International

The future of CBD in Japan: How legal reforms will shape the market

Published

1 year ago

8 April, 2024

Photo: DR | Reddit

At the end of last year, Japan took a big step toward cannabis reform after passing a bill to amend its 75-year-old Cannabis Control Act. After approve these rules in November last year, Japanese authorities are now ironing out the details of these reforms. The industry is preparing for an announcement from Japan's Ministry of Health, Labor and Welfare (MHLW), which is expected to set new standards for THC levels later this April.*

The government's public announcement is expected to occur before a final official decision is made on the new structure for the already growing hemp and CBD industry from Japan, this coming summer.

Yuji Masataka, a doctor and Japan's first medical cannabis expert, told Business of Cannabis: “Considering the upcoming legal reforms scheduled for this summer in Japan, the impact on the CBD market is expected to be significant.”

Dr. Masataka is a graduate of Kumamoto University Faculty of Medicine. After meeting medical cannabis expert Jeffrey Hergenrather in California in 2016, he decided to become Japan's first medical cannabis expert. In 2017, while working at the Department of Neurology at Kumamoto University as representative director, he founded non-profit organization Green Zone Japan, which aims to raise awareness about medical cannabis. Currently, Masataka also holds the position of vice president of the Japan Society for Clinical Cannabinoid Research.

3 Japanese books about cannabis: Marijuana High (2008 reprint), Marijuana Now (1981) and Marijuana X (1995)

Yuji Masataka also serves as a key opinion leader for Astrasana Japan Co. Ltd., providing support to create a progressive and inclusive landscape in Japan, where CBD products are not only widely accepted, but also celebrated for their potential health benefits. healthcare and recognized as a valuable market opportunity.

What is expected to change?
The Japan There is already a CBD market established and thriving, with over 150 companies across the country currently importing, manufacturing or distributing a range of CBD products.

In addition, strong restrictions remain products that can be bought and sold. This includes a stipulation that CBD and other hemp-derived products have zero observable levels of THC, meaning the market is dominated by CBD isolate products.

This is expected to be an important change in the next legislation. According to a statement from the MHLW in February 2024: “In order to prevent the occurrence of health and hygiene risks, a maximum residue limit will be established for THC remaining in small quantities in products derived from the cannabis plant.” .

Furthermore, according to Dr. Masataka, current restrictions that mean only CBD products derived from the plant's stems and seeds can be imported “will be eliminated. The standard is expected to be published this summer and it is said that the standard value (THC) for final products will be around 0,02%”, he continued.

Japanese citizens demonstrate for the regulation of cannabis. Photo: DR | AFP

market opportunities
According to Masataka, there is frequent debate over whether the distribution of CBD as a food will be allowed after CBD is approved as a prescription medicine. Currently, the MHLW does not appear to have any intention of regulating CBD as a food, although future high-profile issues may trigger further regulatory discussions. If legal reforms result in an easing of regulations, it is expected not only that consumer confidence will improve, but also that several important changes are likely to occur in the market.

In contrast to Europe, which has new food regulations, if Japan continues to allow the sale of CBD and other cannabinoids, such as CBG and CBN food product sales in retail stores, following the announcement of new THC regulations, it could establish a unique market position. This would significantly diversify the market, seeing new products such as “CBD-infused foods, drinks and even cosmetics” enter the market, which Dr Masataka expects will see a “rapid increase in demand” due to destigmatization and legal clarity.

Listed companies may also begin to enter the sector, “seeking to capitalize on growing demand and potential profitability”, which in turn leads to “greater investment, more extensive distribution networks and increased competition in the industry ”.

“Due to these changes, prices of domestic CBD products are expected to decrease. This will be positive for the expansion of the CBD market.”

Japan's preference for CBD products differs significantly from that of Europe and the US. Several cannabinoid-infused vaping products are very popular in Japan, given the country's ban on flower containing not only THC but also CBD. This trend could increase as the Japanese government establishes new sanctions for cannabis use. Currently, possession is illegal, but use is not.

On Reddit you can find illustrations and posters of Japanese pro-cannabis movements.

The new law is also expected to allow the use of cannabis-derived prescription medications, categorizing cannabis alongside opioids and other narcotics, potentially opening the door to a medical cannabis industry in addition to pharmaceutical medications like Epidyolex.

It would also be possible for CBD to enter the medical field, with new regulations seeking to promote research, among other initiatives aimed at opening the market. Elsewhere, the new law will seek to differentiate cultivation licenses for high-THC medical cannabis and hemp. The latter is culturally significant in the country and it is hoped that laws will be relaxed in order to promote indoor cultivation and the Japanese hemp industry.

While the amendment is intended to promote domestic cultivation and theoretically allow the manufacture of CBD products in Japan, Masataka believes the import market will continue to thrive.

“Unfortunately, I believe it is not profitable to grow hemp, extract CBD and market CBD products in Japan,” he said. While the industry awaits clarification on the details of Japan's new cannabis framework, the commitment to reform from what has historically been one of the most conservative countries regarding cannabis sends a clear message to the region. Cannabis presents both medical and economic opportunities if regulation allows it to flourish.
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*This article was originally published by Ben Stevens on Business of Cannabis and translated and adapted into Portuguese by Laura Ramos.

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[Disclaimer: Please note that this text was originally written in Portuguese and is translated into English and other languages using an automatic translator. Some words may differ from the original and typos or errors may occur in other languages.]

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ben stevens

Ben is the editor of Business of Cannabis. Since 2021, he has researched, written and published the vast majority of the outlet's content, delivering agenda-setting journalism on regulation, business strategy and policy across Europe.