Japan: One of the Largest CBD Market in Asia-0

Japan: One of the Largest CBD Market in Asia

Japan, has a long history of cannabis cultivation, and now the cultivation is limited in a small area under a licensing system. Tetrahydrocannabinol (THC) is banned and medical cannabis is also illegal due to its trace amount of THC.

Cannabinol (CBD) is legal. In general, CBD products will not be regulated as long as they meet the following two conditions: one is THC-free, and the other is to prove that the added CBD is extracted from cannabis seeds or mature stems. Japan’s CBD products are mainly imported, mostly used in cosmetics, dietary supplements, health products or food, pet snacks, CBD electronic cigarettes, etc., which are quite popular among consumers. According to Prohibition Partners, the Japanese cannabis market will reach $2,057.7 million by 2024.

Japan: One of the Largest CBD Market in Asia-2

Current Law Bans THC but Allows CBD

Cannabis in Japan can date back to Neolithic ages. In 1948, the Japanese Government adopted the Cannabis Control Law to establish a licensing system in all cannabis-related activities, this law has been amended many times through time.

According to the law, “Cannabis” refers to Cannabis plants and its products, such as Mature stems and their products (except resins), as well as seeds and its derivatives.

Japan has a licensing system for the control of cannabis. The law mentions two types of license: one is a “grower license” for agricultural-related personnel, and the other is a “researcher license” for universities and anesthesia management. Cannabis can be grown, transferred, and studied only with permission. These permits are issued by the governor of the prefecture and are valid from January 1 to December 31. The licenses need to be updated every year.

Since the license is very difficult to obtain, the number and area of ​​plantations have dropped significantly. According to the Ministry of Health, Labor and Welfare of Japan, in 2014, there were only 33 cannabis growers who received a license in Japan, with a planting area of ​​only 6 hectares. A cannabis strains called TOTIGISIRO in the Luuma area of ​​Tochigi Prefecture has a THC content of 0.2% and a CBD content of 1.1%. It is strictly managed by Tochigi Prefecture and is not allowed to be planted outside the Tochigi Prefecture.

Although not mentioned by Cannabis Control Law, THC is categorized as narcotics, as per the Narcotics and Psychotropic Control law, such substances may not be imported, exported, manufactured, transferred, accepted, used, possessed, and discarded. THC falls within controlled substances, hence, cannabis flowers, leaves which contain a high concentration of THC, are prohibited.

In Japan, Medical Cannabis is also illegal due to it contains both THC and CBD. With the legalization of medical cannabis worldwide, coupled with the decline in domestic cannabis production, pushing Japan to legalize medical cannabis.

Mature stems and seeds contain almost no THC, so they are legal, so is the CBD extracted from them.

In the case of illegal cultivation, imprisonment for up to seven years will be imposed and illegal possessors will be punished by imprisonment for up to five years.

Japan: One of the Largest CBD Market in Asia-3

An Aging Country with Concentrated Wealth

From the early 1970s, Japan entered an aging society. In 2017, the elderly over the age of 65 in Japan accounted for 27.05% of the total population, reaching 34.176 million. It is estimated that by 2055, the elderly over 65 will be close to 40% of the country’s total population.

The most wealthy people in Japan are those over the age of 50. The average family assets of the 70-year-old elderly group are about 23.74 million yen. Young people and middle-aged people under 50 have negative equity status due to pressure from housing and education.

Wage income reflects the same trend: The wage income for people over 50 is almost twice that of the 20-year-old. Coupled with fixed assets, the disposable income of the elderly in Japan is much higher than that of young people.

With huge buying power and actually health-care need, elderly in Japan will demand more CBD health-care products. which is one of the important conditions for the development of the CBD market in Japan.

Japan has a very rich and healthy market for food and natural health products. Japanese people are very much advocating plant-derived health care products making these products very popular in the Japanese market. Therefore, whether it is skincare products, health products or medicines, the Japanese market has a great demand for CBD products, which also attracted foreign cannabis companies to Japan. It is expected that in 2024, Japan will become the second-largest medical cannabis market in Asia with a scale of US$800 million.

Japan: One of the Largest CBD Market in Asia-4

The Promising Japanese CBD Market

Due to the current shortage of domestic cannabis production CBD products in Japan are full imported, or processed products using imported raw materials.

According to Prohibition Partners’ Asia Cannabis Report, the total cannabis market in Japan is expected to reach US$2,057.7 million by 2024, of which US$794.6 million in medical cannabis and US$1,623.1 million in cannabis.

The CBD products on the Japanese market are not served for medical purposes, but as cosmetics, dietary supplements, health products or food, and pet snacks. There is a wide variety of CBD products in the Japanese market, and consumers can easily purchase CBD products from regular agencies or shopping websites.

In June 2018, Phivida Holdings, a Canadian manufacturer of cannabis products, launched a series of CBD-infused Tea in early 2018. The new products are made from green tea and are said to be used to relieve intestinal inflammation and are only sold in the United States and Japan. It is reported that Phivida plans to set an office in Tokyo to facilitate its entry into the Japanese market.

In September 2018, global medical cannabis company Elixinol Global Limited (Australia) announced its entry into the Japanese market with a range of cannabis-derived CBD dietary supplements, food and health products, and medicinal cannabis products. In 2016, the company increased its investment in the Japanese market and injected US$22 billion to provide working capital for Elixinol (Japan).

The global regulatory shift will also accelerate the legalization of medical cannabis in Japan. More international CBD companies, investors see a promising return on the lucrative Japanese CBD market based on the huge demand of the increasing elderly who are rich and actually need CBD products. As for other people, their awareness towards cannabis and the friendly policy environment will encourage them to use more CBD products and Japan is likely to become one of the biggest CBD markets in Asia.

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Al Fidel
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