On March 10, 2021, the House of Representatives of the Mexican Congress passed the bill by which the Federal Law for the Regulation of Cannabis is enacted and which amends and adds various provisions of the General Health Law and the Federal Criminal Code (the “Bill”).

As a result of the amendments that the House of Representatives made to the bill passed by the Senate on November 20, 2020, the Bill will be sent back to the Senate so for discussion and approval, if so determined. Consequently, only after the Senate passes the amended Bill, if applicable, it will be sent to the President of Mexico so it can sign it into law and order its publication in the Federal Register.

The amended Bill contains the following:

 I. Federal Law for the Regulation of Cannabis:

Among other things, the purpose of the Law is to regulate the following: (i) the production and marketing of cannabis and its derivatives under a public health and human rights approach; (ii) the storage, exploitation, marketing, consumption, harvest, cultivation, distribution, packaging, export, import, research, possession, carry, production, sowing, transportation, supply, sale, and purchase, among others, of cannabis and its derivatives; and (iii) the definition of certification and traceability mechanisms for the production and distribution of cannabis and its derivatives. With respect to medicinal, palliative, or pharmaceutical use, the Law refers to the provisions contained in the General Health Law and its applicable regulations.

The Law provides that the production of cannabis and its derivatives shall have the following purposes (uses): (i) self-consumption, which includes (a) the production at home for personal use and recreational purposes and (b) the production by cannabis associations for the recreational consumption of their associates; (ii) production for marketing and sale for recreational purposes; (iii) production for research purposes; and (iv) production of industrial hemp for industrial purposes.

The Law provides that the National Commission Against Addictions (the “Commission”) shall have the authority over the chain of production of psychoactive cannabis and its derivatives, as well as its consumption. Among other things, the Commission has the authority to (i) set forth the guidelines for granting authorizations and licenses, (ii) granting licenses for the recreational use of cannabis, including cultivation, marketing, and sale to the end-user; and (iii) apply and enforce compliance with the Law.

The Law sets forth six types of licenses: (i) comprehensive, (ii) for production purposes only, (iii) for distribution purposes only, (iv) for final sale to end-user purposes only, (v) for the purposes of production or marketing of derivative products of cannabis only, and (vi) for research purposes. Private parties that intend to undertake the foregoing activities may not do so without the applicable authorization granted by the Commission. The Law provides that persons may obtain more than one such license. Accordingly, the Law intends to avoid a vertical integration in the market, allowing individuals to participate in the chain of production of cannabis. The Law vests the Federal Antitrust Commission with authority to issue resolutions to deny the granting of further licenses or revoke licenses already granted to avoid undue concentration, which affects the market. Notwithstanding the foregoing, the Law does not impose any further restrictions to avoid vertical market integration.

With respect to personal consumption, the Law acknowledges that people older than age 18 have the right to consume psychoactive cannabis. However, it outlaws its consumption for individuals under that age. Furthermore, the Law prescribes that the cultivation of up to six plants of cannabis for personal consumption for recreational purposes is subject to the prior authorization granted by the Commission.

 II. General Health Law:

The Law prescribes various offenses and the applicable penalties thereof for conducts related to, among others, the marketing of psychoactive cannabis without the applicable authorization, pursuant to the Federal Law for the Regulation of Cannabis.

Likewise, the Law prescribes that the possession of cannabis in a quantity no greater than 28 grams shall not be deemed an offense. Consequently, the Attorney General may not prosecute said possession.

III. Federal Criminal Code:

Sets forth various offenses and their penalties, related to the production, trafficking, marketing, or supply of cannabis without the applicable authorization granted under the Federal Law for the Regulation of Cannabis.

The said offenses shall be prosecuted by the federal authorities.

 IV. Saving Provisions:

The Bill provides that the Law shall be effective as of the day following its publication in the Federal Register. Likewise, it sets forth that no later than 330 calendar days following the date on which the Law becomes effective, the Commission shall publish the decrees, procedures, and any other general applicable provision for the commencement of the granting ofthe licenses set forth under the Law, applicable as of 2022.

This document is for informative purposes only and it does not constitute legal advice. For further information, contact us.