A sneak peek into Mexico’s upcoming recreational cannabis legislation

México is in the final waiting stages for the Congress to pass the decree that will regulate the cultivation, commercialization and use of cannabis for adult recreational use in the country. This is a transformational law that reinforces a worldwide trend toward legislation of a drug that has been unjustly vilified as a monster and has proven not to be one.

Finally, things seem to be go well. Mexico has all the characteristics to become a world leader in an industry that is growing and developing every day throughout the world at an increasingly rapid pace and with a firm and irreversible trend. In fact, this advance is being achieved despite resistance from some political parties and even within the government itself. However, they are being pushed and forced by a Supreme Court that has ruled that sanity and common sense should reign on this issue and get rid of the myths and misinformation promoted by the dark and backward forces of prohibition.

Every law is perfectible and this is no exception. Previous initiatives oscillated between imposing rules that were a hindrance to the development of the industry and others in which the activity was wide open to private initiative. This law seeks a balance that allows both small farmers and large industrial corporations to work and that is a merit that must be applauded, taking into account that the struggle to improve regulations has just begun.

The important highlights of the new Mexican legislation are:

• This decree does not address medicinal or scientific use. This is the subject of the General Health Law and other provisions currently in place.

• The Mexican Institute for the Regulation of Cannabis will be created, which will address of everything related to the plant. It should begin operating six months after the law is published by mid December 2021, returning to the original proposal of Olga Sanchez Cordero, former Minister of the Supreme Court and previous Secretary of the Interior. Currently she is the President of the Senate.

• The law will classify cannabis as psychoactive or marijuana when it contains more than 1% THC. This is a positive element and more in accordance with science.

• The cultivation and use of industrial hemp will be allowed, which is very positive since it will detonate an endless number of collateral industries and the generation of jobs, both rural, industrial and commercial.

• Possession of up to 28 grams will be allowed without any problem (up from 5 grams). For possession of up to 200 grams there will be a fine between $5,400 to 10,800 pesos (approximately between $ 250 to $ 500 dollars). Legal and jail penalties persist for higher amounts.

• Consumption is prohibited in schools, workplaces, shopping centers, stadiums and in general where the use of tobacco is not allowed and where smoke can cause inconvenience to third parties.

• The law places great emphasis on prohibiting any use or contact of any form of cannabis with children younger than 18 years. • Self-cultivation will be allowed without further requirements or prevoius registration with the authorities. An adult person may have up to 6 plants at home and 8 if more than two consumers live under the same roof. This complies with the the Supreme Court ruling and takes away a portion of the market from the cartels.

• The law allows forming cannabis user associations with 2 to 20 members who will be able to grow annualy 4 plants per registered associate.

• There will be five types of licenses: cultivation, transformation, commercialization, export and import of non-psychoactive cannabis and non-medical research. • Individuals may obtain more than one type of license.

• The area authorized for open air cultivation of psychoactive cannabis will be one hectare per licensee, and under cover it will be up to one thousand square meters.

• The licenses for commercialization will authorize having a maximum of three points of sale to the public per holder.

• The export of psychoactive cannabis for recreational use will not be allowed (export for medical use is permitted, complying with these pharmaceutical type of regulations). This does not apply to hemp.

• A series of requirements for the packaging and labeling of products are listed.

• There is a proposed timeline where a large part of the regulatory activity must be in place six months after the publication of the law, including regulations together with setting up testing and traceability systems. Once the testing system is working, the first cultivation licenses will be issued. If everything goes according to the plan, by mid 2022.

• An error that will surely be solved in the final discussions currently underway in the Senate is that in the transitory articles it establishes that the transformation and commercialization licenses will be issued 18 months after the decree enters into force. This would imply that farmers will not be able to legally sell their crops for at least one year. This rule does not take into account that an industrial plant for extraction of cannabinoids with good manufacturing practices requires an investment of several million dollars and takes at least one or two years to build and become operational. No businessman is going to risk his capital without first having a license that grants legal security to his investment, so building would comence by late 2023 at the earliest. This is absurd.  It is clear that players must accept and understand the rules of the game.

The first one is to comprehend the social justice grounds for which preference will be given to marginalized groups that were persecuted during prohibition, reserving up to 40% of the cultivation licenses for them. An unmentioned underlying factor is the atavistic fear that Mexican authorities have had in the past regarding the participation of private investors, especially foreigners, in the country’s economic activity. Unfortunately, this innate distrust towards big capital and multinational companies has been reinforced by the current government. The concern of being overwhelmed by powerful large companies explains in part the reason why the extension to be cultivated in the open is limited to a single hectare per licensee and a meager thousand square meters when it is done under cover. Legislators need to clearly specify what should be understood by “under cover”.

It can be assumed that it refers to “under a roof” or indoors, since a mini greenhouse of this size is not financially viable and is only suitable for small gardening tasks or obtaining clones for transplant at the most. This topic is important, as there is a general misconception that marijuana is a herb that grows anywhere and its enough to throw a few seeds on a piece of land to get a harvest. The reality is that cannabis farming has evolved to such an extent that it has become the most technologically sophisticated crop that is done today, worthy of the space station. A modern operation of premium quality cannabis requires research in advanced genomics, the use of certified and feminized seeds, propagation through clones, hybridization of varieties, efficient use of artificial lighting, temperature and humidity controls, ventilation and air filtration, CO2 injection to stimulate photosynthesis, biological pest control, irrigation and hydroponic fertilization in soilless substrates, flower drying, curing and manicure techniques, traceability and testing of levels of cannabinoids, pesticides, mold and pollutants, along with a long list of etceteras.

Specialized engineering knowhow is vital to extract resin from the delicate trichomes of the cannabis flower using supercritical carbon dioxide systems or cryogenic ethanol in addition to advanced laboratory processes to refine impurities and eliminate chlorophyll together with unwanted lipids. Infusing edibles and beverages is another world that belongs to the culinary spehere, a theme that requires further regulation. With regards to selling to the general public, the licensees will have to hire highly trained personnel in order to counsel about the properties and nuances of different varieties, the combination and levels of cannabinoids, the entourage effect and aroma of terpenes, as well as advising on the responsible and safe use of cannabis. The characteristics of the current cannabis market make it essential that the responsible authorities design and provide field courses so that farmers and entrepreneurs can learn what is required by this activity.

The whole world is transitioning away from an totally unregulated illegal scheme with zero quality control to a hyper-regulated and extremely sophisticated marketplace. Equally important is for investors and entrepreneurs interested in participating in the Mexican market must first of all hire legal and specialized consulting services on local cannabis issues, since the implementation and start-up times of projects have begun to run and being a first mover in any country is crucial. Psychoactive cannabis and non-psychoactive hemp are the new multibillion-dollar industries of the 21st century and Mexico is poised to become an strategic worldwide player thanks to its geographical location, the benefits of its climate, skilled low-cost labor, optimal radiation levels and solar photoperiodicity coupled with the fact that it is the largest and most populous country to legalize recreational cannabis use at the federal level (after Canada and Uruguay), something that neither the United States nor the European Union have yet achieved. The starting shot has already been fired. It’s time to move.

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