Vancouver Sun

MEX­ICO'S `GREEN RUSH'

Plagued by car­tel wars, on cusp of le­gal pot, Canopy and oth­ers are ea­ger to tap mar­ket

- DRAZEN JOR­GIC

For Guillermo Ni­eto, a Mex­i­can busi­ness­man who grew up smok­ing pot, the cannabis green­house on his fam­ily's vast farm­lands in Gua­na­ju­ato state is part of a big­ger dream. One that in­volves deep-pock­eted phar­ma­ceu­ti­cal com­pa­nies.

Ni­eto and sev­eral Mex­i­can busi­ness­men have spent years po­si­tion­ing them­selves for when the coun­try opens up what would be the world's big­gest le­gal cannabis mar­ket in terms of pop­u­la­tion, where the drug can be law­fully cul­ti­vated and sold.

Mex­ico fi­nally out­lined rules in July cov­er­ing cannabis for med­i­cal use, and the sign-off is ex­pected in com­ing weeks.

A big­ger prize may also be close for Ni­eto and for­eign com­pa­nies; Se­nate ma­jor­ity leader Ri­cardo Mon­real told Reuters he ex­pected a law to be passed be­fore De­cem­ber for recre­ational use of the drug, al­low­ing reg­u­lated pri­vate firms to sell it to the pub­lic.

“It's go­ing to gen­er­ate a mar­ket,” said Ni­eto, wear­ing a smart blue shirt, blazer, and bright mar­i­juana-leaf print yel­low socks. “We are ex­pect­ing to cre­ate jobs and rev­enue for the gov­ern­ment. We think it could re­ally help our econ­omy.”

In­deed, the le­gal cannabis in­dus­try is al­ready a multi-bil­lion-dol­lar global trade, and some big play­ers, in­clud­ing Canada's Canopy Growth and The Green Or­ganic Dutch­man, and a unit of Cal­i­for­nia-based Med­i­cal Mar­i­juana Inc, told Reuters they were ea­ger to tap the new Mex­i­can mar­ket.

Business aside, Ni­eto says the new reg­u­la­tions will have a pro­found so­cial im­pact on the con­ser­va­tive na­tion of 126 mil­lion peo­ple, where drugs are a sen­si­tive sub­ject due to a long and painful his­tory of vi­o­lence per­pet­u­ated by feud­ing car­tels.

“The first thing that will hap­pen is that no Mex­i­can will die or go to jail be­cause of this plant,” Ni­eto said.

“With that, ev­ery­one wins.” Dario Con­tr­eras Sanchez aims to set up a business mak­ing prod­ucts like soaps and pain-re­liev­ing oils from cannabis that he would grow legally near his fam­ily's ha­cienda in Du­rango state, where the pow­er­ful Si­naloa Car­tel has held sway for decades.

He be­lieves farm­ers near him who cul­ti­vate the plant for nar­cos would want to sell their pro­duce law­fully — if the gov­ern­ment per­mits them.

“Most of the peo­ple want to work legally,” said Con­tr­eras Sanchez, whose sis­ter mar­ried into the fam­ily of for­mer Mex­i­can drug lord Amado Car­rillo Fuentes.

How­ever, Mex­i­cans are by no means uni­fied on this is­sue.

While a grow­ing cannabis in­dus­try prom­ises to be a money-spin­ner, it faces re­sis­tance from cam­paign­ers who are wor­ried that reg­u­la­tions for both med­i­cal and non-med­i­cal cannabis will heav­ily favour big, of­ten for­eign cor­po­ra­tions.

They fear leg­is­la­tion will shut out small fam­ily pro­duc­ers and fail to of­fer a path to le­gal­iza­tion for many farm­ers who make a liv­ing by feed­ing Mex­ico's il­le­gal nar­cotics trade.

The ini­tial reg­u­la­tions cov­er­ing med­i­cal use per­mit en­trepreneur­s such as Ni­eto to grow mar­i­juana on be­half of phar­ma­ceu­ti­cal com­pa­nies and al­lows for­eign busi­nesses to im­port med­i­cal cannabis prod­ucts into the coun­try.

