Mexico’s Senate has just missed the Supreme Court’s October 31 deadline to approve a cannabis legalization bill—and the future of the proposed full-scale regulation of a new industry in the country remains uncertain.
Legislators were working to regulate in a way that promotes a new legal industry and curbs an old illegal one. And after two weeks of heated talks, Senate committees had agreed on a draft of the legislation that was expected to be approved this week.
The bill’s debate was set to start on Tuesday, but it was postponed after “unprecedented” pressure from companies trying to influence the regulation, said Senator Ricardo Monreal, president of the Senate’s Political Coordination Board, the governing body of the chamber. Then lawmakers couldn’t reach an agreement to send the proposal to the full Senate on Wednesday nor for Thursday’s session, which was the original deadline set by the Supreme Court.
The Supreme Court on Friday approved lawmakers’ request for a deadline extension, giving them until April 2020.
In recent weeks, the proposal had been criticized by some advocates and organizations who say the rules would impose strict limitations on personal cannabis use and might benefit major players instead of people with fewer resources, including native communities and farmers.
A lot is at stake: lawmakers are preparing to set the rules for a newly legal cannabis industry in the second-largest economy in Latin America, which presents a huge opportunity for local and global producers. And the regulations are also intended to curb Mexico’s dangerous and powerful illegal drug trade, which has cost, by some estimates, more than one hundred thousand lives. At the heart of the debate is a big question: Who will gain the most when a legal cannabis industry in Mexico becomes a reality?
Leaders of the Health, Justice, Public Security, and Legislative Studies Committees declared themselves to be in permanent session on October 10 to review ten proposals on cannabis legalization, out of more than seventy introduced to the Mexican Congress since 2014. The first draft legislation, published on October 23, would allow cannabis for medical, scientific, recreational, and industrial purposes.
The committees were expected to formally vote on the legislation this week, after which it would head to the full Senate and then the Chamber of Deputies, which is the lower house of the Congress. If no changes were made, the bill would be sent to the president to be signed into law. Senator Julio Menchaca, who presides over the Justice Committee and has been one of the main sponsors of the bill, told Cannabis Wire in the days leading up to the deadline that he still felt confident that lawmakers would meet the Supreme Court’s deadline. However, given the importance of the regulation, Senator Menchaca said, his colleagues don’t want to rush the debate.
Their task is a big one. The government aims to hammer together a complex reform that includes changes in the General Health Law, the Mexican Federal Organized Crime Act, the Special Tax Law on Production and Services, and the Federal Criminal Code. All these rules must be read in light of the bill’s main principle: to bring social justice and peace to the country, particularly to farmers and vulnerable communities who have been devastated by the war on drugs, Menchaca told Cannabis Wire.
Under the proposed regulation, adults eighteen and older can consume cannabis in private spaces (except for those with children or people with disabilities), cultivate up to four plants at home, and purchase cannabis from licensed retailers.
The proposal allows the creation of “associations,” which are non-profit entities with the sole purpose of satisfying the needs of its members regarding the personal use of cannabis and its derivatives. Associations constituted before public notaries can apply for a cultivation license.
In addition, the proposal establishes strict restrictions on packaging for sale. The product package must be made of “sustainable” materials, be childproof, and have a plain design that does not promote cannabis use. There will also be a mandatory registration of seeds and traceability procedures, which will allow the authorities to identify the origin of the seeds, plants, or products and all the activities related to their production. The main regulatory body will be called the Mexican Cannabis Institute.
Critics see the proposal as squeezing local entrepreneurs and ordinary consumers. A group called Regulación por la Paz, also known as the Cannabis Coalition, which includes more than twenty organizations and institutions, said in a statement, “It unnecessarily restricts the rights of cannabis users.”
Julio Salazar agrees. He is an attorney with Mexico United Against Crime, a nonprofit organization that advocates on behalf of victims of severe crimes, which has been one of the main cannabis policy reform supporters in the country. “These series of procedures and verifications are raised to prevent people from having their own plants, forcing them to undergo bureaucratic paperwork,” he told Cannabis Wire, adding, “They put barriers to market entry that can only be faced by major agents of the established industry.”
