In this, the first post of a multipart series, we will debunk the various incorrect ideas, impressions and rumors we continue to hear in the Mexico cannabis practice. As the legalization process draws closer, we deem it important to provide local and foreign readers with a clear understanding of what is really going on with the roll-out of cannabis legalization in Mexico. So without further ado, below are some of the biggest things folks are getting wrong right now.
1. I will be able to do everything as soon as it gets legal.
Although cannabis will be fully legal once the Cannabis Law and the Medical Regulations are published, that does not mean that you will be able to apply for licenses immediately. Regarding adult and industrial use, the Institute must first be established and be fully operational. A full 90 days after that happens, you will be able to apply for a research license, whereas you will have to wait 6 months for licenses for activities involving non-psychoactive cannabis and 18 months for adult use permits and licenses. Finally, as for cultivation licenses, you may only apply for them once testing and traceability guidelines are published. As for medical use, for everything pertaining to seed classification, qualification or plant growing, it is expected the regulations will provide for a 90-day window after entrance into force, to allow the Ministry of Agriculture and relevant agencies to set up the procedures to apply and obtain licenses and permits. All of this said, it is never too early to start! And savvy operators have begun to do exactly that.
2. The Cannabis Law will regulate everything.
Simply not true. The Cannabis Law will only be concerned with adult and industrial use (hemp) and research for those purposes, whereas the Medical Regulations, as the name might suggest, regulate medical use and research for medical use. Both statutes, alongside 1) amendments to the General Health Law and the Federal Criminal Code and 2) guidelines/internal regulations (or amendments thereof) of the various agencies concerned, will comprise the entire framework of “cannabis legalization” here in Mexico.
3. Mexico is only legalizing marijuana.
This statement is terribly simplistic, as it seems to suggest that legalization is only about allowing people to possess and consume smoke weed in public. Indeed, with notable exceptions, much of the activism in Mexico has had to do with recreational use, while in fact it concerns itself with everything from hemp, to edibles, to medical products, to research and of course, the appropriate conditions for cannabis consumption for adult use.
What is more, the Cannabis Law provides for the creation of cannabis policies, with the Cannabis Institute in charge of monitoring implementation. Legalization will have implications ranging from the corporate structuring (there are still Notaries Public out there unwilling to establish companies with a cannabis undertaking), to the trademarks they can acquire. In sum, in our view legalization will entail a substantial change in the Mexican legal system, after decades of prohibition.
4. The market is only open to Mexicans, not foreigners.
Not true! It is expected that although cannabis licenses will be open to Mexican companies only, foreigners will be able to, at the very least, enter the market by either establishing a Mexican company or acquiring participation at an existing one with a cannabis corporate undertaking– subject to the limitations set forth in the Foreign Investment Law (up to 49% ownership). Many of our clients seeking entry into the Mexican cannabis space are not Mexican nationals.
5. Cannabis is only good for recreational and medical use.
As anyone in the industry knows, there is low-THC cannabis (commonly known as hemp, and defined in Mexico as 1% THC or less), and THC-rich cannabis (known as marijuana). It is the latter which has elicited major controversy, given its psychoactive properties. However, hemp is a variant/genre with broad uses and applications from being a remedial plant (yes! It can clean highly polluted soils), to being a substitute to fossil fuels, construction materials, plastics, etc. In fact, as we have mentioned before in this blog, we believe that hemp could very well reboot the Mexican economy in a sustainable manner. Unfortunately, what we have noticed in Mexico so far is that hemp has been neglected by the business community, activists and media alike. This neglect has also led to lighter regulation, and therefore more room to maneuver when establishing a company.
In our following posts we will continue debunking misconceptions that range from understandable to outright outrageous. After all, informed investors and companies make better decisions, and clients making informed decisions make better use of our services. Contact us at [email protected] to learn more!
*Editor’s Note: We also plan to republish this post in Spanish over the weekend. Until then, check out the following blog posts on cannabis in Mexico.