Q: How does COFEPRIS’ revocation of the guidelines on the control of cannabis and its derivatives change the short-term future of cannabis regulation in Mexico?

CS: In August, the Supreme Court ordered the Ministry of Health to issue a regulation on cannabis focused on medicinal topics because of its link to human rights issues, specifically the right to free personality development. Derived from that, the Senate circulated among legislators of the Health, Justice and Second Legislative Studies commissions, a security opinion on cannabis regulation that seeks to allow the use of cannabis for medical, scientific, recreational and industrial use. The deadline for endorsing this regulation has been extended several times, the last extension was granted due to COVID-19 sanitary emergency, for December 15, 2020.

The lack of regulation creates legal uncertainty, which endangers consumers and leaves an open door on cannabidiol (CDB) matters. If the new regulation is approved, Mexico could benefit from different perspectives and investment.

Q: What are the opportunities and obstacles that companies should keep in mind if they want to do business with cannabis in Mexico?

EA: We have many clients waiting for our country to provide a legal resolution on the subject. There is still no appropriate regulatory framework that can give companies a legal guarantee to invest safely in Mexico, but it is coming. On the one hand, the government needs to be responsible and craft a proper regulatory framework to assess people’s health. On the other hand, it needs to grant the appropriate guarantees to investors and the industry.

Q: How can companies speedily enter the market when Mexico’s cannabis laws change and how can Hogan Lovells support its clients through this process?

EA: Investors must understand our current regulatory framework and then have a proper advisory to understand what are the freedoms and limits regarding this matter.

CS: We encourage investors to take risks. To do that, they need to be properly informed to make sure that they understand the current regulations so they can stay in the market. Once the new regulations enter into force, we advise to start taking different preparatory actions, from setting up a company in Mexico to prepare all the scientific and technical support for evidencing the safety and effectiveness of their products when the times come for getting the required approvals.

Q: How can the Senate’s new approval on labeling for food and non-alcoholic beverages contribute to reduce obesity and overweight in Mexico?

EA: This proposal seeks to grant consumers the tools to make an informed decision when buying food and non-alcoholic beverages. This action stems from the government’s policy to combat obesity and overweight among the population.

However, what we have gathered from our clients in this industry is that the government has not been properly transparent on this subject. There was an agreement that adequations on labeling were necessary but these must be well-thought, ensuring that they meet the goal they were meant to address without generating extra costs or problems for the industry.

Time and costs are the biggest challenges in the logistics of imports and exports, particularly for multinational companies that seek to homogenize their labeling in different countries. They could face an increase in costs as this decision affects things like design, inventories, distribution and in some cases even the reformulation of the product itself.

There is also a new power granted to the Ministry of Health to determine additional nutrients that may be a critical risk factor for disease development, especially obesity and diabetes. The new regulations impose new significant restrictions and limitations and it is uncertain whether these will achieve its intended goal.

Modifications to NOM-051 go beyond labeling. They include advertising matters and electronic media, which will have an impact on business and marketing since companies would be facing more restrictions. It is important to mention that regulations on food do not go as far as they do on medicines; they are only focused on the nutrient components of food and non-alcoholic beverages but now with important limitations and very strict requirements.

Q: What recommendations would Hogan Lovells make to the authorities so they can ensure a successful application of the law?

CS: The Mexican government’s strategy is similar to Chile’s in that it seeks to ensure the only elements that attract consumers to a product are its nutrients and components. But to achieve this, it is very important that changes are supported by a public policy that encourages the consumer to develop better consumption habits. The scope of regulations should go beyond changing labels of prepackaged products, it should also apply to all different types of food  (i.e. street food) which  are the main source of Mexicans food intake,  in order to have  a real effect in the citizens health.

Q: How will changes to the public purchasing scheme affect distributors and pharmaceutical companies?

EA: We are in a process of maturation, recomposing the structures and strengthening the supply of medicines for the public sector. In that sense, maybe the actions that have been taken were necessary but is worth that this is adopted with an adequate strategy for ensuring that needs are properly satisfied. The government’s goal should be to ensure that the new measures stick to the law and that they respect the industry’s rights. They should also comply with the legal framework and guarantee the interests of patients, including proper supply of products.

CS: Especially in this sector, fair competition is key. This goes beyond costs and prices. Medicines undergo a long and sometimes difficult process in Mexico to reach the market and competing with products that do not have to go through that process can distort the market and lead to shortages or unreliable distribution models that only endanger the consumer.

Q: What are the main barriers to increasing the culture of blood donation and what regulatory adjustments can be made to encourage it?

EA: The type of blood donation that exits in Mexico is replacement donation, which is basically where you give to family and friends only. There is no real culture of voluntary or altruist blood donation, which is what WHO suggests. In 1986, blood donation remuneration was prohibited because of HIV infection risk. Right now, the context is much different and better awareness is needed to encourage people to donate voluntarily and even anonymously, not just in cases of need. Having a proper, more flexible regulatory framework that helps to incentivize donation and ensures the safety of the donor is also important. Incentives do not necessarily have to be monetary, either. There are other possibilities such as remuneration in the form of access to other services.

CS: A culture of donation could later result in having donation for research, which would be very valuable and it could help the health sector develop and grow in different areas, such as medicine or regenerative therapy development.

EA: Within the current legal framework, costs of recovery for the processes of recollection, transportation, processing and distribution of blood are not considered to be commercial actions. But flexibility on paying also for the time the person spends to donate could also work as an incentive.

Q: What other issues should be subject to adjustments to improve well-being in Mexico?

EA: We need to adapt to the different realities we face to be able to satisfy clients’ needs. Business within the current legal framework and under the new modalities that the administration is introducing is challenging. We need to be constantly updated and understand the industry trends in different subject areas, whether it is products, labeling, technology, business models or other areas of opportunity where we can help clients.

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