Canada seeks legal marijuana business in Mexico

Billions of dollars are at stake, and no one wants to be left out. That's why a Canadian businessman is at the front of the line, as soon as the endorsement is given to make marijuana cultivation in Mexico legal.

Four months ago, in the Senate of a country where the war on drugs has left more than 250,000 dead in just over a decade, a Canadian businessman dedicated to the cannabis business told the congressmen: "Its location in the world is perfect, its labor costs are perfect, its climate is perfect (?) Let the private companies expand their business, do what they know how to do.

The words of Erick Factor, founder of MYM Nutraceuticals, made clear the shift in the drug debate and also the interests at stake behind the project for the total legalization of cannabis in Mexico. The country could become the largest market for legal hallucinogens in the world in the coming months. And nobody wants to be left out.

For months, the eyes of the big names in the cannabis business have been on the Mexican Senate. Some companies have lobbyists walking the halls of the Upper House hoping to get a slice of a multi-million dollar business. Some have already spoken to a high-profile politician to be the "Sherpa" to lead them into the promised land. Other groups are scrutinizing the requirements for small producers in an industry that seemed unimaginable a few years ago. Several foreign investors are following the process step by step, particularly from Canada, the first country to legalize recreational cannabis and the country with the largest cannabis industry in the world market.

But while some are following the money, others are watching with suspicion. Civil society organizations warn that a law tailored to the needs of big capital would make it impossible to incorporate small producers and farmers into the legal market, and to pay a historic debt for a prohibitionist policy that has killed more than the drugs themselves.

"As it stands now, the bill privileges foreign companies because you would need a multimillion-dollar investment to enter that market," says Zara Snapp, the founder of the RIA Institute, dedicated to public policy research. "It's worrying, we don't want another extractive industry that exploits the resources and takes the profits," she adds.

In 2018, the Supreme Court of Justice declared unconstitutional five articles of the General Health Law that prohibited the use of cannabis for recreational purposes, and gave the legislature one year to create new regulations.

Morena, the party in government after that year's elections, and the opposition saw the ruling as an opportunity to push for a comprehensive law, which would make Mexico the third country in the world to fully legalize marijuana. But the deadline expired last October without legislators agreeing to issue the law, which was criticized for putting up insurmountable entry barriers for small producers.

Ricardo Monreal, Morena's strong man in the Senate, blamed the impasse on the lack of consensus and the influence of pressure groups. "It's impressive how many lobbyists are around," he said.

The Supreme Court granted an extension that ends in April and the Senate, which began sessions last Saturday, is already rushing a bill to be discussed on the floor. Meanwhile, the players involved remain on tenterhooks.

The coming law: endorsement of cannabis

"Mexico is definitely very interesting, the next big event for many cannabis entrepreneurs," says Factor, the entrepreneur who participated in a Senate forum last October, in an interview. Factor says that skepticism is understandable, but that there are fair business opportunities for all involved. "I wouldn't describe my visit as lobbying, it was more about sharing the experience and know-how of our country to give clarity to Mexican legislators," he says.

"There is a unique opportunity in Mexico to have comprehensive legislation that addresses the issue of cannabis from production to marketing," says Canopy Growth, the largest Canadian company in the sector in terms of market capitalization, by email. "We are following with interest the development of legislation and regulation in Mexico," says the company, but insists that "it is still very premature" to analyze the new legal framework. Canopy, which is on the Senate's list of lobbyists, avoids commenting on the criticism and what it has discussed with Mexican lawmakers.

The Canadian industry sees a potential market of 2.25 billion dollars in Mexico that will depend largely on the release of marijuana for recreational use, according to the consulting firm Cannacord Genuity.

Its analysts believe that the proposal that failed in October offers business opportunities "feasible, but not ideal" because it limited the participation of foreigners to 20% of capital stock of a company and prevented vertical integration, ie that a single company controls several phases of the production and marketing process.

Vicente Fox, likely to benefit

The consulting firm believes that Khiron, a Colombian-Canadian company, is the best positioned to enter the Mexican market. It has experience with regulations in other countries in the region such as Colombia and Uruguay, and has former president Vicente Fox (2000-2006) on its board of directors, a letter of introduction that is included in virtually every press release and financial report. Khiron plans to arrive in Mexico in the first quarter of this year and aims to reach 11.7 million consumers.

El Pais requested an interview, but the company did not respond. Fox declined for reasons of agenda. Aurora Cannabis, another Canadian company that announced in December last year the purchase of Farmacias Magistrales, the first firm to obtain permission to import raw materials with tetrahydrocannabinol (THC) into Mexico, did not answer the requests either. Like Aphria, one of the largest companies in the Canadian market. Almost all the interested parties are opting for caution and silence is becoming eloquent. No one wants to risk a legislative process where many things remain undecided.

The arrival of Canadian capital caused controversy in Colombia, which in 2017 issued a law to regulate the use and export of medical cannabis. "Khiron and other companies with financial muscle were always one step ahead," explains Luis Felipe Cruz, a researcher with the organization De Justicia. "They had the money and the experts, even greater technical capacity than the state, and under the table, they dictated how the regulation had to be," says the Colombian specialist. "The government did not know how to manage expectations well and did not change anything for the producers in general or in the illegal markets, which are transnational," he says. Diana Paola Valenzuela, legal director of the Colombian company Anandamida Gardens, says that "there have been obstacles for everyone, even for Canadian funds that financed local companies and had to make their way.

