News Flash: Recreational Marijuana in Mexico Is Going to Have to Wait


More than the subsequent decade, investors may possibly have a difficult time locating a more quickly-developing sector than cannabis. Worldwide sales have extra than tripled to $10.9 billion amongst 2014 and 2018, and several Wall Street estimates recommend that annual sales could tally amongst $50 billion and $200 billion by the finish of the upcoming decade. But a single issue is for particular: North America is top the green rush.

To our north, Canada became the initially industrialized nation in the contemporary era to green-light recreational cannabis use and sales final year. Adult-use sales commenced on Oct. 17, 2018, with regulations concerning marijuana derivatives, such as edibles, vapes, and infused beverages, going into impact on the a single-year anniversary of recreational weed sales starting (Oct. 17, 2019).

Meanwhile, in the U.S., 33 states have passed some kind of health-related marijuana legislation, with 11 of these states also permitting for the consumption and/or sale of adult-use pot. The U.S. is anticipated to turn into the marijuana industry’s crown jewel.

And then there’s Mexico, which legalized health-related marijuana in June 2017, and looked to be just days away from passing legislation to legalize adult-use cannabis in October. Sadly, recreational weed in Mexico is going to have to wait.

Image supply: Getty Photos.

Recreational marijuana legislation hits a snag in Mexico

For these of you who could not be familiar with Mexico’s push to legalize adult-use marijuana, here’s a short summation.

On Halloween 2018, Mexico’s Supreme Court ruled that it was unconstitutional to ban the possession or use of recreational marijuana. This was the fifth time that Mexico’s highest court had issued such a ruling, which is vital. You see, in Mexico, when the Supreme Court reaches 5 equivalent verdicts on an concern, it becomes the regular set all through the nation. In impact, by ruling it unconstitutional to ban cannabis possession or use, the Mexican Supreme Court legalized adult-use marijuana.

Having said that, the Supreme Court only decides what’s lawful — it does not modify current law. Its ruling gave Mexican lawmakers a single year to rework legislation that would offer the framework for a legal adult-use atmosphere. In accurate lawmaker style, Mexico’s Congress waited till mid-October 2019 to introduce this legislation, rather than handling it months in advance. Even though you can study a extra thorough summation of the bill right here, the crucial points are that:

  • Persons 18 years and older could invest in and possess cannabis.
  • Edibles and infused beverages can only be purchased by health-related marijuana individuals.
  • The Cannabis Institute is the regulatory physique that would oversee the legalized sector.
  • Huge corporations would not have priority when it comes to getting developing, processing, or retail licenses.

It looked as if this bill, which combined bits and pieces of a lot of proposals, would have small concern becoming law ahead of the Nov. 1, 2019, deadline issued by the Supreme Court. But this wasn’t to be the case. Huge corporations that want in on the Mexican pot sector exerted sufficient stress on lawmakers to stall talks, thereby causing Mexico to miss its deadline to legalize recreational marijuana.

A half-emptied hourglass on a table next to a calendar.

Image supply: Getty Photos.

Adult-use cannabis in Mexico will have to wait, for now

The significant query had been “Now what?” Properly, we know that answer now.

With a deadline miss imminent, Mexico’s Senate appealed to the Supreme Court for an extension, citing that each chambers of Congress would go over and approve a bill legalizing adult-use marijuana in November. On Nov. 1, the Supreme Court granted that request, thereby pushing back its deadline for legalization till April 30, 2020, or six months. Of course, the higher court was rapid to pronounce this a “one time only” exception and expects lawmakers to have anything hashed out by then. 

Having said that, with properly more than 5 months to go ahead of this new deadline, it is most likely that lawmakers who modestly opposed some elements of the bill will demand further discussion and/or adjustments. This tends to make it significantly less most likely that the current bill will be authorized this month and indicates additional delays should really be anticipated. A extra most likely situation would involve approval taking location amongst February and April, through Congress’s spring session.

It would also not be in the least surprising that, in spite of calls by particular lawmakers to preserve significant corporations out of Mexico’s pot sector, bigger organizations lobby lawmakers for their piece of this potentially profitable pie. Right after all, the State of the Legal Cannabis Markets report by Arcview Industry Analysis and BDS Analytics calls for $1 billion in annual income (health-related plus recreational) in Mexico by 2024.

A tag that says edibles and a cannabis leaf lying atop an assortment of cookies and brownies.

Image supply: Getty Photos.

This could not be an investor-friendly marketplace

There’s no doubt that Mexico presents intrigue to investors. If and when it legalizes recreational weed, it would instantaneously turn into the most populous nation in the planet to have accomplished so. And with a consumption age that is 3 years decrease than Canada, it indicates an even broader potential customer pool.

Having said that, there are lots of motives why investors may possibly be greater off avoiding Mexico. Possibly the greatest purpose becoming that the current bill desires to preserve edibles and infused beverages away from recreational customers.

In Canada, derivatives are most likely to be the margin driver for properly-recognized pot stocks like Aurora Cannabis (NYSE:ACB). Even though Aurora Cannabis is the biggest producer of marijuana in the planet, it is preparing to supplement its dried flower production with a massive assisting of edibles and vape offerings, amongst other option consumption selections. Dried flower can be simply oversupplied and commoditized, generating derivatives a ought to for healthier margins in the Canadian cannabis space.

The purpose I bring up Aurora is that it has a presence in Mexico by means of its acquisition of Farmacias Magistrales, announced in December 2018. Farmacias currently offers Aurora access to extra than 500 hospitals all through Mexico, generating it a possible winner if Mexico OK’s recreational weed. But with no access to higher-margin derivatives like edibles and infused beverages, Aurora would be stuck focusing on quantity more than high-quality with decrease-margin dried flower.

What’s extra, Mexico’s current recreational bill tends to make it clear that significant corporations could not be welcome in this space. That is an added hurdle to Mexico’s cartel activity, which could also constrain legal sales and make it hard for the legalized marketplace to compete on the basis price tag.

In brief, it’ll be intriguing to watch recreational marijuana legalization ultimately play out in Mexico, but this does not seem to be a marketplace that is, as of but, investor-friendly.


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