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Japan finances its pensions with cannabis

Japanese authorities takes a hard line on cannabis and the laws surrounding its use are some of the most repressive among developed countries. However, the government pension fund GPIF (Government Pension Investment Fund) has just invested some 80 million dollars in companies active in the cannabis sector.

The perception of cannabis in Japan

The cultivation, consumption and possession of cannabis in Japan are regulated by the Cannabis Control Law. This law was enacted in 1948 when the country was under American occupation after the Second World War. Since then, the law has only been superficially amended. Unsurprisingly, Japan is one of the strictest countries in the world in this respect. Possession of marijuana is punishable by five years in prison. Growers face up to 10 years in prison. In addition, a new law is currently being discussed in the country that would criminalise a simple positive blood test for cannabis.

In addition to the legal troubles, anyone connected with cannabis in the country risks ostracisation through loss of employment or expulsion from school. There are many cases of people being ostracized for having too close a relationship with the plant. Famous actress Saya Takagi, for example, had all the programmes she appeared on taken off the air after she was arrested in possession of cannabis. International rugby player Christian Loamanu was banned for life from the national team and dismissed from his Toshiba Brave Lupus team. Foreigners are not exempt from punishment in the country. In 1980, Paul McCartney went to Japan for an 11-date tour. But he was unable to leave Tokyo’s Narita International Airport because the authorities found him in possession of cannabis. He had to wait 11 years to regain the right to travel to the Empire of the Rising Sun.

The sale of cannabis seeds is also illegal, as the Cannabis Control Act considers seeds to be a narcotic substance. However, it seems that sterilised seeds – that are therefore unable to germinate – can be sold legally in the country. It is all a matter of interpretation of the law.

GPIF pension fund invests in cannabis

Despite the extreme severity of the government, judiciary and public attitude towards cannabis, the GPIF has invested in three cannabis companies, as reported by Bloomberg. It has acquired about $80 million worth of assets in at least three cannabis companies. GPIF now owns $17 million (€14.3 million) in Cronos Group Inc. and $7 million (€5.9 million) in Aurora Cannabis, which specialises in the medical and recreational cannabis business. It is also one of the twelve largest shareholders in Canopy Growth, a cannabis company specialising in cannabis products.

The reason this information is important is that GPIF is not just any pension fund. It is an organisation largely under the control of the Japanese government. It is also the world’s largest pension fund with assets under management totalling some $1.6 billion.

Quoted by Bloomberg, the lawyer specialising in the defence of cannabis consumers, Michiko Kameishi, denounced “a complete contradiction”. The GPIF representative defended the pension fund’s position, stressing that these investments were made “in the interest of its members” and that, moreover, they represented only 0.005% of the fund’s assets.

The duality of investment funds

The GPIF is obviously not the only investment fund that does not invest solely in sectors that respect the principles it promotes. It must be said that the balance between ethics and returns is not always easy to find. Sovereign wealth funds in the Middle East, for example, seek to respect the principles of strict Islam. They therefore refuse to invest in gambling, alcohol or pork. However, the Saudi sovereign wealth fund PIF has acquired 5.7% of Live Nation, the world’s leading concert organiser, in other words, an activity that is not in line with the rigorous Islam promoted by Saudi Arabia.

Investment funds are above all driven by financial logic and must make a profit, even if it means committing some ethical deviations. This logic is all the more crucial in the case of the GPIF as the population is getting older in Japan. Financing pensions will therefore require increasingly profitable investments. And the cannabis market is one of the most promising markets of the moment.

Age pyramid in Japan in 2018
Cultivation information, and media is given for those of our clients who live in countries where cannabis cultivation is decriminalised or legal, or to those that operate within a licensed model. We encourage all readers to be aware of their local laws and to ensure they do not break them.

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