the Japanese CBD market to highly regulated medications could give a significant advantage to products like Epidiolex.

Rapid Growth and Uncertain Future

Between 2019 and 2023, the CBD market in Japan grew sixfold, from ¥4 billion ($26 million) to ¥27 billion ($173.8 million), according to a report by Euromonitor International. CBD products are primarily sought for relaxation, sleep improvement, and stress relief. Currently, CBD represents 28% of the total cannabis market in Japan, with the remaining 72% being illicit marijuana sales.

Even with current restrictions allowing only products derived from hemp seeds or stalks, the CBD market has thrived thanks to lenient enforcement that has allowed for a robust gray market. It is estimated that around 150 companies operate in the CBD trade in Japan, serving approximately 588,000 regular users.