Draft proposals are usually not made public until they are sent to the full Senate for debate. But in this case, lawmakers decided to publish the document in advance in order to get feedback and guarantee a transparent process. Senator Menchaca, who represents the National Regeneration Movement party, which has a majority in both houses of Congress, emphasized in an interview with Cannabis Wire that the current draft, which can be modified during the debate leading up to the vote, is “a working document that is still under analysis,” adding, “There might be some aspects that haven’t been fully understood, or that we haven’t been able to explain well. Whatever may need to be corrected, will be corrected.”
Menchaca also underlined two rules: for companies applying for a commercial license, only 20% of their funding can come from foreign sources; and also, vulnerable and minority communities must be prioritized for licensing, under the proposal, in any state policy regarding the cannabis industry.
Multinational cannabis companies have already shown interest in Mexico’s cannabis market.
Aurora Cannabis, one of the largest cannabis companies in the world, entered in December into a Letter of Intent to acquire Farmacias Magistrales, the first cannabis company to receive a license to import, manufacture, store, and distribute medical cannabis in Mexico. Meanwhile, PharmaCielo, which is a medical cannabis company based in Colombia, has formed a joint venture with Mino Labs, a Mexico-based pharmaceutical distributor, to export cannabis oils and other derivatives from Colombia to Mexico.
Khiron Life Sciences Corp, a medical cannabis company with its core operations in Colombia, and a company that counts former Mexican president Vicente Fox as a board member, has been also preparing to enter Mexico’s market. Last December, its subsidiary, Kuida Life Mexico S.A., was approved to import and commercialize three CBD products from its nutraceutical line in Mexico.
Local business interests are also hoping to benefit from the new policy. Guillermo Nieto, president of Mexico’s National Association of the Cannabis Industry, has been promoting the creation of a “cannabis cluster” in the country that involves the private sector, universities, and the federal government. “Today, all Mexicans living in the Sierra de Guerrero, Sinaloa, or Michoacán would be given the opportunity to integrate into their life a new crop that can bring you much greater profits than those obtained today by planting corn and beans,” he said in an interview with El Heraldo de Mexico.
Mario Delgado Carrillo, leader of the National Regeneration Movement government party in the Chamber of Deputies, has proposed a government-owned cannabis wholesale company in Mexico called “Cannsalud.” However, Mexican president Andrés Manuel López Obrador, who has been cautious about decriminalizing and legalizing cannabis, said during a press conference on October 10 that a federal company is not on the government agenda.
Recreational use of cannabis in Mexico is, in theory, legal, but in practice, citizens still have to undergo bureaucratic rigmaroles. Mexicans have been allowed to possess up to five grams of the plant for personal use since 2009. And the Supreme Court has ruled five times that a federal ban on cannabis use and possession for recreational purposes is unconstitutional since it limits the “free development of personality” right. On January 31 of this year, the Court issued an official notice of its precedent to both houses of Congress, which were required to reform the laws accordingly in 90 legislative days.
However, the approach that resulted was untenable: in Mexico people who want cannabis must request an authorization from the Federal Commission for the Protection against Sanitary Risk (COFEPRIS), that’s likely to be denied. Then they must go before a federal court and request an injunction.
Separately, medicines derived from cannabis were authorized nationwide in June 2017 through modifications to the country’s General Health Law. Then in 2018, the former administration approved prescription-free sales of dozens of cannabis-based products, all with less than one percent THC.
The legislation under debate aims to regulate all types of uses, harmonizing the different regulations, and to set the rules for a legal cannabis market.
Salazar, the attorney from Mexico United Against Crime, explained in an interview with Cannabis Wire that the lack of agreement to approve such legislation strongly affects vulnerable and minority communities. Farmers who could benefit from entering the legal cannabis market, he said, remain unprotected, and patients who require treatments continue to struggle to access the drug. “In addition, the war on drugs continues, taking lives and violating human rights.”
Note: this piece was updated to include the Supreme Court’s decision on Friday to grant lawmakers’ request for a deadline extension.