How­ever, Mex­ico's Supreme Court, which has ef­fec­tively le­gal

ized cannabis by rul­ing pro­hi­bi­tion is un­con­sti­tu­tional, has given the gov­ern­ment un­til Dec. 15 to draft new leg­is­la­tion for the recre­ational use of cannabis.

Mon­real, Se­nate leader of the rul­ing Na­tional Re­gen­er­a­tion Move­ment (MORENA) party, told Reuters that law­mak­ers were cur­rently iron­ing out the finer de­tails of the leg­is­la­tion.

He said his party, which has a ma­jor­ity in both houses of Congress with its al­lies, should have no prob­lems pass­ing the law, which he added would de­crim­i­nal­ize pos­ses­sion of a “cer­tain amount” of mar­i­juana.

Mon­real said the law would not al­low Dutch-style cafés in the first stage of lib­er­al­iza­tion, but the pub­lic would be able to buy mar­i­juana from pri­vately run and strictly reg­u­lated “sales and dis­tri­bu­tion cen­tres.”

How­ever, he added the Se­nate was di­vided over whether to al­low in­dus­trial cul­ti­va­tion of hemp, a cousin of cannabis plants used in prod­ucts rang­ing from food and clothes to build­ing ma­te­ri­als, cit­ing op­po­si­tion from industries that fear hemp will dis­place their goods.

De­pend­ing on what laws Mex­ico passes, Latin Amer­ica's sec­ond-largest econ­omy could morph into a hot new fron­tier in the so­called “green rush” spread­ing across Cana­dian and Amer­i­can farm­lands, spurred by grow­ing global in­vest­ment buzz around le­gal mar­i­juana.

Glob­ally the le­gal mar­i­juana in­dus­try was val­ued at $17.7 bil­lion last year by con­sul­tancy Grand View Re­search, and is ex­pected to reach $73.6 bil­lion by 2027.

Large cannabis com­pa­nies, which have phar­ma­ceu­ti­cal fa­cil­i­ties to test prod­ucts, said they were eye­ing both the med­i­cal and non-med­i­cal mar­i­juana sec­tors.

Smiths Falls, Ont.-based Canopy Growth, the world's big­gest pot com­pany, told Reuters it aimed to

con­trib­ute to “the re­spon­si­ble de­vel­op­ment of this new mar­ket” and would re­view the up­com­ing reg­u­la­tions.

The Green Or­ganic Dutch­man said it “looks for­ward to par­tic­i­pat­ing in the Mex­i­can cannabis mar­ket” through its sub­sidiary, TGOD Mex­ico, adding it was mon­i­tor­ing the sit­u­a­tion.

Raul El­izalde, co-chief ex­ec­u­tive of HempMeds Mex­ico, a dis­trib­u­tor and sub­sidiary of Cal­i­for­nia-based Med­i­cal Mar­i­juana Inc, said it had held talks with some Mex­i­can phar­ma­ceu­ti­cal com­pa­nies in­volv­ing a joint ven­ture about, ini­tially, med­i­cal cannabis.

How­ever, it may launch its own pharma business in the coun­try should the new med­i­cal reg­u­la­tions re­quire it.

El­izalde said most com­pa­nies would hold off mak­ing in­vest­ment de­ci­sions un­til they see what laws the Se­nate passed in De­cem­ber, in case they also amend the medic­i­nal rules.

“It's much bet­ter to wait and see if this will change,” he said.

To start with, big Cana­dian com­pa­nies are likely to see Mex­ico as a place to ex­port their cannabis prod­ucts, while U.S. play­ers, ham­strung by fed­eral laws that pro­hibit mar­i­juana ex­ports, may fran­chise their brands in Mex­ico, said Avis Bul­bulyan, CEO at cannabis con­sul­tancy Siva En­ter­prise.

Fur­ther down the line, Mex­ico's in­ex­pen­sive land, rel­a­tively cheap labour force and favourable weather would likely make it a top des­ti­na­tion for com­pa­nies to grow and ex­port cannabis raw ma­te­ri­als and prod­ucts.

“It's on a lot of peo­ple's radar,” Bul­bulyan added.

Not ev­ery­one is happy with how the new in­dus­try is shap­ing up, how­ever.

The coali­tion that led the cannabis le­gal­iza­tion drive through the courts, made up of pro-mar­i­juana ac­tivists and par­ents of ill chil­dren seek­ing cannabis-based pain re­lief, say the new med­i­cal reg­u­la­tion helps big busi­nesses rather than pa­tients.

Law­mak­ers le­gal­ized the use of medic­i­nal mar­i­juana in 2017, while the Supreme Court ruled in 2018 that recre­ational mar­i­juana should be per­mit­ted.

As it stands, the med­i­cal reg­u­la­tion would bar peo­ple like Mar­garita Garfias from grow­ing cannabis for per­sonal use to re­lieve pain. Farm­ers could only cul­ti­vate mar­i­juana through part­ner­ships with phar­ma­ceu­ti­cal com­pa­nies that can con­duct prod­uct tri­als, tie-ups which are out of reach for most.

Garfias, the mother of a wheel­chair-bound 16-year-old son with mul­ti­ple dis­abil­i­ties, said fam­i­lies who live in fear and have faced get­ting crim­i­nal records for try­ing to help their chil­dren feel short­changed.

“The reg­u­la­tion doesn't help with this, nor with so­cial justice nor hu­man rights for pa­tients,” added Garfias, who said her homegrown cannabis-de­rived medicine had re­duced her son's epilep­tic fits and hos­pi­tal­iza­tions.

Mex­ico's health min­istry re­ferred queries about the reg­u­la­tion to the reg­u­la­tor, COFEPRIS, which said the rules were fo­cused on en­sur­ing the pop­u­la­tion was not put at risk.

“Medicines must have qual­ity, safety and ef­fi­cacy,” it said.

Ac­tivists say lob­by­ing by cor­po­ra­tions could shut small pro­duc­ers out from both the med­i­cal and non-med­i­cal mar­kets, and thus fail to sig­nif­i­cantly dent the il­licit nar­cotics trade.

“We are very pes­simistic,” said Ta­nia Ramirez, drugs pol­icy di­rec­tor at Mex­ico United Against Crime, an or­ga­ni­za­tion that spear­headed the le­gal­iza­tion drive through the courts.

Mon­real, the MORENA se­na­tor, said no law was per­fect but that le­gal­iza­tion would trans­form Mex­ico, from emp­ty­ing its jails of small-scale pot smok­ers to help­ing farm­ers shed the yoke of deadly car­tels.

“The most im­por­tant thing for Mex­ico and its leg­is­la­tors is that they dare to knock down this decades-old taboo.”

 ?? AN­I­CANN/ BERNARDO ZAVALETA/ HAND­OUT VIA REUTERS ?? De­spite the prom­ise of a grow­ing cannabis sec­tor in Mex­ico, there are con­cerns that rules for med­i­cal and non-med­i­cal pot will heav­ily favour big, for­eign firms.
AN­I­CANN/ BERNARDO ZAVALETA/ HAND­OUT VIA REUTERS De­spite the prom­ise of a grow­ing cannabis sec­tor in Mex­ico, there are con­cerns that rules for med­i­cal and non-med­i­cal pot will heav­ily favour big, for­eign firms.
 ?? DRaZEN JOR­GIC/ REUTERS ?? Guillermo Ni­eto is hop­ing Mex­ico opens up what would be the big­gest le­gal pot mar­ket in terms of pop­u­la­tion.
DRaZEN JOR­GIC/ REUTERS Guillermo Ni­eto is hop­ing Mex­ico opens up what would be the big­gest le­gal pot mar­ket in terms of pop­u­la­tion.
 ?? HENRY ROMERO/ REUTERS ?? Se­nate ma­jor­ity leader Ri­cardo Mon­real ex­pects a law al­low­ing pri­vate firms to sell pot to the pub­lic.
HENRY ROMERO/ REUTERS Se­nate ma­jor­ity leader Ri­cardo Mon­real ex­pects a law al­low­ing pri­vate firms to sell pot to the pub­lic.

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