Mexico Unveils its Propositions for the Cannabis Industry

Mexico Unveils its Propositions for the Cannabis Industry

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Throughout the global climate on cannabis, we’ve seen many Countries change their laws concerning marijuana. Canada legalized recreational use, controlled by the Government (to some degree) in 2018. Uruguay legalized a few years prior. Within the United States, we have seen scattered legalization efforts on a state-by-state basis, while simultaneously within the Federal government bills are passed to secure the industry.

Mexico recently unveiled its proposition on how it will play the cannabis game. The current majority party, Morena, wishes to create a State run cannabis business, similar to Pemex (government owned oil company), which would oversee the entire cannabis industry; from medical to recreational.

The public company would be responsible for creating “franchises” who would either grow & supply, dispense, utilize for medical research (conducted by Pharmaceutical companies). It’s unclear how they will handle the industrial aspect of the industry (hemp), however, it’s fair to assume that this too will fall under the government run business.

CannSalud, is the name of the proposed venture. They will be responsible for testing the quality of the cannabis and wholesale purchases of all legally sanctioned grow operations. Essentially, they will process the cannabis and distribute it to their licensed dealers. It is presumed that any legal citizen of Mexico would be able to apply for a license, however there isn’t a lot of detail on costs, processes, and so forth.

Additionally, the proposal allows for personal cultivation permitting up to six plants per citizen, for home consumption.

The Alleged Reasoning behind the proposition

According to Morena, the reason that they wish to implement a “State-run-business” approach to the cannabis industry is to keep it “Fair”. They fear that lucrative cannabis businesses would monopolize the marketplace leaving no space for those of a lower economic standing.

They allege that by creating CannSalud, they will be able to control market prices and permit citizens to participate by becoming a “franchise”. They would also be able to maintain quality control on all cannabis produced within the nation.

What some people fear

Fears about a State run cannabis business vary depending on who you talk to. For economists, supply and demand issues become a problem. Governments trying to control prices rarely end well historically speaking.

Corruption is also of concern. Who would be able to buy the licenses? Will “friends” of the people running CannSalud get preferential treatment? What happens when there are shortages? Price fluctuations, etc.

Many people fear the management of the company more than the purpose and intent of the company.

Why this approach might not be a bad thing

There is another element to consider, which actually makes this proposition not too sketchy. The criminal element within Mexico, specifically drug cartels, are quite powerful. If you were to leave the industry in the hands of the market, there is no guarantee that Cartels would not simply use their vast funds to dominate the legal market.

Some might argue that this is a fair capitalistic approach, and would essentially convert cartels into businesses, similar to how the Mafia controlled liquor industry turned legal in the late 1920s. However, these Cartels are far larger than 1920s Mafia, with far more power and reach than typical criminal organizations.

For the State to monopolize the marketplace, it could shield the industry from criminal influence (to a degree). It would in all likeliness also create a “set licensing system” which would be open to the public, similar to how Pemex worked for decades.

This means that it isn’t entirely a Socialistic approach to the cannabis industry, but rather a controlled marketplace where individuals can “buy into” the industry.

What Mexico Could Mean for the World

If there is one thing that is certain, Mexico is not going to implement a new cannabis regime without looking to international borders.

While recreational cannabis production will in most cases remain local, the industrial and medical aspects of the industry would most probably expand internationally. Mexico has a very cheap labor cost, meaning that mass production will be able to occur in a relatively short time.

International Markets, such as Canada and soon to be United States, will rely on a portion of the Hemp and derivatives grown in Mexico due to the reduced costs of operations.

Considering that cannabis would be completely legal in Mexico, export licenses will also be dispensed eventually, meaning that international cannabis companies will look towards Mexico for supply.

We still have to wait and see who will be in charge of this government run company, however, Mexico is utilizing a unique approach to cannabis legalization, unlike we have seen in previous State programs. This bill has majority support and is likely to pass, granted some amendments would most likely occur. Nonetheless, the due date for voting is October 23rd, meaning that by this year…Mexico might join the international cannabis community.

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