Cannabusiness Advisory

Mexico Inches Closer to Legalization

March 11, 2021


Early this week, two special committees in the lower house of the Mexican Congress signed off on a draft bill to decriminalize cannabis nationally. Members of the chamber’s Health and Justice committees approved the cannabis bill in a combined vote of 34-11, with 12 abstentions.

The bill – which has been revised significantly since its passage in the Senate last November – will now be sent to the full chamber for a vote. After a 2018 Supreme Court ruling held that the prohibition on cultivation and personal possession of marijuana was unconstitutional, lawmakers were tasked with implementing a decriminalization policy, though Congress has repeatedly postponed its deadlines. If passed, the legislature will be close to establishing one of the world’s largest cannabis markets. The floor vote is expected to take place this week.

With support from the administration of President Andrés Manuel López Obrador, the bill marks what many hope might be a watershed moment in the history of a country long plagued by violence among competing drug cartels. Until now, the failed war on drugs has continued to fuel a massive cannabis black market. This new legislation is considered by many to be a solution: legalize, tax and regulate. In fact, the president has repeatedly argued that the decriminalization of cannabis and other narcotics could help curb the illicit profits of Mexico’s various criminal organizations.

The House version of the bill contains some key amendments to the version passed by the Senate in November; namely, lawmakers revised the regulatory structure, and rules for the commercial market and licensing policies, among other provisions. Initially, the bill provided for the creation of a new federal agency – the Mexican Institute for the Regulation and Control of Cannabis – which would have been responsible for the licensing and implementation of the program. However, the revised bill gives that authority to an existing agency, the National Commission Against Addictions.

The bill proposes six license classes: (i) production, (ii) distribution, (iii) sales/retail, (iv) marketing, (v) research, and (vi) a newly added license category for vertically integrated cannabis businesses. Though the bill includes language regarding the prevention of “undue concentration that affects the market,” many have noted, perhaps rightly, that the vertically integrated license class is likely to result in market consolidation and domination by larger industry players. Moreover, while the bill states that it will grant licensing priority to marginalized communities, many advocates are concerned that the lack of strict criteria will stymie this initiative. In fact, most advocates had hoped that a specific percentage of licenses would be set aside for marginalized communities, but no such provision is included in the amended bill.

Nonetheless, the amended bill retained many provisions that have the support of legalization advocates. For example, adults will still be allowed to possess and/or purchase up to 28 grams of cannabis and cultivate up to six plants for personal use. A provision put forward by the president’s party – which has a majority in both chambers – requires that adults be issued a permit to grow, carry or consume cannabis and its derivatives. As one might expect, community advocates are largely unsupportive of governmental registration for personal home consumption. With respect to public consumption, cannabis would be treated the same as tobacco under the amended bill, though online sales would be prohibited. Another major amendment in the revised bill is the imposition of a temporary moratorium that concerns edibles, which cannot be marketed until additional research is conducted.

Despite some disagreements among politicians and advocates, the end of cannabis prohibition is undoubtedly a progressive step forward for a country still suffering from the proliferative effects of the black market. Hopefully, Congress will examine regulatory rollouts in other jurisdictions and avoid similar pitfalls, including the ineffectiveness of social equity initiatives.

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