CBD is legal in Japan, but only if it is extracted from plant stalks and stems. CBD is still not very popular in Japan, as brands struggle to contend with traditional Japanese values while showcasing the benefits of CBD. Most brands are small and local but larger players from North America and Europe have started to enter this attractive market.
| Population | GDP per Capita | Healthcare Spend per Capita | Cannabis Use | Average Price per 500 mg Tincture | 2020 Market Potential |
|
127 million |
US $39,306 |
US $4,233 |
0.3% |
US $100 |
$52.3 million |
In 1948 the Cannabis Control Law effectively banned all business related to the cultivation, sale, or research of cannabis or its byproducts. The law largely failed to specify between cannabis and lower-THC content hemp and its byproducts, so the country operated in a vaguely anti-CBD state in the years since. While CBD existed in a grey legal space, this did not extend to hemp for industrial purposes as Japanese regulators have not limited the growth of hemp plants or the use of hemp materials for fabric or rope, or limited the consumption of hemp seeds.
In more recent years, Japan officially legalized CBD, although strict regulations meant the country did not experience its first CBD advertisement until May 2018. The CBD must be extracted from the stalks and stems of the plant, as the lawmakers determined that this was an easy way to eliminate potential contamination from THC.
There are two licenses for growing cannabis in Japan – one for industrial material purposes, and a second for drug research purposes. Each prefecture is in charge of licensing parties to grow or handle cannabis and the licenses are to be renewed at the beginning of every year.
Officials approved clinical trials for the CBD-pharmaceutical Epidiolex in December 2019.
Japanese society is notoriously conservative and traditional, often shunning socially liberal movements that gain traction in Europe and North America. Public perception and acceptance of cannabis is no different – only 1.4% of people between 16 and 64 years of age have even tried cannabis – one of the lowest rates in the world, especially compared to other large consumer economies like the US, where that same rate is more like 40%.
The Japanese National Police Agency reported a total of 3,578 violations related to cannabis consumption in 2018 – a low number, but a shockingly high rate, 42.5% of those arrested, were under the age of 30, indicating more interest in cannabis products among younger generations. Additionally, between 2015 and 2017 the number of Japanese reporting cannabis use rose by over 33%, a trend which may be helped by the medical benefits of cannabis use.
One-third of the Japanese population is now over the age of 60, a proportion expected to continue growing in the coming decades, and healthcare spending in the country grew exponentially in the past ten years, much faster than the economy. In addition to offering a cheaper treatment for certain illnesses, legalizing cannabis and hemp may also offer Japanese farmers an economic buoy.
Recently, popular personalities in Japan have expressed interest or encouragement in the cannabis industry. Priyanka Yoshikawa, crowned Miss World Japan in 2016, has become an advocate for CBD and a spokesperson for CBD's health benefits. Additionally, the First Lady of Japan for the past eight years, Akie Abe, has been an avid proponent of CBD – expressing her love for 'hemp oil' first in 2015, and was a key note speaker at the 2016 inaugural Kyoto Hemp Forum, where she even purchased Elixinol products for her husband, Prime Minister Shinzo Abe.
The Japanese market will grow into a lucrative option for developed CBD companies in North America and Europe in the medium-to-long term, and companies like Elixinol, Phivida, and New Age are taking advantage already despite slow growth. However, for the short term, Japanese consumers remain serviced by mostly smaller local companies.
Elixinol Japan was one of the first companies to supply the Japanese market with CBD products, and was the first CBD company to be approved for a public advertisement in May 2018. In September 2018, the company doubled down on its Japanese investment, purchasing a majority stake in their subsidiary. However, shortly thereafter in October 2018, the company released a press statement acknowledging that some oils had been sold in their product line which were (accidentally) sourced from a non-compliant manufacturing process. Subsequent bad press and difficulties with regulators followed, and after a disappointing fall and winter, the company divested its interest in Elixinol Japan in December 2019.
Phivida Organics, a Canadian company specializing in the CBD-infused foods, drinks and 'clinical products' space as an extension of their commitment to organic, plant-based health and eating habits, began selling products on the Japanese market in January 2018. The company, which processes the CBD products in Ontario and exports them to Japan, has a distribution agreement with the local online Japanese distributor, Asayake.
New Age Beverages Corporation, a market leader in infused drinks and manufacturer of CBD oils from Colorado was approved by the Japanese Narcotics Control Division to sell their products in September 2019. The company will bring their 'Nhanced line of products to Japan, including a body cream, roll-on gel, and tincture, all of which will be sold "through over 50,000 direct-to-consumer product consultants."
AP Organics, a Swiss-British company focused on production of refined oils has also entered Japan, betting on the country's cosmetics market as its next big money-maker. The firm began business operations in Japan in August of 2019 and primarily partnered with vape companies, although representatives have expressed a business mission to enter the cosmetics space in the next year, where the company views more potential for CBD.
There are also smaller CBD brands from Japan and local CBD stores where consumers can explore their options. Healthy Tokyo, for example, maintains storefronts in the wealthy neighborhood of Minami-Aoyama and in the Haneda airport. A popular beauty store, Cosme Kitchen, carries CBD oil in its stores, and cafes in Japan's capital are selling CBD oils as part of their health food options.
Because Asian beauty movements, led by the "J-Beauty" trend are at the cutting edge of global waves of popular skincare methods, it's likely that CBD in the beauty industry will take off in popularity in Japan before – and to a larger extent than – it will in the health and wellness sector.
Hemp is a cash crop that could be profitable for struggling Japanese farmers.
Outside investment from North American CBD companies will likely continue as these companies strive to create global brands.
It is going to be a challenge for the CBD industry to break its association with the highly-stigmatized cannabis in a conservative country like Japan. Although more and more popular personalities are speaking out in its favor, like the First Lady and celebrities, they are exceptions to the rule and CBD will have to climb out of the deeply entrenched biases against cannabis.
Japan is primed to become the world's next biggest CBD market, with a loosening regulatory environment, a cultural emphasis on natural health solutions, and young generations obsessed with trendy beauty products. The country has one of the largest consumer economies in the world, the country's health-and-wellness trend is growing, consumers tend to be financially mature, and the country has an aging population – all great signs for a potential CBD market.
As regulations continue to ease and popularity of CBD continues to rise, Japan's consumers will be a highly coveted market for European, American, and Canadian producers, as Japanese investors have largely neglected the opportunity to build a local Japanese CBD-production or processing industry.