The Cannabis Market in Japan Thrives Despite Its Illegal Status

Cannabinoids like THC (tetrahydrocannabinol) remain highly illegal in Japan, but despite this, the underground market is booming. A new report by Euromonitor International highlights “staggering growth” over the recent years, noting that it increased “approximately sixfold from JPY4 billion (USD26.3 million) in 2019 to JPY24 billion (USD173.8 million) in 2023.”

Japan has had uncertain laws surrounding marijuana for decades, but those have changed in recent months. CBD (cannabidiol), in particular, is finally having its moment as legislation passed in December 2023 now allows for the use of cannabis-derived medications like Epidiolex. To fully understand Japan’s new CBD laws, click here.

“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,” wrote the authors of the Euromonitor International report.

While CBD is now permitted for certain uses, legislation regarding THC has cracked down further. Cannabis containing THC is considered a narcotic to be regulated, and possession or use of the substance could result in a seven-year prison sentence. The law was a direct response to the rising use of weed among young people in the country. However, if the growing black market is any indication, it doesn’t appear to be working.

“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,” the report continued. “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 CBD market is still in the very early stages, so there’s plenty of room and potential for growth. Whether or not it will catch up to the illicit cannabis market, however, remains to be seen.

“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,” authors wrote.

What’s next for Japan? Only time will tell. Hopefully, the country will reconsider its new THC laws to allow for the cannabis market to thrive in a more legally-friendly way.