2021 might be the year when Mexico becomes the largest country in the world to legalize cannabis. That’s great news for millions of Mexicans. Legalization could help put down the nation’s narco-violence and open new opportunities for startup companies both at home and abroad.
Mexico’s Senate passed a bill in late November legalizing recreational marijuana. Lawmakers in the lower house say they will approve a bill by February, though they want to raise the number of pot consumers may possess in public beyond the Senate bill’s limit of 28 grams, or about an ounce.
Countries often legalize medical cannabis, only to see restrictive – or even delayed – regulations mute any business opportunities for years.
The long delay underscores the benefit of approaching the international medical marijuana industry with a conservative strategy.
And according to a poll published by the Center for Social Studies and Public Opinion in May 2020, a clear majority of Mexicans were not in favor of recreational cannabis legalization.
Since the first extension was supposed to be “exceptional and one-time-only,” the delays serve as a reminder that without first having a regulatory framework in place, market projections are largely meaningless.
Challenges associated with legislating amid the COVID-19 pandemic was cited as the main justification for the new extension.
For instance, in 2019, Mexico’s main regulatory body for medical cannabis revoked key guidelines used as the basis for issuing dozens of import licenses for low-THC products, putting the status of those permits in question.
Mexico’s newest regulations could resolve issues for the industry. Public consumption of marijuana would be allowed, except in places where tobacco use is prohibited or at any public places where younger people could be exposed. Households where more than one adult life would be limited to farm a maximum of eight plants. The legislation also says people are not allowed to consume cannabis in homes where there are minor individuals. Possession of more than 28 grams but fewer than 200 grams would be considered an infraction punishable by a fine but no jail time.
It is also said that Mexico set to become “The World’s Largest Legal Cannabis Market” as its Congress wraps up legislation in the coming weeks to legalize weed throughout the supply chain, from farming to distribution and consumption.
Legalizing recreational marijuana in Mexico could bring several benefits, namely reducing black-market activities associated with marijuana. Furthermore, legalization could open up avenues for tax-paying businesses to enter the segment, boosting the Mexican government’s tax revenue. Biz Latin Hub estimates marijuana legalization will fetch $1.2 billion in tax revenue for Mexico and save up to $200 million in enforcement costs.
Another estimate pegs the Mexican legal marijuana market’s value at $12.0 billion by 2029. The industry is also set to promote additional activities that create employment in Mexico. However, complete weed legalization may present problems for US cannabis producers. According to Politico, North American marijuana growers could face stiff competition from Mexican cultivators. The country’s climate is more favorable, and production and labor costs are lower. In February, Vicente Fox even highlighted the possibility of Mexico exporting legal cannabis to the US.