Mexico was poised to legalize adult-use cannabis as October drew to a close, but lawmakers missed a Supreme Court-imposed deadline to pass the legislation before the end of the month, leaving many stakeholders wondering what’s next.
The story began when Mexico’s Supreme Court ruled Oct. 31, 2018 that the country’s ban on the recreational use of cannabis was unconstitutional. This ruling marked the fifth time that the court had reached such a decision, according to The Motley Fool, and thus the Supreme Court gave lawmakers one year to draft legislation that would implement an adult-use cannabis market in the country.
Senate committees released such legislation Oct. 17 in a proposal that set the legal age at 18, mandated that consumption occur in a private setting, established packaging regulations aimed at discouraging youth use, banned edibles and infused beverages from the adult-use market, created The Cannabis Institute to oversee the industry, and included provisions to ensure that big businesses would not have licensing priority.
The global industry then watched in anticipation as the Supreme Court deadline approached.
Due to pressure from companies trying to influence the legislation, Mexico delayed the vote. Senate Leader Ricardo Monreal has since vowed to keep these outside parties from influencing the vote or the legislation itself, The Motley Fool reported.
So, what happens now?
According to Tim Conder, COO of TILT Holdings, a holding company that owns a combination of cannabis brands and services and that has interest in expanding to Mexico, the biggest impact of the delayed vote is simply the wait for a new vote to occur. The Supreme Court has extended its deadline to April 30, 2020, and industry stakeholders are continuing their preparations for the rollout of an adult-use market.
“I don’t think that it has far-reaching ramifications other than just delta in time between when the vote was originally scheduled and when it’s now scheduled,” Conder tells Cannabis Business Times. “We haven’t seen any delay in preparations for local distributors or brands that are looking to enter the market there, but obviously, it delays orders.”
Industry conversation indicates that stakeholders are still actively engaged in understanding Mexico’s regulatory landscape and educating potential consumers on the benefits of cannabis or the benefits of particular brands or products, Conder says.
“As long as the vote does take place on that timeline, … I don’t think there will be any kind of specific disturbance to the industry’s rollout in Mexico,” he adds.
TILT Holdings is focusing its business development efforts for its subsidiary Jupiter Research, a provider of vape hardware, in Europe, Canada and Latin America, and the company has been in discussion with brands and potential distribution partners about expanding existing relationships or building new ones in the Mexico market.
“We’ve done some hardware sales already in Mexico to companies that are planning for adult-use in that country, but it’s pretty limited thus far,” Conder says. “We participated in at least one trade show there, and we’re really excited about the partnerships that we’re laying the groundwork for in that country. One of the most exciting things is we have existing clients that are excited about expanding into that market, either from the U.S. or Canada, and [we’re] getting to talk to potential new clients about the launch of their new businesses in that region.”
As Conder points out, Mexico is roughly two times the size of Canada, and although a finalized regulatory system remains to be seen, the market’s sheer size and its addressable population make it desirable for cannabis companies. It is also an attractive target for Canadian LPs and U.S.-based multi-state operators due to its proximity to the U.S. and Canada, Conder adds.
“We’re really looking forward to Mexico actually initiating the rollout of an adult-use cannabis program so that we can follow on the heels of that with our own ramped-up expansion efforts,” he says.
While Conder is hopeful that a vote will materialize soon on Mexico’s legalization bill, he acknowledges that delays are common, and often expected, when dealing with cannabis policy reform legislation.
“My assumption would be that these things always take time, and I feel like we’re subject to delays regardless of the municipality, state [or] country,” he says. “It’s just par for the course with the implementation of a regulated cannabis market.”
In the meantime, the TILT team, and likely the rest of the global cannabis market, will be watching Mexico very closely as the April 30 deadline approaches.
“TILT and specifically Jupiter Research are really excited about the Mexican market and looking forward to seeing what the Mexican government does on or before April 30,” Conder says. “We’re very excited about this opportunity in Mexico and excited for the population to be able to purchase cannabis legally in that country."