Some critical voices call the practices of Canadian companies "cannabic colonialism" and others say there is room for all kinds of actors. The challenge for the Mexican Congress is enormous. At stake is guaranteeing the rights of consumers, changing the course of an anti-drug policy that has plunged the country into the worst crisis of violence in its recent history, outlining the rules for it could become the largest legal market for marijuana so far, and achieving a political consensus that resists the pressures and interests inside and outside the government coalition. You have three months to do so.

With information from the Spanish newspaper El País

CANNABIS LEGALIZATION CLOSER IN MEXICO

The Mexican Senate is ready to discuss and vote on the legalization of marijuana in Mexico for recreational use.

Senate and civil society work on the construction of a cannabis regulation that benefits the sick and consumers: Jesusa Rodríguez
Senate and civil society work on the construction of a cannabis regulation that benefits the sick and consumers: Jesusa Rodríguez

January could be the month in which the legalization of marijuana in Mexico takes one more step towards reality, this after the Senate issued that the first month of 2020 would be prepared for the ruling to regulate the recreational use of cannabis to debate and approve it in accordance with the unique extension granted by the Supreme Court of Justice of the Nation (SCJN) last October and which expires next April 30.

This is a topic of greater relevance and has been the subject of analysis and debate by national and international specialists in health, legal matters, entrepreneurs, producers, and civil organizations, among others, he said in a statement.

The Senate stated that, from February 1st, when the work starts in the Congress of the Union, and according to the statements of the President of the Political Coordination Board, Ricardo Monreal Avila, the regulation of the plant will be one of the main issues in this period.

Monreal Ávila has reiterated that the benches will be heard, but there will be serenity in the integration of the legal framework that will govern everything related to the plant to avoid, thus, some kind of external influence and pressure. In addition to complying with international standards.

The document is being reviewed by the Health Commission, since it responds to the observations of the Ministry of Health, the Ministry of the Interior and the Federal Commission for Protection against Health Risks (Cofepris).

Marijuana consumption in Mexico

According to the World Drug Survey (GDS 2019), 79.2 percent of people who use drugs use marijuana and their main source of acquisition is from a known dealer.

This pattern is more common than you might think, and marijuana and other drug use is increasing. GDS 2019 notes that in Mexico 27.2 percent of users do so more than 301 days a year, above the global average of 151 days a year.

The factors of drug consumption in Mexico are diverse. The country is immersed in a swamp of poverty and violence that has been fed by the control of organized crime in strategic areas, a reality that the federal government seeks to counteract with measures that will eradicate the power that drug trafficking exercises over the country.

CANNABIS REGULATION ADVANCES IN LATIN AMERICA

Although the legalization of medicinal cannabis is advanced in the region, there are still many obstacles to its production and commercialization. This was revealed in a study carried out by Alfredo Pascual and published by Marijuana Business Daily International, titled 'Cannabis in Latin America: regulations and opportunities'.

The study reviews the state of the cannabis legal framework in Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, Peru, and Uruguay. Two aspects of the report stand out: that Brazil, where it does not yet have a specific law for cannabis, is the largest market for this plant in the region; and that Colombia is the country that has attracted the largest investment in Latin America for cannabis production.

For now, Argentina, Chile, Colombia, Mexico, Paraguay, and Uruguay have already regulated the law for medicinal cannabis, while Peru has implemented a law, but there is no access to any product.

The first to legalize cannabis in all its forms (industrial, medical and recreational) was Uruguay at the end of 2013. Until August 2019, only four companies had a license to grow cannabis with a high THC (tetrahydrocannabinol) content and more than 20 companies had a license to grow hemp, as they call the non-psychoactive cannabis variety. In Uruguay there are already 36,956 customers for this market, 7,224 homemade growers and 3,900 people are members of 125 cannabis clubs where collective cultivation is allowed.

Chile became the first country in the region to authorize the large-scale cultivation of cannabis with high THC content. However, the vast majority of Chileans have access to cannabis through domestic or collective cultivation.

According to Pascual, only the following companies have managed to obtain a cultivation license: Dayacann, Alef Biotechnology, and Agrofuturo. Cannabiol is the only unregistered product available for commercial sales in the Chilean market. In no more than a year, 2,500 patients can access this product.

"Of all Latin American countries, Colombia has attracted the most attention and foreign investment commitments for cannabis production," Pascual said.

The analyst thus explained the conditions the country has in terms of production of these crops and "the advantage of being the first player. Colombia "was one of the first Latin American countries to legalize the production of medicinal cannabis, with regulations that promote the creation of a value-added industry for national and export markets," he said.

According to figures from Fedesarrollo, more than 4,000 licenses for small and medium producers have been applied for. They have so far granted 247 licenses to grow the plant, 199 registrations in the ICA and 120 licenses for the manufacture of cannabis derivatives.

Legislation on the plant is still pending in Brazil, but it is the largest cannabis market in Latin America in terms of the number of patients and products sold legally. Sales are made through special authorizations "granted by the federal regulatory agency for individual patients, on a case-by-case basis, to import products for personal medical use. Since this program began, they already have more than 10,000 authorizations.

Argentina legalized medicinal cannabis in March 2017, Mexico legalized it in June of that year, and Paraguay regulated it with a decree in 2018, but none of the countries have implemented the laws.

According to Fernando González, a cannabis expert, the regulation of the plant has been delayed because "there is a global interest that seeks to delay the processes, especially the opioid companies.

By Mexicanist Source La Republica