What Does Mexico’s Cannabis Legislation Mean for International Business?

25th October 2019

Earlier this month, Mexico’s Senate published draft Cannabis legislation outlining proposed plans for the new sector. What does this draft bill say, and what could it mean for local growers and international businesses?

The Mexican government was set to make a decision on the final draft of Cannabis legislation earlier put forward by members of the Senate. A deadline of October 24th was set by the country’s Supreme Court. The judiciary body ruled last year the prohibition of adult marijuana use as “unconstitutional”.

A final agreement on the legislation is yet to be reached, but is expected to be confirmed by the end of October. The draft is largely based on a bill put forward by former Senator Olga Sánchez Cordero. However, additional proposals have been merged in the recently published draft.

International companies, particularly those based in Canada or the USA, are undoubtedly getting excited at the prospect of breaking into, what is soon-to-be, the largest Cannabis market in the world. However, proposals put forward in the legislation may put a spanner in the works for their ambitions.

Colorado-based company CannabisOne – a business growth strategist – intends to influence the shape of upcoming Mexican Cannabis legislation:

“Next month we are actually going [to Mexico] in order to have a symposium with all of the media outlets … And then also the lawmakers and dignitaries that will all meet in one place in order to make the decisions that are shaping the laws in Mexico.”

Current proposals highlight plans to limit the number of licenses granted to local companies, instead prioritising local and vulnerable communities. It also plans to ban the vertical integration of companies – a model that many large businesses prefer.

International licenses could be capped at 20%, as the laws will aim to give priority to domestic businesses. An additional 20% of licenses would also be allocated to communal lands in municipalities where crops were destroyed while the plant was still prohibited.

Even more significant to International businesses are plans to ban vertical integration. This means that a single applicant will only be able to hold one license at a time. With these rules, companies would only be permitted to focus on either cultivation, manufacture, or retail at any one time. This doesn’t sit well with large corporations and companies, like CannabisOne.

CEO of CannabisOne, Jeff Mascio, has said:

“They want us to be able to control only one segment of the business, whether it be cultivation, manufacturing or retail. We want to be able to control all of that until the supply chains are actually more developed”.

The final terms and guidelines of Mexico’s upcoming legal Cannabis sector remain uncertain. The Senate has previously hosted international speakers, such as former Colombian Senator Juan Manuel Galan, to provide their perspectives. However, it is yet to be determined how much influence these talks will have on the current draft legislation.


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