The Mexican Senate has just passed a bill containing a draft federal law regulating cannabis (the “Cannabis Act”). The draft law contains changes to the General Health Act and Federal Criminal Law and is amended by a helpful appendix. The cannabis law will be sent to the Mexican Lower Chamber (Cámara de Diputados) for discussion and hopefully for approval. This is very big news for the Mexican cannabis industry.
While the bill, which was originally put for Senate approval, has features that we expected (and possibly some other, more disturbing restrictions), the appendix is really encouraging. If the cannabis law is passed in the lower chamber, we expect it to be published along with the medical regulations discussed below, legalizing the entire cannabis market for all uses in Mexico.
A bit of context here: As we previously reported, changes to the General Health Act and federal criminal law in Mexico in 2017 made it possible to:
1. Limited cannabis use and use for qualified patients.
2. Possession of cannabis to conduct medical research.
3. The import and export of medicinal cannabis products.
In 2018, the Mexican Supreme Court ruled Mexico’s general ban on adult cannabis use unconstitutional and urged the Mexican Ministry of Health, COFEPRIS (Federal Commission for the Protection from Health Risks) and various other Mexican government agencies to establish regulations to establish a commercial cannabis chain for the To adopt cannabis distribution.
A ruling by the Mexican Supreme Court last year mandated the Ministry of Health to publish regulations on medical cannabis use and put the changes into effect from 2017 to September 2020. However, this has not happened yet. Mexico’s cannabis law, just passed by the Mexican Senate, is set to match the 2018 mandate, and this new law is expected to go into effect on December 15th.
The Cannabis Act will regulate recreational and industrial (hemp) use in Mexico, but it does not regulate medical cannabis use, which is already legal and regulated by draft medical regulations that we expect to see in the Federation Gazette at or in the Be published near the same time that the cannabis law is passed – early December 2020.
The following are the game changers included in the Cannabis Act:
- The THC levels of 1% and more to consider cannabis as psychoactive will be further solidified so that Mexico will follow the international rather than the American / Canadian standard. Cannabis use for adults is legal from the age of 18.
- Possession of up to 28 grams of cannabis is completely legal.
- Individuals can apply for adult cultivation and consumption permits for up to 6 plants per permit holder or 8 plants if more than one permit holder lives in the same home. There will be no need to install physical barriers in your home in order to consume. It will be enough to ensure that smoke does not reach minors or passive smokers.
- The concept of “consumer associations” (asociaciones de consumero) is introduced. These Asociaciones de Consumo are non-profit organizations made up of a group of individual cannabis permit holders who are allowed to jointly conduct activities related to the use of adult cannabis, provided they are at least 500 m from a recreation area, school or smoke-free area are .
- The Cannabis Act provides licenses for the following activities related to cannabis: cultivation, processing, merchandising, import / export and research. These licenses also include the authorization to carry out secondary activities such as transport, storage and, in the case of cultivation and processing, sales to the next link in the production chain, provided the cannabis buyer also has a license.
- The verticality of the licenses is allowed and there are no restrictions on related parties to apply for other licenses. This means you can enter into partnerships for the entire production chain, although this may be restricted by the Ministry of Health or the Federal Economic Competition Commission for social and antitrust reasons.
- Each cultivation license covers 1 hectare for free range and 1000 square meters for indoor farming. License holders are limited to 8 free range licenses and 2 indoor farming licenses, for a total of 8 acres outdoors and 2,000 square feet indoors. Population groups considered vulnerable or affected by the war on drugs (indigenous peoples, farmers, etc.) have license preferences.
- Foreigners, like any other Mexican company, can set up a Mexican company and apply for cannabis licenses.
- The Mexican Institute for the Regulation and Control of Cannabis is established to oversee the controls of the industry. This includes defining and refining policies and guidelines for licensing.
- Hemp is regulatedalbeit superficial.
If the cannabis law is passed, it will pave the way (thanks to its geographic location and climate) for Mexico to become a cannabis powerhouse, both for production and as a market.
It is important to understand three things about cannabis in Mexico.
First, cannabis use is already legal in Mexico thanks to the 2017 changes and recent binding precedents from the Mexican Supreme Court. However, it’s essentially unregulated right now, which keeps the industry in a legal gray area
Second, cannabis regulation in Mexico will include more restrictions than the current unregulated situation.
Third, while cannabis will be completely legal once the cannabis law and medical regulations are published, that doesn’t mean you can apply for licenses immediately after those laws are passed. The Mexican Institute for the Regulation and Control of Cannabis must first be created and fully operational. Then, a full 90 days after that, you can apply for a research license but wait 6 months for licenses for non-psychoactive cannabis activities and 18 months for permits and licenses for adult use. Cultivation licenses cannot be applied for until the testing and traceability guidelines have been published.
Due to the long waiting times and the current situation, we usually recommend our customers to apply for cannabis licenses NOW. Although securing these licenses prior to legalization is a bit complicated, these current licenses are more comprehensive than the licenses issued after the cannabis law and medical regulations come into effect. As I wrote earlier, securing a Mexican cannabis license gives you a leap in market knowledge and business acumen.
Bottom line: A boom in the cannabis market due to legalization is coming to Mexico and the best way to take advantage of this is by acting now.
We’ll be releasing a version of this post in Spanish later in the week. Until then, please see the following sections for more information on cannabis in Mexico: