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We are on the verge of witnessing one more high tide in the ongoing green wave.
Mexico is set to become the second Latin American country to decriminalize marijuana after Uruguay.
Mexico’s health regulator has released the much-anticipated medical marijuana guidelines. The new rules will make the North American nation the world’s largest legalized cannabis marketplace (in terms of population).
The new cannabis law will permit drug makers to work on medical marijuana. This research will be conducted by independent laboratories under the health regulator’s supervision.
The reform also comprises of guidelines for the recreational use of cannabis in the country and cultivation and harvesting of marijuana. The laws also authorize companies to grow marijuana legally for medicinal uses.
Mexico’s policymakers are set to pass the bill legalizing the recreational use of cannabis in the upcoming session of Congress in February 2021.
An Opportunity For North American Cannabis Firms
North American marijuana companies may benefit from the giant Mexican cannabis market. This latest move by Mexico will create additional pressure on the US president-elect Joe Biden to legalize marijuana federally. Fifteen out of 54 states in the United States have already legalized marijuana for recreational purposes.
The Canadian cannabis market has already been leading from the front since federal legalization in October 2018.
The S&P/TSX Cannabis Index has been rallying for the past few months on the back of Biden’s upcoming presidency. The cannabis index has zoomed over 99 per cent in the last three months.
Leading cannabis firms such as Aphria Inc. (TSX: APHA) and Canopy Growth Corporation (TSX: WEED) might be watching this development closely. Both companies have already outlined their plans to enter the US cannabis market. Stocks of Aphria have advanced by 122 per cent in one year while Canopy Growth’s shares have returned 35 per cent in the same period.
@Kalkine Image 2020
A Curb On Cannabis Smuggling
This initiative aims to curtail the rising cannabis-related criminal cases in Mexico. The new legislation has paved a way to reduce violence between feuding drug cartels. These drug mafias have been farming marijuana illegally and trafficking it through international borders.
Legitimate companies may face initial competition from a well-rooted drug cartel in Mexico. The illegal agencies still dominate local drug markets and smuggle marijuana across the Americas. The United States is their main market, especially for cocaine and heroin.
During the COVID-19 pandemic, the drug mafias cut payrolls and developed new hacks to circulate illegal drugs. Some of them are using modern methods of delivery and payment such as drones and cryptocurrency. But majority of these cartels still rely on older systems like mysterious tunnels and seaways.
