This month, I visited Mexico City in an effort to bolster momentum toward the passage of the groundbreaking Senate bill concerning cannabis legalization in the United Mexican States.
In November, the Senate cannabis bill was passed and moved to the lower chamber, the Mexican Chamber of Deputies (Cámara de Diputados), akin to the U.S. House of Representatives. The Chamber of Deputies has to consider the legislation and take action before the end of April 2021, a deadline recently extended by the Mexican Supreme Court.
There’s a rule about how many times changes may be accepted and/or rejected and/or proposed before conclusive legislation can be enacted. This is further compounded by midterm elections in Mexico that will take place in the summer of 2021. This Spring many legislators, particularly in the lower house which is made up of 500 legislators, will be shifting their focus to campaigning in their jurisdictions. If the cannabis bill isn’t finalized by the end of the first quarter or early second quarter, it may not move forward at all in 2021.
Currently, the Chamber of Deputies is examining the language, terms, conditions, and scope of the comprehensive bill passed by the Senate. This includes language relating to the export of “psychoactive” cannabis flower above the THC threshold of 1% and “non-psychoactive” cáñamo or industrial hemp. The legislation also addresses the indigenous populations and putting a policy and plan into action so that local farmers can participate in this emerging global industry.
Based on my meetings with those in the Chamber of Deputies, they’ve been paying close attention to developments in the Mexican Senate. They’re examining a number of issues the Senate independently studied over the last year, including the impact of cannabis legalization on society, children and teenagers, taxation, ownership and control related issues, and trends from a public health standpoint. Partner of CAAM legal and Hoban Law Group International Attorney, Luis Armendáriz remarks, “It’s important that the Chamber of Deputies does not let the momentum gained with the Senate approval fade away. We’re crossing our fingers that the consensus reached to approve the bill last November will continue and a positive vote is issued before midterm elections, when legislators or political parties may start thinking about any political cost of legalizing the plant.”
The Mexican legislature wants to avoid mistakes made by other Latin American countries. They were perhaps unavoidable as these were the first such efforts across that region. They can be avoided and corrected. Mexico is taking steps to learn from the pitfalls of cannabis legalization and commercialization in other countries such as Colombia and Chile.
This circumspect view is admirable and wise. That being said, Mexico is not Colombia, the U.S. or Colorado. It’s a complex society, with a complex legislative process that has unique cultural and commercial issues based on the historical makeup of the country’s economy, governmental, and narco-politics.
Numerous trade groups have staked out positions on this legislation and been very active in moving it forward. One is the founder and director of CannabiSalud, Lorena Beltran. She comments, “The delays in the legislative process for the regulation of cannabis in Mexico is due in large part to the change of the political regime, the lack of knowledge on the subject and poor coordination between interest groups. However, after a year of momentous events for humanity, it seems that values such as empathy and unity reappear in society; detonating the urgency for cooperation and creation of alliances between businessmen, activists and public servers, who in conciliatory terms today are willing to analyze in a more conscious way the ways of acting and direct efforts towards the regulation of an industry that will allow our country to rise from a health and economic crisis.”
Like Luis Armendáriz, she does not want to see the momentum that had been building toward cannabis legalization in Mexico fizzle. Beltran adds, “In these last two months we have seen great advances that in years had not been achieved; which keeps us positive, focused and willing to implement a regulation that will undoubtedly have a global impact. A new stage is coming for Mexico, a new and necessary cannabis normality that will bring abundance for those who have lost hope.”
The organization and collaboration amongst many of these leading trade associations, trade groups, and stakeholders is absolutely essential for the legislation to move forward. They need to answer questions and provide data and solutions to the challenges being raised by the lower chamber and to work with Senators spearheading the legislation by the middle of Q2 2021. Otherwise, the bill could stalemate, given that the summer election will change the makeup of both the chamber and the Senate. This could require additional extensions from the Mexican Supreme Court, which they’ve granted thus far due to the pandemic and other issues.
If the legislation passes, there’s still considerable work to be done from a legislative, regulatory, and commercial standpoint. Once the legislation is passed and adopted, a Cannabis Institute would need to govern the regulatory and rulemaking process. Then they’d need compartmentalized policies for adult-use, industrial hemp, medicinal cannabis, and so on. All of this takes time.
Time is not plentiful given the speed at which things are moving and the forthcoming election. If trade organizations and stakeholders don’t work together now to expedite the process, we could be in the same place at the end of next year. That’s not good for the economy, especially a post-pandemic economy, or for development across this region, as so many industries in Mexico would benefit from the passage of cannabis legalization.
As we’ve seen in countless jurisdictions across the globe, cannabis legalization is good public policy, with benefits for commercial purposes and the citizenry as a whole. One of the bigger challenges for the Mexican legislation is the exportation of plant material. This is true for industrial hemp, currently defined as cannabis up to 1% THC, and likely for the exportation of marijuana flower, defined as cannabis above 1% percent THC.
The domestic market is a whole other animal. Here’s a sampling of the questions being asked by Mexican policymakers: will the citizens purchase cannabis? Will they buy non-intoxicating products of the plant, such as CBD, and incorporate them into their lifestyles? Will they purchase these products commercially? Will they use pharmacies for distribution? Or will they pursue a dispensary distribution model as in Colorado?
Community building and cultural change need to occur for a viable commercial marketplace to flourish in Mexico. The distribution and use of existing channels for non-intoxicating cannabinoids seems to be the most direct pathway to that end, while other elements need to be developed.
There is not, based on my outside observation, a built-in cannabis community to support a domestic industry in the short-term. That will need to be constructed in a deliberate fashion for the domestic market to be viable. That said, we’ve seen things move extraordinarily quickly in the cannabis industry. In the United States we’ve witnessed cannabis policy change occur at a pace not previously contemplated. With extremely smart people involved in the stakeholder process, and the thoughtful and deliberate nature of the government, the Mexican cannabis marketplace is dizzy with possibilities.