EconomyFinancialLack of permits and regulations holds back the potential...

Lack of permits and regulations holds back the potential of the cannabis industry

For Eda Martínez, president of the Mexican Council of Cannabis and Hemp, the approval of the Federal Law for the Regulation of Cannabis has become more of an endurance race than a speed race. The Senate of the Republic has put on hold the approval of a law that, in addition to legalizing the recreational use of the plant, could strengthen the path for an industry that is beginning to gain momentum in Mexico.

In Mexico, the medicinal use of cannabis has been legal since 2019, and since January 12, 2021 it has been regulated. However, there is still a long way to go, since the industrial development of the plant, in addition to its production chain, are issues that have not been considered and on which the future of the sector will depend.

For now, in Mexico it is still not clear what will happen with the planting and harvesting permits for cannabis, and therefore, agricultural producers are being left out of the supply chain for the national pharmaceutical industry. To this is added the lack of rules for the industrial uses of the plant or the agronomic research around it, whose discussion has been postponed on several occasions by the legislature.

Martínez explains that what they know of the draft, which he qualifies as historical, has been aimed at regulating the recreational use of the plant (with no intention of selling), thereby making the industrial use of cannabis invisible, which can include the manufacture of textiles, construction material, biofuels, food supplements or cosmetics, among others.

Although permits to cultivate cannabis for recreational use are considered in the preliminary draft, it is also necessary to keep an eye on the rest of the production chain, since this can make the difference for Mexico to become a leader in this incipient industry worldwide.

“Mexican growers should be considered for psychoactive cultivation licenses, which include preparation, planting and harvesting, up to pharmaceutical grade, which they would already have to have active licenses. We are very late in everything and in view of the legislative omission, what is happening is that the growers do it anyway because it is normalizing, but they have not been able to transfer it to legality,” says Martínez.

For now, on April 13, the Indigenous Association of Cannabis Producers of Oaxaca (AIPCO) delivered 26 sanitary authorizations to indigenous people, peoples and native communities for the cultivation, harvesting of the marijuana plant and its medicinal derivatives. These permits were granted by the Federal Commission for the Protection against Sanitary Risks (Cofepris).

In Mexico, the market value of medical cannabis may exceed 1.3 billion dollars by 2028, while recreational cannabis may add 655 million dollars that year, according to calculations by the consulting firm Statista.

Where is Mexico standing?

In March 2015, the Court granted an injunction for the health authorities to allow the parents of a girl who suffers from a severe form of epilepsy to import a medicine made from cannabis as a treatment for their daughter. Since then, in Mexico there have been advances in the use of medicinal cannabis, but there is still a long way to go.

Although there has been regulation since last year and there are already some products on the market, the growth of cannabis medicines on the market has not taken place, and for Eda Martínez this responds to the fact that, in addition to the Ministry of Health, These processes also consider other institutions such as the Ministry of Agriculture and Rural Development (SADER), the Tax Administration Service (SAT) and the Ministry of Economy because it has not determined the tariffs.

The bottleneck is that there are no guidelines for tax collection, for the rules that allow obtaining planting and harvest licenses or to have national raw material. There is even a lack of rules for the establishment of the tariff fractions that allow pharmaceutical companies to export the raw material, which has led some players in the sector to operate through shelters.

“There are many products on the network that are not registered and the consumer does not know if they are safe or not, and that create a trend; although at the end of the day they are not legal products, it is due to legislative omission, and then, the omission to complete the task in all other government bodies causes a Ferrari without a steering wheel, without keys, road and gasoline, and then you can’t run”, he considers.

Lorena Beltrán, executive director of CannabiSalud, says that the achievements that the sector has made in terms of laws and regulations in this time are due to the protections. Meanwhile, there are already some areas in industrial and recreational medical use that are opening up through protections in order to be able to carry out business operations.

“The industry exists, it grows day by day and it is not going anywhere, and although it is not fully regulated, we have it and it is generating jobs and an economic impact, which grew with the pandemic through small entrepreneurs. . The industry is not going to stop and it is unfortunate that the authorities take the responsibility to regulate”, he comments.

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