First, thanks so much to my friend and Mexico City attorney Elias Lisbona Jassán of Perez Ferrer Abogados, who co-authored this piece with me, David Feldman.
To answer the question in the headline, I think the legal term is “sort of.” This topic, of course, is important not only for the 120 million folks living in Mexico but for all of us in the rest of North America. It also portends where things might be headed in the rest of this hemisphere, and increases pressure on US lawmakers and leaders to consider further action if Mexico were to join Canada with full adult-use legalization. In addition, it enhances the hope of many to create multilateral trade in cannabis once the US moves to legalize it.
How did we get here?
For those who have not focused much on the developments in Mexico, let’s review the timeline in order.
• Cannabis became illegal in Mexico in 1920. Interestingly, for just four months in 1940, cannabis became “legal,” when then-President Lázaro Cárdenas enacted regulations to focus more on addiction than treating use as a crime. Mexicans could then go to a pharmacy and purchase what they needed for their “addiction,” and be protected as to the quality of the product without fear of prosecution. This was abandoned after pressure from the U.S. It took over 60 years to decriminalize personal possession of small amounts in 2009 for possession of up to five grams.
• In June 2017, medical marijuana with THC content of less than 0.1% became legal in Mexico. Patients can obtain products in pharmacies with a medical prescription. Permits for labs to produce medical cannabis are issued by COFEPRIS or the Federal Commission for the Protection Against Health Risks. It took until January 12, 2021 for President López Obrador to publish regulations to implement this program, and now Mexican people have legal access to their medicine. But there is very limited product supply available currently. The Ministry of Health oversees the medical marijuana program.
• In October 2018, the Mexico Supreme Court declared the illegality of cannabis unconstitutional, and they ordered the legislature (the Congress) to legalize the possession and home cultivation of THC products for adult use. In responding, the Congress sought to go further and intended to legalize the whole chain of production, including legalizing the industrial use of hemp and adult-use licenses for cultivators, distributors, and retailers, along with home grow.
• The Congress came close but missed four Court-set deadlines to complete the legalization, with various excuses including the pandemic. The most recent deadline was April 30, 2021. There was talk of a special session to be convened after the June elections.
• On June 10, 2021, the Supreme Court ran out of patience, and on its own, in part due to the legal procedure that they followed, said adult use of marijuana is officially decriminalized. More on this below.
Unlike in the US, where a strong majority of Americans of both political parties favor adult-use legalization, in Mexico, that percentage is more like 33%. This number has increased over the years, especially following the loss of so many lives in the war on drugs. The strong Catholic population in Mexico, however, may explain the reticence to support legalization, since church leaders have not supported this effort. That said, many see tremendous economic opportunity in legalizing cannabis in Mexico, suggesting it would be the largest legal marijuana market in the world.
What does the latest Mexico Supreme Court decision change?
Last month, the Supreme Court issued a “General Declaration of Unconstitutionality” by an 8-3 vote. The Court has stated that making cannabis illegal violates the country’s human right of “Free Development of Personality” included in the Mexican constitution. This right is used to defend homosexual and transgender rights, people with disabilities, and consumers of illegal drugs. As a result of the decision, it is now “automatically” legal for Mexicans to home grow, possess and consume cannabis with THC without specific limits, so long as you receive a permit from COFEPRIS (many people in Mexico object to this requirement due to privacy concerns). On the other hand, commercial production and sale remain illegal.
But there is one wrinkle. Obtaining seeds for that home grow is still technically illegal. To deal with this, the Court urged Congress to reform an article of the General Health Law (Article 235) to allow the harvest of cannabis for home cultivation. It is expected this change will occur. The Court also ordered COFEPRIS to advise citizens how to acquire seeds legally. Strangely, CBD remains banned. This decision relates only to cannabis with THC.
Mexican President López Obrador this week said he respects the court’s ruling but floated the idea of a voter referendum on the issue. He acknowledged that there are multiple views on legalization, including within his own Cabinet. He confirmed, however, that he will instruct COFEPRIS to comply with the ruling. One also assumes the Congress still will try to pass full adult use legalization.
Where do we go from here and what implications are there for US producers?
Multiple US and Canadian cannabis companies have been exploring potential business opportunities south of the border. Drug trafficking and violence remain rampant in Mexico. Estimates are that 350,000 people have been murdered in Mexico since 2006 in the drug war, and the Mexican army has been the primary enforcer where significant corruption is reported. The hope, of course, is that a legal market for cannabis will strike a significant blow against the cartels and illicit markets that have dominated so much of Mexican society and its economy. The concern is that the latest decision does not go far enough to ensure that a strong, regulated and protected legal market can indeed develop in the United Mexican States (as the country is officially denoted).
We also are concerned that the latest decision will generate significant confusion, especially for law enforcement agencies in the various Mexican states. What is legal and what is not? Will they go after folks for producing CBD even though THC possession is now legal? Will Congress finally act? Will there be a referendum?
For the time being, it appears that the development of commercial production and sale of adult-use cannabis remains aspirational for those seeking to enter this potentially very lucrative market. And when that does occur, will appropriate protections against facing government corruption or attempts by criminal elements to sabotage the new industry be in place? Some American companies that have attempted to develop grow facilities in other southern regions such as Colombia have faced significant challenges regarding crime and corruption, despite the strong attractiveness of these markets in terms of weather, availability of land, and labor costs.
It is true that illegal exportation of Mexican cannabis been reduced steadily in recent years, and this has helped to adjust the market culture with the move towards legality. Mexicans hope that full legalization can help reduce the violence and bet for a regulated and globally competitive market where the best companies can compete. As we say, watch this space!
