Mexico Will Legalize The World’s Largest Legal Cannabis Market
This comes on the heels of Canada’s historic legalization several years ago, which has created a viable international marketplace, channeling funds through the Canadian markets and effectively mobilizing the global cannabis industry.
When Canada legalized, the U.S. missed an opportunity to ensure that NASDAQ and the New York Stock Exchange would have a role in controlling the financial markets and dollars funneling into cannabis. This was expected since Jeff Sessions was in control of the Department of Justice (DOJ). We didn’t necessarily have a pro-cannabis Administration under Trump and certainly not under the leadership of Senator Majority Leader Mitch McConnell, no friend to marijuana. Despite this, what are the implications for America doing business with partners directly to the north and south?
At first, you might think none of this matters as the U.S. has legalized adult-use marijuana programs state-by-state. While this dispensary models still violates federal law, it has garnered bipartisan support from American politicians to prevent the DOJ from interfering with legal, state marijuana businesses. But the issue is much larger.
We’re talking about a global cannabis economy, with Mexico as the largest country in the world, by population, to legalize marijuana. Mexico will boast the biggest consumer market for cannabis products — with a population of more than 125 million people – representing an enormous leap forward for the developing international cannabis marketplace.
Congress Set To A Vote On MORE Act The First Week Of December
Cannabis Sales In The U.S. Soar On ‘Green Wednesday’
Some Cannabis Activists Are Urging Congress To Vote ‘No’ On The MORE Act
A few steps remain to federally legalize marijuana in Mexico, but the bill has been approved by the Mexican Senate. The bill will establish a regulated cannabis market to allow those eighteen and older to purchase and possess up to 28 grams of marijuana. It also allows a personal cultivation provision for individuals to cultivate up to four plants for personal use. Some technical requirements still need to be hammered out before outright passage, including whether or not personal use cultivation needs to be tracked by the government.
I travelled to Mexico this past February, pre-COVID, to consult with the Mexican Senate on the considerations for hemp and marijuana policy. The timeframe for moving the legislation forward was pushed back by the pandemic. With full passage of the bill now imminent, what can we expect?
Mexico is not the first country with a narco or cartel trafficking history to pass cannabis legalization. It’s happened in numerous Latin America countries that made up part of the black market drug trade. This makes the cartel implications for federal marijuana legalization extraordinarily interesting.
Mexico seeks to regulate and legalize the plant, put strict controls on ownership and the supply chain in place, and to engage in domestic and, most importantly, international commerce surrounding marijuana. The dollars invested in this industry must comply with all forms of financial source verification — theoretically mitigating the opportunity for organized crime to participate in this business.
Something that seems counterintuitive to Mexico’s legalization campaign is that hemp may or may not be included in its final version — as it may pose too much of a threat to existing Mexican industries. I’d argue that this is precisely why hemp is so important – its versatility and multitude of industrial uses go far beyond the singular focus of being cultivated for cannabinoid extraction.
Until late 2019, the Hoban Law Group had registered a number of cannabinoid CBD manufacturers’ products with COFEPRIS, Mexico’s FDA, when things were put on pause to finish up the legislation. If hemp is indeed excluded from the final bill, it would have ramifications for the cannabinoid and CBD industry in Mexico.
Why would those other industries see industrial hemp as a threat? A significant sector of Mexico’s economy is the maquiladoras: local factories run by foreign companies, generally tapping into Mexico’s cheap labor and manufacturing goods for export. Some large maquiladoras have already begun utilizing hemp, including BMW and Levi’s, which have facilities in Mexico. Automotive and textile Industries are major players in the world, but industrial hemp would not displace them. It would complement the existing operations and provide farmers with a more versatile plant requiring less water.
Mexico has a well-documented history of cannabis usage, but will these consumers move their buying habits into a legal, commercial marketplace? The answer is likely yes — if there are medical marijuana distribution outlets selling products created through a regulated system. And will this system displace some of the large illicit cultivation operations across Mexico?
Mexico hopes to join other Latin American countries in becoming major forces in the global cannabis industry and to address the cultural and historically illicit implications of cartel and criminal activity surrounding the plant. How this will roll out and its effectiveness remains to be seen.
Pair the skill set of Mexico’s farmers and agricultural industry with the country’s manufacturing capabilities and an international cannabis marketplace and the pieces could fall into a very favorable place for the nation’s economy and citizenry.With Mexico’s imminent federal legalization of cannabis, the country will boast the largest consumer market for cannabis in the world — an enormous leap forward for the global cannabis industry.
