Mexico Legalizes Recreational Pot

Category: Agreements, News
Published: 2020-12-04
Mexico Legalizes Recreational Pot

By Wendy Fry

Mexican federal lawmakers have been ordered by a court to make rules by mid- December that would essentially legalize marijuana, making the country the largest market in the world for legal, recreational pot and creating the potential for a new cross-border industry.

But advocates, attorneys, medicinal marijuana users and business people warn there may be major holes in the pending legislation that would continue to criminalize small-dose users and favor large corporations over small businesses and family-owned farms.

Some raised concerns about the current draft regulations favoring foreign companies over Mexican businesses – although the latest draft version of the bill puts strong limits on imports and exports.

“I think it’s definitely going to be a cross-border business economic activity,” said Luis Armendariz, a Chihuahua-based attorney and the head of the Global Practice Group at the Hoban Law Firm, which is based in Colorado. The law firm represents companies interested in legally producing and selling marijuana in Mexico by helping those companies register trademarks in Mexico and finding local partners to produce it.

“Obviously, production is going to be cheaper on the Mexican side of the border where labor costs are lower,” said Armendáriz.

If approved, Mexico would become the most populous country with a federally regulated adultuse cannabis market, and the third country in the world to federally legalize pot for recreational purposes. Mexico’s population of 125 million is much bigger than those of Canada and Uruguay, the two other countries where marijuana is already legal at a federal level.

The Mexican Senate on Nov. 19 approved a bill to legalize marijuana with 82 votes in favor, 18 against and 7 abstentions. The tentative legislation allows for adults 18 years old and older to be able to purchase and possess up to 28 grams of marijuana and cultivate up to four plants for personal use.

The bill will now go to the Chamber of Deputies – or Mexico’s lower house – for a vote. If approved by the Congress, President Andrés Manuel López Obrador will then get to decide whether to sign it into law or not.

Lawmakers have been working to reform the legislation for two years when the nation’s Supreme Court ruled in late 2018 that a marijuana ban is unconstitutional. The court ordered Congress to amend the law accordingly, but the legislature has struggled to reach a consensus on the issue. The Supreme Court has granted several deadline extensions with the latest being until December 15.

“This is going to be a federal law – it is going to apply to the whole country, not state-by-state,” emphasized Armendáriz. “This is a federal process. It takes place in Mexico City. It involves senators and federal agencies. There may be some items that are under state or local jurisdiction – something similar as in the United States, such as permitting for real estate to produce it, getting your business operation license, prohibition from being within X kilometers from a church or school – but in general terms, it’s a federal law, which makes this so attractive to the international community.”

In the United States, many states, including the border states of California and Arizona, have taken steps to legalize or decriminalize recreational marijuana. The border states of New Mexico and Texas allow small amounts of marijuana use, but only for medicinal purposes.

However, at a federal level in the U.S., marijuana remains classified as a schedule 1 illegal drug – like heroin or cocaine – meaning no amount is legal to have or use in the country.

Although federal agencies typically only investigate major growers or sellers, and those businesses that try to cross state lines with their sales, U.S. federal law enforcement officials can and have prosecuted individual users and medical marijuana patients, even if they live in a state where medical marijuana use is protected under state law.

Lawyers said marijuana being legalized at a federal level in Mexico will help protect users and businesses from differing sets of rules in different jurisdictions. For example, users won’t have to worry about having a legal amount of marijuana in Ensenada but breaking the law if they travel to Tijuana.

By contrast, across the border in San Diego, differing rules at a local level can create confusion. It is legal to receive marijuana delivered to the home within the city limits of San Diego, for example, but that same activity is completely illegal in neighboring jurisdictions like Chula Vista or El Cajon.

Business owners say these complicated variations severely limit the amount of automation, innovation and technology they can incorporate into their business models. And user advocates say they unfairly target minority or disadvantaged communities by placing them at higher risk of arrest and prosecution.

Mexico’s proposal would allow private companies to cultivate and sell marijuana to the public. The latest version of the draft bill would limit the number of plants an individual could own up to four, which is down from the original six plants allocated in a prior version of the bill.

A previous draft version of the law would have required consumers to register for a governmental license – a step advocates said would have discouraged legal use, leaving customers likelier to stay in the illegal market. The secretary of the Senate’s United Commission of Justice, Health and Legislative Studies said that provision was eliminated Friday. (Nov. 17)

But advocates still worry the current version of the bill will favor large corporations over small businesses and family-owned farms, while doing little to address the issues at the root of the country’s illegal drug trade.

It unfairly disadvantages small family-owned farms who currently only participate in the illegal drug trade because there is no path to legality, according to attorneys and advocates.

“This is exactly what worries us,” said Victor Gutiérrez, the director of litigation of the nonprofit group Mexico United Against Crime. “This law continues to criminalize personal users and at the same time completely favors large industrial corporations.”

Gutiérrez said some of the requirements, such as requiring all the packaging on the product to be recyclable and ecological, will push smaller businesses out of the market.

“Some of these requirements, only transnational businesses would be able to comply with, such as ‘adolescent proof’ seals. There is no type of seal in the world that is adolescent proof. I don’t know if they mean they want the businesses to put a facial recognition system on the bottle or use biometrics or what, but only big corporations are going to be able to comply with some of these regulations,” he added.

The law would also require commercial sellers to provide seedto-sale product tracing, akin to the system used in California, but likely to be far more difficult in rural Mexico.

Acannab is advocacy association raised concerns about certain provisions that they consider excessively restrictive, such as limitations on outdoor cultivation.

The Movement for Legalization 4/2020 said that “if this project is approved without modifications, fundamental parts of this thriving industry will be excluded.”

Ricardo Monreal, the Senate leader of López Obrador’s ruling Morena party, said lawmakers considered a number of international models for legalization. The current proposal borrows elements from Uruguay, Canada and some U.S. states.

President López Obrador said in August that the marijuana reform legislation will advance this session, which began in September, indicating he supports signing it into law.

Sen. Julio Ramón Menchaca Salazar, also of the Morena party, said in April that legalizing cannabis could fill Mexico’s treasury coffers at a time when the economy is recovering from the pandemic.