Cannabis law, an emerging area.

Cannabis law involves navigating changing policies around the legalization of Marijuana. This area of law is nuanced and requires a thorough understanding of policy timelines. With the demand to legalise Marijuana for medical and other recreational purposes, several countries have been making attempts to establish federal protections for financial institutions that provide services to state-legal cannabis businesses.

It is true that Cannabis law is a quickly emerging area in the legal industry that will continue to grow. As more businesses receive licenses to sell Cannabis, more patients will get better access to medicinal Marijuana. Also, other federally regulated bodies will provide more financial services such as loans and insurance to Cannabis-related businesses.

Through our blog today, we will witness the cannabis market in Japan. While only in its initial stages, there are high growth opportunities, particularly among health-conscious Japanese consumers, given inherent demand for better sleep and pain relief. The nation’s Cannabis market has quadrupled in the space of a few years, from JPY4 billion in 2019 to JPY17 billion in 2022. But still, it lacks much, due to lack of investment, uncertainties and more. With regulation change, expected in 2023, one may witness the market grow substantially.

Cannabis became a prohibited substance in Japan, following the adoption of the Cannabis Control Act in 1948, and there have been no major changes to this legislation. At present, the consumer understanding is limited, and most consumers most likely consume Cannabis illegally. Japan follows a strict opinion of zero tolerance to Cannabis. Saying this, around 0.2% of the Japanese population (15-64 years old) is thought to consume Cannabis illegally. This percentage is far lower than illicit Cannabis consumption in most other countries, especially when compared to many Western nations recording over 10%. The Japanese police and the Ministry of Health, Labour, and Welfare (MHLW) treat Cannabis in the same way as other “hard” drugs, such as methamphetamine, cocaine and heroin. Subsequently, Japanese society tends to view Cannabis as harmful and anti-social. But prospective legislative reform would be an essential first step in broadening societal acceptance for CBD.

Cannabis regulation reviews in other countries have contributed to momentum for regulatory changes in Japan. In 2021, the MHLW established an expert committee to review the Cannabis Control Act, and it is expected revisions will be proposed in a bill to be submitted in 2023. Hence, one can most likely expect an official legal introduction of Cannabis in the Japanese market, even if it is for medical use.

Currently, products containing CBD, which is extracted and manufactured from only the mature stems and seeds of the Cannabis plant, do not fall under the legal category of cannabis, which is regulated by law. Therefore, with the market being surveyed, we can also expect a possible change in categorising of drugs from ‘part-based’ to ‘ingredient-based’. When importing CBD products, the importer needs to prove that it is THC-free as well as being extracted from grown stem and seeds only. This is a drag on imports because in other countries, regulations are generally ingredient-based, focussed on THC content rather than the parts of cannabis plants, making it difficult for manufacturers to prove that they comply with Japan’s unique part-based regulations. Changing the regulation from part-based to ingredient-based, would immediately widen the potential gateway for CBD imports and present new market opportunities.

The popularity of vapour in Japan is attributable to Japan's e-cigarette regulations, where nicotine-containing vapes are banned by law. CBD-containing liquids provide the sensation of vapour inhalation without the need to consume harmful ingredients such as nicotine and tar, which has further supported their usage.

Once legislation is amended, large companies from industries as diverse as food, beverages, supplements and cosmetics are expected to enter the market. Topicals are also good entry products, as consumers can easily try them at retail shops, and Japan has a massive skin care market. These products can be positioned on their strength as aids to better sleep and for pain relief, which can be expected to directly appeal to health-conscious consumers in Japan, a nation renowned for the longevity of its people.

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