Marijuana possession and use could be legalized in Mexico in June 2021, becoming the third nation to do so. The court took action after Congress failed to meet various deadlines, resulting in the ruling. Progress towards the legalization of marijuana continues to be slow.
An important medical bill was signed into law by the legislature in 2017.The following year, Grandview Market Research estimated the market to be worth $47.3 million, with a CAGR of roughly 28% through 2025. Concerns persist, however. Since the legalization of medical use in Mexico in 2017, the sector has suffered significant setbacks as a result of legislative delays.
In January of 2021, a framework for the medical market was published. The status of adult-use licenses was unclear as of the end of August. Benzinga’s analysts and operators tell us that despite significant challenges, the market is ready to be a global leader. There are numerous investment opportunities now that international players have entered Mexico’s cannabis market.
Operators point to a variety of factors as evidence that Mexico’s cannabis business is poised for global dominance. Cannabis company CEO Janko Ruiz de Chavez said the country’s geology and environment are suited for cultivating the plant. In addition to the country’s large population and proximity to Latin America, he touted its many advantages.
This permits Mexican and international firms to exploit Mexico as an export base, he said. It is expected that the legislation of the country will continue to change, resulting in new products and services for the domestic industry. When Clever Leaves Holdings (NASDAQ: CLVR, CLVRW) signed a licensing arrangement with CBD Life in June, the two companies announced that they would be bringing their products to the Mexican market.
Roderick MacDonald, CEO of Goldcann Worldwide Inc., predicts that when marijuana is legalized in Mexico, it will be the largest international market. There has been a long tradition of herbal treatment in this nation with many different sorts of herbs and applications, he said. Leading competitors are keeping a close eye on the market.
Aurora Cannabis Inc (NASDAQ: ACB) communications expert Jenny Ng said it is encouraging to see Mexico taking moves toward reform. At present, Aurora does not have any business in Mexico.
Ng stated that the corporation is keeping a close eye on the market and its possible impact on North America.
“While there is still much work to be done, we are cautiously optimistic and interested to see how this will affect the overall North American dynamic,” Ng said. Non-citizens can directly invest in the market, which may present chances for global investors. When asked about the cannabis industry’s potential for growth, Ruiz de Chavez stated that there had been an abundance of capital available for several years.
In addition, he cited the country’s location, low labor costs, and production prices that reduce shipping expenses as reasons for the country’s popularity. Lawmakers and the Illicit Market Put a Dent in the Road Many of the market’s pain issues, according to reliable sources, are the result of legislative delays and the illicit market.
Euromonitor International research analyst Catherine Krol spoke on the impact of regulatory uncertainty on investors. According to her, a standardized market and increased productivity can be achieved by government regulation. However, the supply chain could bear the brunt of the burden.
In order for this new market to be successful, both growers and distributors will need to invest a large amount of capital, as there is no precedent for this type of industry, which will likely take many years to develop. As for the medical market, Krol noted that present restrictions restrict imports and exports, which has an impact on the market.
Because only cannabis-derived items can be exported, Krol went on to say that only pharmaceutical businesses are allowed to import seeds. Nabis Group co-founder and cannabis expert Jorge Escalona said the medical sector “needs a clear pathway for imports and raw materials.”
However, cartels may continue to operate despite the introduction of new regulations. “If Congress delays again the full regulation of the industry, the winner will be the illegal market.” Escalona said. Similar issues were raised by others. When it comes to illegal market prices, MacDonald found that they were low, easy for people to get hold of, and had limited police participation.
He said that the high cost of imported goods could promote the illicit market, as citizens are unable to afford them. Krol has no idea how much of the illicit market will make the switch to the legal sector. Sinaloa, Chihuahua, and Durango, in the north, have “generational knowledge of cultivating cannabis.” she said. Because of their proximity to North America, Krol thinks that their skills and knowledge could prove to be advantageous.