Legal Cannabis In Mexico: August 2020 Update
This article was originally published on Hoban Law Group, and appears here with permission.
Draft of Medical Use Rules Published
Finally. On July 27, 2020, a draft of secondary rules for medical cannabis in Mexico was submitted by the Secretary of Health (SSA) to the National Commission for Regulatory Improvement (CONAMER) for the mandatory public consultation and regulatory impact assessment. The rules, titled Rules for the Sanitary Control of the Production, Research and Use of Medical Cannabis and its Pharmacological Derivates (Reglamento en Materia de Control Sanitario para la Producción, Investigación y Uso Medicinal de la Cannabis y sus Derivados Farmacológicos, and successively referred to as the “Rules”), come after more than 3 years waiting for this following the 2017 amendments that legalized such uses. These Rules are only intended for medical and research purposes.
The stated purpose of the Rules is to establish the “…regulation, control, promotion, and sanitary oversight of raw material, molecular compounds, pharmacological derivates and medications with production, scientific, industrial and medical purposes.”
The contemplated research activities only include those for pharmacological and agronomic purposes. As for “industrial” use, the term is set with the connotation of production of molecular compounds, pharmacological derivates, and medications; not as industrial hemp in the broader sense that contemplates its multiple uses. This would contradict the definition set in the general cannabis legalization bill approved by Senate committees last March.
There are some definitions worth noting, some of which have generated feedback from industry advocates suggesting improvement, namely:
- Cannabinoids: Defined as “organic compounds pertaining to the terpenophenolics group, which include CBD and THC” (which, by the way, are the only cannabinoids identified and defined in these rules).
- Cannabis: “Cannabis sativa, indica and americana or marihuana, its resin, preparations and seeds.”
- Hemp: “Fibrous product elaborated from the male cannabis sativa plant, without flowers or fruits, which does not contain more than 1% THC.”
- CBD: “Cannabidiol and its acid forms, cannabinoid compound that lacks psychoactive properties.”
The Federal Commission Against the Protection against Sanitary Risks (COFEPRIS) will be in charge of implementing and managing the traceability system which shall organize the use of specialized technical tools. This may appear strange to those expecting that it be the Secretary of Agriculture (or the tax revenue service, for that matter), who would normally have the best resources and knowledge to manage this area.
In addition to the SSA, the following government agencies will be involved in the application and enforcement of the Rules:
- National Service for Agro-food Sanitation, Inocuity, and Quality (SENASICA): oversee and promote cannabis sanitation, as well as managing systems to prevent or reduce contamination at the primary production stage in accordance with the Mexican Law of Vegetal Sanitation;
- National Service for Seed Inspection and Qualification (SNICS): regulate the production of certified seeds, qualification of seeds and sale of cannabis seeds in accordance with the Federal Law for the Seed Production, Certification, and Commerce;
- Secretary of Agriculture (SADER): involved in the review of permits for the importation of seeds, through its various agencies that are under its jurisdictional and operative umbrella;
- COFEPRIS: sanitary oversight and control of scientific, industrial and medical use of cannabis in accordance with the General Health Law;
- Mexican Tax Revenue Service (SAT): verify compliance with applicable tax provisions, including but not limited to the import and export taxes, and customs procedures, in accordance with the Customs Law, the Health Law, among others; and
- Secretary of Economy (SE): intervene in the determination of applicable tariffs that shall be applied to the import and export of cannabis.
Generally speaking, the Rules insert the aforementioned uses of cannabis into the Mexican healthcare and sanitary legal framework, perhaps even to the extent of overlapping with other health regulations. Each of the existing government agencies mentioned above is assigned with responsibilities that will now cover the respective stages of production, processing, preparation, importation or exportation, sale, and a prescription for the allowed uses. In other words, no new agencies are created for now, as opposed to the Cannabis Legalization Bill which currently contemplates the creation of the Instituto Mexicano del Cannabis (Mexican Cannabis Institute).
For purposes of this summary and consistent with the terminology used in the Rules, an “establishment” shall be deemed any of the commercial establishments that are mentioned by Mexico’s General Health Law, the Medical Supply Regulations (Reglamento de Insumos para la Salud) or the rules for health care research (Reglamento de la Ley General de Salud en Materia de Investigacion para la Salud). These include medication production facilities or laboratories, pharmacies, drugstores, storage facilities, clinics, and hospitals, among others.
