Japan's parliament has passed a bill to legalize cannabis-based medicines in a landmark revision of its stringent drug laws, while toughening its ban on recreational use of marijuana.

The changes to Japan's cannabis and narcotics control laws passed on Wednesday in the upper house will pave the way for the lifting of a ban on medical products derived from cannabis.

Cannabis-based medicines, produced with the active ingredient cannabidiol, or CBD, are already used overseas to treat various conditions such as severe epilepsy.

This is a win for patient groups that have campaigned for access to these medicines.

However, the changes amount to a tightening of Japan's already tough cannabis policy.

Marijuana consumption was criminalized, closing a loophole that officials partly blamed for a recent rise in cannabis-related arrests.

Prior to the revisions, inhaling marijuana had been technically legal, whereas possessing it was punishable by a jail term of up to five years.

The loophole was originally introduced to prevent farmers from being arrested for accidentally inhaling psychoactive smoke when growing hemp.

But alarmed by the recent spike in arrests over cannabis, especially among young people including teens, authorities decided to take things up a notch.

Under the revised laws, those caught using or possessing marijuana can face a prison sentence of up to seven years.

Health ministry statistics show the number of arrests related to cannabis hit a record 5,783 in 2021, with a marked rise among teens and those in their 20s.

And according to a 2020 police probe into 748 people arrested over marijuana possession, nearly 30 percent cited the lack of penalties against consumption as an emboldening factor.

"As more and more young people gravitate toward abusing marijuana, we hope this revision will put a brake on the trend," top government spokesman Hirokazu Matsuno said Wednesday after the bill cleared parliament.

Japan's CBD market has flourished in recent years, swelling from just $3 million in industry value in 2015 to an estimated $59 million in 2019, according to Tokyo-based research firm Visiongraph.

The new rule against consumption will leave CBD products unregulated, as it will only target THC — the psychoactive substance that makes people high, a health ministry official told AFP.

Japan's Cannabis Control Act was introduced in 1948 during the post-war US occupation, but it is not an outlier in Asia where tough penalties for drug use are the norm.

Still, decades of a strident government crusade against illegal drugs, synonymous with the mantra of "dame zettai" (absolutely not), have led to marijuana being heavily stigmatised in Japan.

Just 1.4 percent of people in Japan say they have tried marijuana, compared to more than 40 percent in France and around half in the United States, data compiled by the health ministry show.

Japan's tough anti-cannabis laws have ensnared international stars including Beatle Paul McCartney, who spent nine days in detention in 1980 after the drug was found in his baggage.