The medical cannabis market in Asia could exceed US$5.8 billion by 2024 if it is legalised across the region, but further legalisation is not likely in China and Hong Kong in the near future, according to a new research report.
While attitudes are changing in Europe and the United States, Asian countries remain quite conservative when it comes to the use of marijuana, with China, Japan and South Korea all warning citizens not to indulge when they travel to countries where it is legal, according to Prohibition Partners, a research firm focused on the cannabis industry.
Despite conservative attitudes in Asia, Prohibition Partners said momentum among consumers and businesses for legalisation of marijuana for medical use is reaching “critical mass” globally and consumption of medical cannabis in Asia is likely to increase faster than in other early-adopter regions.
“In our view, while Asian investors and start-ups continue to keep an eye on legal developments in Europe and North America, western-based cannabis companies are getting ready to explore new opportunities in the Asian market,” the research firm said.
Attitudes about the use of marijuana for treatment of cancer, epilepsy and other ailments have been changing in recent years in the West, where medicinal cannabis is now legal in 33 American states and a number of European countries, including Germany, Italy, the Netherlands and the United Kingdom.
The World Health Organisation recommended in January that cannabis be removed from the most restrictive schedule of a 1961 treaty designed to combat drug abuse internationally.
Bank of America Merrill Lynch even began research coverage of several firms in the cannabis industry in April.
However, the International Narcotics Control Board, an independent, quasi-judicial expert body that helps implement United Nations drug rules, said in March weak regulation of medical cannabis could “potentially have adverse effects on public health and may increase non-medical cannabis use among adults”.
“They may also contribute to the legalisation of non-medical cannabis use by weakening public perceptions of the risks of using cannabis and reducing public concern about so-called ‘recreational’ cannabis use, particularly among young people,” the board said.
In its report, Prohibition Partners noted that cannabis was largely legal and used in traditional medicines throughout Asia until the 1930s and attitudes now appear to be changing in the region, with Thailand legalising medical cannabis and Singapore considering changing its laws.
If legalised across Asia, China and Japan would potentially be the biggest markets in terms of value, accounting for an estimated 75 per cent share in 2024, according to Prohibition Partners. That could quadruple by 2027, the research firm said.
Cultivating and consuming marijuana in China remains illegal, but the country has become the world’s largest producer of industrial hemp for uses such as clothing and rope. China produced US$1.1 billion of hemp in 2017, according to Prohibition Partners.
“Current legislation in China makes no distinction between medical and recreational cannabis,” Prohibition Partners said. “There is currently no indication that this is likely to change, despite positive developments elsewhere in the region. However, as Chinese companies begin to explore business opportunities in the medical cannabis sector for investment purposes, there may be increased support for a review of the current legislation.”
Prohibition said China is not likely to fully legalise cannabis in the next five to 10 years.
In Hong Kong, the manufacture of cannabis or other drugs is deemed the most serious of all offences and trafficking carries a maximum sentence of life in prison, according to Prohibition Partners.
Hong Kong and Macau “are likely to keep step with developments in neighbouring China”, the research firm said. “However, we predict that given its high level of western exposure, Hong Kong is likely to act as a testing ground for the legalisation and regulation of cannabis.”