Vincent Speranza
Mexico's Managing Director and LatAm Regional Advisor
Endeavor
/
Startup Contributor

Yes to Cannabis Regulation

By Vincent Speranza | Tue, 12/15/2020 - 00:00

We have a promising, high-value market, rural communities that can benefit, opportunities to explore, and investment interest. On Dec. 15, Congress will deliver the missing piece, giving the green light and detonating the Mexican cannabis industry with the approval of its regulation.
 
It doesn’t need to be perfect, at least at this starting point. The important thing is to have it and modify it as we go. There are several reasons for this urgency, which I discuss below.

LAWLESS ENTREPRENEURIAL OPPORTUNITIES

The Mexican cannabis industry is already well-established, although not on firm ground. We detected this when we launched the study Cannabis in Mexico last June, which can be consulted in our Data Lab at www.endeavor.org.mx.
 
In it, we detail how there are entrepreneurs (colloquially called ganjapreneurs) who are working on activities around this crop even without the perfect conditions. We were also able to detect that there are business ideas, funds that are set aside for when the regulatory step is taken, opportunities, and a lot of ground to grow.
 
Mexico ranks 12th among the countries with the most registered cannabis patents, only below China, the US, and Canada. And, by October 2019, there were 549 registered trademarks related to this product, with cannabis-infused tobacco and pharmaceuticals the largest proportion.
 
There are also all the services around the plant: from information and traceability technologies and pharmacovigilance to ethical issues, consulting, marketing, and, of course, specialized investment funds, which are already distributing capital in Mexico.
 
Speaking of industrial opportunities, meaning hemp, there are thousands of applications and innovations in various submarkets, including textiles, agriculture, food and beverage, beauty or personal care products, paper, building materials, and plastics. Some specific examples are cinder blocks, denim clothing, pet food, rope, brake linings, and shampoos.
 
Regarding the health issue, we are living in a stage of great complexity as humanity. Cannabis provides many benefits for mental health and other related diseases, as it contributes to the well-being of patients.
 
Unfortunately, we are letting go of all of this as a country due to this illegality status. But other countries are moving and they could attract these ventures, funding, and attention if we waste them.

BENEFITS TO THE COUNTRYSIDE AND FARMERS 

It is not just that creative minds are seeing opportunities in cannabis. Mexico's agricultural capacities for cannabis production must also be considered, facilitated by climatic factors and the amount of land that is not used. Besides, cannabis production can be healthy for the land, as it works a lot for crop rotation, which gives farmers many advantages.  
 
On the other hand, there is the social transformation aspect of cannabis. As we know, the Mexican cannabis trade is highly lucrative, but that value is not reflected in the small farmers who are located at the bottom of the value chain.
 
What we found in the roundtables for the creation of our study Cannabis in Mexico was that all the players put the farmers at the center to dignify their activity. It is for them that we must regulate because until now they have been victims of this industry.
 
But what would happen if we make them participants and put them on the chain, raise their performance by land, and, thus, their income? This would be a gigantic social opportunity. If this industry does well economically, socially the impact will be very positive because the first mile, which is the land and which has been forgotten and abused, would be directed to grow.
 
That is part of what the regulation intends, by allowing cultivating communities that have been planting for decades to become owners of their work and to take advantage of their plantations to produce profits.

RECOMMENDATIONS FOR DECISION-MAKERS

I am convinced that Mexico has everything needed to become one of the centers of cannabis innovation in the region, as it has strong competitive advantages to be an important player on an international level. What's more, we have already been that, but informally.
 
For cannabis to reach its full potential and become this promising formal industry with purpose and impact, the first step must be taken on Dec. 15. Until there is a legal resolution, entrepreneurial activity, and other opportunities, will continue to occupy a gray area where they’ll hardly be able to flourish.

Perhaps one approach to ease the resolution would be that legislators focus firstly on the health and hemp divisions to boost textile, industrial, and food opportunities, and achieve quick wins. In other words, leave recreational consumption for later, since it’s the element that causes the most controversy, complexity and has public opinion more concerned and divided. 
 
We must take advantage of the time to avoid being left behind against other countries that are already developing this market. One of the examples to follow is that of Colombia. Its regulations prioritize vulnerable farmers by giving them special privileges so that they can enter the legal market.
 
We are one month away from the new discussion. It seems that economically there is not much to discuss and that the answer should be a "yes." But politics and public opinion are heavily skewed by misinformation around cannabis. One of the worst scenarios would be that the decision is postponed again because not having visibility increases that gray area and causes the paralysis of resources, people, and ideas.
 
Also, although entrepreneurs are "programmed" to overcome obstacles, I do not know how much more they can resist operating as they have done so far. Passing the legislation will certainly give them oxygen to move forward.
 
From Endeavor, the recommendation to Mexican legislators is that they study experiences such as that of Colombia and that they focus on ensuring that the law meets goals of social progress and inclusion of rural communities that participate in the cannabis trade.
 
We also urge that dialogue between all the players involved be resumed. Consensus must be generated and all parts of the formula for success must be well-understood to allow 2021 to begin with new regulation, at least for the health, food, and textile sectors.
 
We are convinced that this can be a sector that promotes the economic recovery that we so badly need in the country, generating wealth, innovation, and social change through quality entrepreneurship and jobs. It is a golden opportunity but it has an expiration date. The advantages are happening now; if we wait, we will certainly miss the train.

Photo by:   Vincent Speranza