U.S. companies ready to tap into Mexico’s legal marijuana industry

Border Report

Details remain murky, but some companies see Mexico ripe for investment and ... hemp maquiladoras?

EL PASO, Texas (Border Report) – Mexico this week moved closer to legalizing the use and sale of marijuana. And while details such as whether you need a license to grow up to six plants in your home are still up in the air, some American companies are preparing to tap the market.

“It’s a great opportunity for international companies, Canadian and U.S., to start investing in Mexico. I think it would be a mistake not to,” said Raul Elizalde, CEO of HempMeds, a subsidiary of Medical Marijuana Inc.

The Chamber of Deputies this week approved possession of personal amounts and retail sales of cannabis products. People may consume marijuana in their homes if no minors are in the room. Mexico’s Senate previously gave consent and must now green-light changes in the lower house.

“The law passed with minimal changes from Senate. It will return to the Senate and it’s likely it will pass immediately and be published very soon,” Elizalde said. “It basically approves harvest of cannabis, transformation, sales and transportation of the product.”

But don’t look for dispensaries to open the next day. A Mexican supreme court April 30 deadline forced Mexican lawmakers into a “put the horse before the cart” scenario. Elizalde said he doesn’t expect final guidelines on legalization until March 2022. What he does expect are lawsuits.

“It’s not a perfect law. A lot of things are not clear. I expect a lot of challenges. A lot of companies want to push (their services) so they will file strategic lawsuits to get more than what the law allows,” he said.

One of the changes made in the lower house was allowing end-to-end licenses. Companies may harvest, process, distribute and sell cannabis with a single permit. That’s likely to draw opposition from investors in smaller companies.

But unlike in the U.S., where producers have to deal with laws and regulations in individual states and even municipalities, cannabis firms in Mexico must only abide by this one federal law.

Organized opposition to legalization itself has been largely absent. This, despite 2020 public opinion surveys showing that most Mexicans were against the premise. The bill blazed through a congress dominated by President Andres Manuel Lopez Obrador’s political party, MORENA, which championed it.

MORENA members maintain tens of thousands of people are in jail after being caught with small amounts of marijuana. Those people should be given treatment for addiction, not jail time, they said.

Hemp maquiladoras in Mexico?

In cannabis circles, there’s marijuana and then there is hemp. The first is defined as containing more than 0.3% THC, or tetrahydrocannabinol – the chemical responsible for the plant’s psychological effects. Hemp has less than 0.3% THC and has industrial uses, such as a textile, bioplastic and biofuel.

“Hemp now would be in the same situation as in the United States to not be considered a drug anymore. Hemp is the only product that you could start importing into Mexico right away. You could also transform prime material that would come from the United States, with professional labor that is cheaper than in the United States – a kind of maquiladora in Mexico. Hemp is a really good market for U.S. companies,” Elizalde said.

One American CEO foresees opportunity in the production of hemp in Mexico. (AP file photo)

His company already has a foothold in what is expected to be Latin America’s biggest market for cannabis. It was the first U.S. company allowed to import hemp supplements.

“We will be one of the first American companies that will (test) the Mexico” cannabis market as well, he said.

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April 29 2021 07:00 pm

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