Is Mexico ready for Cannabis? Market opportunities for medical cannabis, an interview with Erick Ponce

The global market of medical cannabis grows with each country that legalizes its use. In 2021, when Mexico approved regulations for the medical use of cannabis, a wide range of possibilities opened up in a market that is valued in 13.4 billion dollars and is expected to grow 22.9% annually to reach 44 billion dollars by 2025.

Mexico’s geography and climate benefit the cultivation of cannabis, in addition the costs throughout the production chain are affordable, therefore the medical use of this plant represents an opportunity for growth and development for different sectors of the population. 

To have a better understanding of this industry we had a conversation with Erick Ponce, President of the Group for the Promotion of the Cannabis Industry in Mexico (GPIC) and discussed the potential opportunities this incipient industry is bringing to the table. 

Erick, thank you very much for this opportunity to talk about this new industry in Mexico. According to your experience, what is the current situation in Mexico in relation to cannabis?

Thank you very much for the invitation.  For context, let’s go back to 2017, when the medical use of cannabis was legalized in Mexico. From 2009 to 2011 there was a fight for the legalization of its recreational use and now it is legal if the user requests and obtains a permit. The most important part of this process is the medical use, that includes the entire chain of processes so that we can bring accessible medicines to the country.

Mexico allows cultivation, although there are currently no active crops as some regulations are still needed for this, but for the medical use the entire chain is open, we can now import raw materials, develop, manufacture and distribute medicines and sell to patients. 

It is worth mentioning that investors are very interested in the fact that it is legal to export cannabis-based products from Mexico. Once Mexico manages to generate patents, its pharmaceutical developments are allowed to be exported.

What is the relevance of Mexico in the cannabis industry in the world? 

Mexico's potential is interesting for several reasons, one of them is its privileged climate conditions that allow having up to four crops a year, one of the main reasons for that is not having strong winters. 

Production in Mexico is much cheaper than in other nations or regions that allow legal production, such as the United States, Canada, or Europe, and the exchange rate is also lower. On the other hand, Mexico's international trade agreements facilitate the development of business partnerships with a large number of countries. 

With a population of almost 130 million people, Mexico is the largest country to legalize Cannabis at the federal level. Other countries have legalized cannabis use in a State or local level and other have smaller populations. Mexico is the second largest country in LATAM with greater market potential worldwide.

Are there cannabis-derived products that are already accessible for the population? 

Mexico legalized cannabis medical use in 2017, however, it was not until 2021 that the secondary rules and regulations were published. Meaning that while the law passed 5 years ago, it was not until a year ago 100% legal use was granted with access licenses, permits, etc. 

Cannabis legislation is in the early stages, there are few products in the market, in general, we are still in the development process. Furthermore, we have reached this stage during a global pandemic.  With safety and regulatory priorities turned to COVID-19, the entities that regulate these matters clearly prioritize pandemic related issues over cannabis use.

In Mexico, the Ley General de Salud, which is the main law for health policy in the country regulates cannabis, no separate or special law was created. There was no need to create new institutes, entities or processes. Cannabis is recognized as a medicine, with quality standards and specific processes, these allow to develop the cannabis medical market like any other medicine. In other words, pharmacies, labs, all those who are in the health sector can benefit from this legalization and produce or distribute products as they do with other medicines.

What opportunities do you identify in the health sector?

We could start by mentioning the academic upside with the research topics generated by analysis of the seeds, analysis for land use and viability and research regarding the product itself.  We consider an opportunity as well the educational effort needed to raise awareness about the benefits of its use.

Commercially, we identify as an opportunity the equivalence agreements, if medicine is patented with the authorization of COFEPRIS, it has an equivalence agreement with other countries, which makes the export process much easier.

Furthermore, there are R&D opportunities on the use of new therapeutic applications of cannabis. Pharma labs can develop new studies here, these activities are more affordable in Mexico than in other developed countries. There are several benefits for the treatment of medical conditions, such as anxiety, insomnia, stress, additionally there are ongoing studies on topics as relevant as cancer.

Similarly, last year we published a study in a scientific journal on veterinary applications, the first application of cannabis was made on a captive elephant, it was documented and we saw how the treatment improved its condition.

It sounds very optimistic, but this is already happening in Mexico and the possibilities are limitless.

As an up-and-coming industry, what areas of opportunity do you identify in Mexico?

In Mexico we have learned about cannabis through the grapevine, with folk stories filled with taboo and mysticism. We are a country that has suffered the so-called war on drugs, so the topic is taboo to say the least. In my opinion, the first thing that is needed is education and awareness about the use of cannabis with formal and official sources.

It is necessary to raise awareness among authorities, the public and health professionals. It is necessary to try as much as possible to eradicate the myths associated with its use. We need to educate on how to handle new molecules, substances, health controls, among others.  All the actors need to be involved from the government, the private initiative, and our international relations.

For instance, learning from experiences of other countries is something we believe is crucial. In the case of the Netherlands, as a country, we could learn from their best practices in cultivation, manufacturing, production, dispensing, etc. We consider we are on the right track on this matter.

How do you think Dutch companies can be involved in this process?

In many ways, starting with the investment part. Some areas of interest that I identify are the exchange of user manuals, best practices, patents, research in plant genetics, flowers, etc. All of this could happen coupled with multicenter studies and with a complete validation of medical processes that many pharma laboratories require.

Dutch companies can also be involved in the auxiliary businesses, consulting, data analysis, training, etc. 

What does the future hold for this industry? 

Decriminalization, recreational, therapeutic use and wellness are all on the rise around the world. Cannabis promotes well-being and it is a socioeconomic issue. In fact, a general cannabis law is being debated in the Mexican Congress, which considers a variety of uses, including not only industrial medical use, personal use, or recreational use, but also other industries such as beverages, supplements, and cosmetics. This is currently being debated, and we expect it to be approved soon. 

Is there anything else you want to add?

We would like to open the doors to all companies and people who want to know more about Mexico, so they can witness that we are a competitive country and a very interesting place to do business. We can talk about this new industry, do business, and we are always open to collaborate. 

Holland House Mexico would like to thank Erick Ponce for this interview. If you are interested in learning more about these and other business opportunities in Mexico, contact us here.