This month, the Mexican Congress finally approved the use of marijuana for medicinal purposes. While these regulations do not permit the discretionary (formerly known as “recreational”) use of marijuana, this legal framework will likely later expand to encompass a discretionary marijuana industry in the not-so-distant future. Indeed, the Mexican senate already passed a bill legalizing the discretionary use of marijuana last November, but the Chamber of Deputies – (the Cámara de Diputados is one house of the Mexican Congress (also called the Congress of the Union), the bicameral legislature of Mexico; the other chamber is the Senate – has not yet debated the bill or put it to a vote.
I. Limitations in Existing Mexican Marijuana Regulations
While the legal framework for medical cannabis has been established, the enforcement structures required to regulate the industry are not yet developed. Once those laws are in place, which deadline is set for April 30, 2021, the next step will be for businesses to apply for licenses, starting on or about June 2021. “Mexicans have been waiting for these regulations for a long time,” says attorney Aldo Ricardo Rodríguez Cortés. The government will continue to work throughout the year to establish additional regulations, and – like in the United States – multiple government agencies will be involved in the regulation of the Mexican marijuana industry.
One area that Congress will legislate is the law addressing the importation of live matter, including seeds, plants, flowers, and more, which is not permitted as of today’s date because those businesses will need to obtain a license. Additionally, it is important to note that licensed Mexican marijuana businesses may only import a particular product from countries that do not prohibit the exportation of that product. In other words, that means that if the law of the United States does not permit the exportation of, for example, dried plant material, then Mexican businesses will not be permitted to import dried plant material from the U.S. even if the Mexican company is otherwise licensed to do so.
II. Permissions in Existing Mexican Marijuana Regulations
In sum, the new regulations authorize the government to oversee the production of marijuana for research and medicinal purposes. Businesses that seek to grow, manufacture, or produce medical marijuana in Mexico must be authorized by the national health regulator “Cofepris,” also known as the Federal Committee for Protection from Sanitary Risks (Comisión Federal para la Protección contra Riesgos Sanitarios) is the department within the agency that deals with the importation of medical device. In terms of sales of marijuana, the regulations published this month allow pharmacies to provide cannabis-derived medicines to authorized patients in possession of prescriptions. Retailers are also required to maintain records regarding consumers.
III. How to Enter the Mexican Marijuana Industry
Prepare, prepare, prepare!
- Research and monitor the regulations that are applicable to the area(s) of the industry you want to penetrate;
- Prepare to apply for a license(s) as soon as they become available; do not wait for market or regulatory stability;
- Tip: While the regulations are not yet finalized (see above re: April 31, 2021), some licenses may not be transferrable at all once issued to a specific business.)
- Form and register your business in Mexico;
- Think: type and control of entity, location, tax issues, access to product and consumers, etc.
- Tip: Research eligibility; this will likely be a controlling factor in your entity’s structure and control
- Ensure your business is fully protected from legal liability, including evaluating your risk liability and updating your insurance coverage;
- Research and pursue partnerships with an existing or emerging Mexican company;
- Research regulations applicable to private funding and explore potential relationships;
- Protect your intellectual property now: protect your brand, and empower your business.
- Tip: Mexico is a “First-to-File” Country – meaning trademark rights go to the first person or entity that files a trademark application for a brand or mark, not the first company to use the brand or mark.
IV. “Welcome to Cannabis, Now Lawyer Up”
Industry insiders view the Mexican marijuana industry as the gateway to the greater and burgeoning Latin American cannabis industry. And with over 130 million Mexicans, the financial forecasts for the Mexican medical marijuana industry alone are nothing to sneeze at. Take steps now to establish your reputation in the Mexican marijuana industry to ensure you are well-positioned to scale into the greater Latin American cannabis industry throughout the coming years.