Mexico City, November 27th, 2020.
Last Thursday November 19th, 2020, the Senate approved, both in its general and particular terms, the Decree by which the Federal Law for the Regulation of Cannabis is issued, and several provisions of the General Health Law and the Federal Penal Code are amended and added.
This new proposal of law governs over the following uses of cannabis and its derivatives:
- Adult use for personal use and self-consumption, shared use between those persons that conform associations for the consumption of psychoactive cannabis and commercialization for adult use.
- Investigation purposes, except investigation for medicinal purposes.
- Industrial use, except industrial use for medicinal purposes.
As per the Federal Law for the Regulation of Cannabis draft, the industrial use of cannabis is the utilization of cannabis and its derivatives, in concentration below 1% of THC, for the obtaining, elaboration, manufacturing, preparation, conservation, mixture, conditioning, packing, manipulation, transport, distribution, storage, public sale and supply of products different to those referred to medicinal, palliative or pharmaceutical uses.
The medicinal, palliative and pharmaceutical use of cannabis and its derivatives, as well as the use of cannabis in cosmetic products, are not governed by the Federal Law for the Regulation of Cannabis but rather by the Federal Health Law and the health dispositions issued on the matter.
In addition, the acts innate to the transformation and commercialization of edible and drink products that contain the substances extracted from cannabis, for the purposes governed by the Federal Law for the Regulation of Cannabis, are prohibited.
The Federal Law for the Regulation of Cannabis draft allows adults of legal age and entities legally incorporated as per the Mexican law, to conduct those acts related with the utilization of cannabis and its derivatives for industrial purposes on the basis of the corresponding license.
Holders of licenses for the utilization of cannabis and its derivatives must comply with the terms and conditions of the granted license, as well of the dispositions set forth in the Federal Law for the Regulation of Cannabis, the General Health Law and any other applicable disposition.
As per the Federal Law for the Regulation of Cannabis, one must hold a license for:
- Cultivation: which includes the acquisition of seeds or seedling, the sowing, cultivation, harvesting and preparation of cannabis.
- Transformation: including the preparation, transformation, manufacture and production of cannabis.
- Commercialization: which includes the public distribution and sale of cannabis, its derivatives and products.
- Export and import: distribution and sale, outside the national territory, as well as the entry into it, of non-psychoactive cannabis or products manufactured based on it, in the terms of the laws, international treaties and other applicable regulations, which must specify its destination or origin, respectively.
- Investigation: It includes the acquisition of seed or seedling, the sowing, cultivation, harvest, preparation and transformation of cannabis and its derivatives, exclusively in the quantities and in the terms of the research protocol approved by the Mexican Institute for the Regulation and Control of Cannabis.
Holders of any of the abovementioned licenses are also allowed to conduct the auxiliary activities of transport and storage.
The processes and products covered by each license must be verified by the Mexican Institute for the Regulation and Control of Cannabis or through an Authorized Third Party.
Licenses for the cultivation, transformation and commercialization of cannabis and its derivatives are mutually exclusive. Hence, the holder of one of these licenses cannot be holder of any of the others.
Licenses for the export and import of non-psychoactive cannabis are excepted from the abovementioned provision and hence, can be granted to holders of another license (i.e. license for cultivation, license for transformation, license for commercialization) in the cases and under the conditions set forth by the Federal Law for the Regulation of Cannabis, the General Health Act and all other applicable dispositions.
For an entity to obtain a license for any of the abovementioned activities it is necessary for the interested party to:
- Be considered a trader or merchant and be registered before the Federal Taxpayer Registry (“RFC” for its acronym in Spanish).
- Hold a positive opinion of compliance with tax obligations issued by the Service Tax Administration (“SAT” for its acronym in Spanish).
- Be legally incorporated as per the General Corporations Law. Irregular entities[1] are not allowed to be involved in those activities governed by the Federal Law for the Regulation of Cannabis.
- Have a registered office within the Mexican territory and it should only have as corporate purposes those directly related to the acts regulated by the Federal Law for the Regulation of Cannabis.
For its part, both the General Health Law and the Federal Criminal Code were modified as follows:
- The General Health Law was modified, in general terms, to set forth and define the powers of the Health Ministry in matters of cannabis control and regulation. In addition, the following modifications are included:
- Only cannabis sativa, Indica and Americana or marijuana, its resin, preparations and seeds, containing Tetrahydrocannabinol (THC) in an amount equal to or greater than 1% is to be considered as a narcotic.
- Tetrahydrocannabinol (THC), those that are or contain it in concentrations equal to or less than 1%, the following isomers: ∆6a (10a), ∆6a (7), ∆7, ∆8, ∆9, ∆10, ∆9 (11) and its stereochemical variants, having wide therapeutic uses and constituting a minor public health; are no longer considered psychotropic substances.
- The Federal Criminal Code suffered modifications with regards to the conducts related with psychoactive cannabis, which will only update a criminal conduct when its possession exceeds the 200 grams. Possession of psychoactive cannabis in amounts above 28 grams and below 200 grams are to be sanctioned only with fines. For its part, the modifications to the Federal Criminal Code also exempts the planting, growing, or harvesting of marijuana plants, as criminal behaviors, when conducted on the basis and as per the terms of the Federal Law for the Regulation of Cannabis.
The proposal of the Federal Law for the Regulation of Cannabis has been sent for the review and approval of the Chamber of Deputies.
Our practice group in matters of Cannabis remains at your service to clarify any query you may have over this topic.
S I N C E R E L Y,
Juan José López de Silanes
lopez_de_silanes@basham.com.mx
Rodolfo Barreda
Ricardo Evangelista
Mariana Arrieta
[1] Those entities not registered in the Public Registry of Commerce but that have become externalized as entities, before third parties, and which have legal personality, whether they are recorded on a public deed.
