Mexico's Role in the Future of the Cannabis Industry

In 2022, the global cannabis industry will reach over US$35 billion in sales, registering the most considerable growth in the industry's history. However, these achievements couldn't be possible without all the social and regulatory changes worldwide, including those that allowed hemp to be available in 50 US states, including therapeutic uses, and a wide range of regulations that decriminalized several forms of usage.

These global achievements also relate to other markets changing their position toward cannabis, including Mexico in 2017, with the changes to the General Health Law, and a specific regulation for therapeutic and pharmacology uses of cannabis issued in 2021.

Although the global cannabis industry has reached figures that we wouldn't have dreamed of a decade ago, we expect that the entire industry will face new changes and challenges, including sales, but, above all, the products that will lead the market. Still, the most critical change will be the perception of the industry. In 2019, Consulta Mitofsky revealed that 58 percent of Mexicans surveyed accepted cannabis legalization. Globally, we see a similar landscape where consumer products like cosmetics, cannabinoid-infused supplements, and even textiles derived from hemp are standing their ground. It's not only about these products but also the cannabinoids used to formulate several products. During the first quarter of 2022, US markets, including California, Oregon, and Colorado, saw a 70 percent increase in sales of products with minor cannabinoids like cannabinol (CBN). While these products are booming, traditional products like those with CBD have become a commodity.

In Mexico, the consumer demands are similar to those in the US. There is a massive interest in all the wellness and health benefits of cannabis-derived products, including stress relief, help sleeping and even palliatives for pain. However, the market observes an utterly different landscape since there are no regulations for the consumer market, forcing companies to decrease their investments to research, develop and bring these new kinds of products and cannabinoids to the local market. As a result, most consumers are getting these products from the gray market.

Because of all the industry changes and consumer motivations, the real potential of the Mexican cannabis industry hangs on a thread. Companies are waiting for several regulations that will allow a diverse range of players to participate in those areas of the market with greater demand and to fulfill consumer requests for non-psychoactive cannabis-derived products to become the partner that will improve their quality of life, instead of only benefiting the large pharmaceutical corporations.

Globally, the industry tends to perceive Mexico as the cannabis unicorn because of its general weather and soil conditions but also because it was one of the first countries to modify the laws to allow therapeutic and industrial uses of non-psychoactive cannabis or hemp, even before the US signed the Farm Bill in 2018. But Mexico has been overtaken by other markets, whose potential and speed in the regulatory process are making them gain potential leadership positions in harvesting and offering raw materials. In addition, other countries are beginning to lead the product transformation and commercial operations. For Mexico, there are just a few paths to entering the global cannabis industry, one of those paths is to harmonize its laws and regulations and allow sales of products derived from hemp or those that can legally prove concentrations of psychoactive cannabinoids like THC lower than 3 percent. The other path is to use transportation and transformation of raw materials as an enabler for several Mexican actors to gain leadership positions either as consumers or as part of the supply chain for the entire global industry.

The so-called potential to lead the global cannabis industry decreases because growing and selling raw materials has lost its value. In 2017, those in charge of harvesting hemp had very high revenues but, currently, the profit related to growing and harvesting does not exceed 20 percent. The same goes for sales of products with no recreational or therapeutic purposes because there is no regulation for this market. Above all, it is a constantly evolving industry in terms of cannabinoids that are more appealing to the final consumer. 

Due to these conditions inherent to the industry that create value chains around the cannabis industry, implementing a holistic approach to the growth of the local market and the position of Mexico in the global industry will drive economic and social development for our nation.