- A research protocol shall be authorized by COFEPRIS for those parties intending to carry out cannabis research. It is worth noting that the abovementioned secondary rules for health care research will be applicable, which for example, sets forth the requirements and credentials that research professionals must meet.
- Research done on human beings shall not only follow applicable laws and regulations but also “good clinical practices” adopted internationally, which are not clearly defined or identified.
- The SSA, through COFEPRIS, will lead coordination efforts to maintain a national cannabis research inventory.
- A permit shall be obtained from SENASICA for cultivation with either research or medication production purposes. SENASICA will keep a National Registry of Cultivation Permits (Registro Nacional de Permisos de Siembra). The list of requirements is provided in the Rules.
- Cultivation permits may be granted for (a) cultivation, grow and harvest; (b) health research; (c) production of molecular compounds, pharmacological derivates and medication; or (d) production of SNICS-certified seed.
- Cultivation activities shall be carried out within “physical barriers” that limit contact with “people or environment”.
- The registration or production of qualified cannabis seeds may be requested into the National Catalogue of Vegetal Varietals (Catalogo Nacional de Variedades Vegetales), provided the requirements set forth in the Rules are met. Expert opinions may be sought in order to verify the varietal’s distinctiveness, homogeneity and stability.
- A varietal may be registered into a National Program for the Production of Certified Seeds (Programa Nacional de Produccion de Semillas Calificadas) by the SNICS. The list of requirements is provided in the Rules.
- Medical cannabis can only be prescribed by duly licensed medical, homeopathic, and dentist professionals. Their prescriptions must carry a bar code to be obtained by COFEPRIS and the prescription books will be subject to strict control and patient information recording practices.
- International travel passengers (Mexican nationals or foreigners) who require cannabis medication use shall carry and present the special, bar code-bearing, prescription with signature by the medical professional, or such be the case, the permit, or authorization by the foreign nation’s authority.
- Pharmacies, drug stores and establishments that provide diagnosis and treatment services will be subject to strict compliance requirements, starting with those set for by the existing sanitary control and health care regulations.
- As hinted above, cannabis raw material is defined as “…cannabis seeds, seedlings, propagative vegetative material, stem, leaves or inflorescences, necessary for the production of molecular compounds, pharmacological derivates or medication”.
- Establishments who process, import, export, or use raw material shall keep control books authorized by COFEPRIS and integrate a Custody and Safeguard Security System.
- Production facilities, processing laboratories or storage organizations that handle cannabis as raw material, molecular compounds, or medication can only sell it to establishments that hold the corresponding sanitary licenses, such as hospitals, pharmacies, and distributors.
- Cannabis in homeopathic medications will only be allowed if presented diluted and dynamized.
- Cannabis (natural or synthetic) is not allowed in herbal remedies.
Import and Export of Raw Material and Medication.
- Raw material, molecular compounds, pharmacological derivates, and medications can be imported. Establishments seeking to import cannabis as raw material shall prove to COFEPRIS that such material is legally allowed in the country of origin.
- On the other hand, only pharmacological derivates and medications can be exported.
- In order to obtain a permit for seed import with research and industrial purposes under the Rules, SADER will publish the mandatory phytosanitary requirements.
- The Rules provide in this corresponding section the detailed requirements and logistics that will apply to the importation process of molecular compounds, pharmacological derivates, and medications. The process includes prior notices to the port of entry customs office, sampling, import documents to be delivered, and storage facility requirements.
- For the importation of medication intended for personal use, COFEPRIS will be the agency with the authority to issue the corresponding permit. Applicants will submit the current medical prescription that includes the medical professional’s license number and details of the product and quantity.
- SENASICA will issue the phytosanitary import certificates for botanic seed for cultivation, seedlings for cultivation, and vegetative propagative material. Such certificates will be issued under guidelines aimed at preventing entry of plagues or other similar hazards.
- Once raw material enters the country, it shall be mobilized to facilities where confined cultivation is allowed under strict custody and control responsibilities.
Establishments for Medical Attention.
- Medical care services that result in the supply or prescription of cannabis medications can be provided in establishments that meet the corresponding requirements for operation.
- Each such establishment shall have a responsible individual who will be in charge of maintaining compliance with a list of reporting, safety, control, and record keeping obligations.
- Licenses granted by COFEPRIS for these establishments shall have a duration of 2 years.
Read the original Article on Hoban Law Group.
Benzinga‘s Related Links:This article was originally published on Hoban Law Group, and appears here with permission. Draft of Me… ]]>