Mexico Medical Hashish: Totally Authorized, However Is It Open?

Mexico Medical Cannabis: Fully Legal, But Is It Open?

In our last post, as well as in our cannabis webinar in Mexico last month (repeat here), we explored the implications, business opportunities, and requirements to take advantage of the medical regulations that recently went into effect in Mexico.

Yes, medical cannabis is completely legal in Mexico now. However, this does not mean that you will be able to do everything that medical regulations allow. “Does that mean there are areas in medical cannabis that are closed to my business?” No it does not. It just means that some areas are open earlier than others.

To start with, it is important that applicants – especially foreign investors – consider the difference between publication, entry into force and full implementation of a law. The medical regulations are no exception. Under Mexican law, every law contains a final section of a purely operational nature, known as the “Artículos Transitorios”, which provides:

  1. when the law will come into force
  2. whether contradicting laws or regulations should be harmonized or repealed, and
  3. Transitional points such as the gradual implementation of specific provisions.

In the case of medical provisions, the transitional provisions provide for the gradual implementation of certain sections regardless of the overall medical provisions that came into force on January 13, the day after their publication. This was intended so that there are now several government agencies responsible for the interpretation and application of medical regulations and not only coordinating their processes, but also updating, optimizing or streamlining their processes to cope with their new tasks, including maintenance and Processing of cannabis, to fulfill applications.

These agencies need to work out the administrative procedures that are now available for all activities foreseen in the medical regulations, train their staff, adapt their structures and develop internal guidelines for issuing application formats, fees, etc. The agencies with the highest mandate are part of the Ministry of Agriculture, so much so that they have a specific provision just for them:

FOURTH. The Ministry of Agriculture and Rural Development, including its regulatory agencies, will have 90 working days after entry into force to harmonize its internal policies as necessary to ensure the proper implementation of these regulations [translation ours].

What does it mean what we have said so far? At the beginning, according to the provision mentioned above, you can already apply for a permit / license provided for in the medical regulations, provided this is not related to growing activities that will be opened for applications in late May or early June 2021.

Additionally, the fact that government agencies have to make adjustments – and some even have a grace period to do so – could mean that permit / license application regulations may not be implemented from day one. There are three possible reasons for this.

  1. The transitional provisions expressly stipulate that all agencies work within their approved budget for the current financial year when implementing the medical regulations and may not increase it for subsequent financial years. In fact, agencies have to do more work with the same staff and without additional financial resources. With Mexican federal agencies suffering from one of their biggest budget cuts in history, we expect agencies will struggle to make ends meet to serve cannabis applications.
  2. There is no fee schedule for several of the application procedures specified in the medical regulations. To do this, we would have to wait until the competent authorities (in particular the tax administration authority and the Ministry of Economic Affairs) submit proposals to Congress to amend the Federal Fees Act (Ley Federal de Derechos).
  3. Third, in a COVID / low budget background, the agencies may not issue traceability requirements, application forms, specific implementation requirements, or anything in between to apply for each permit / license regardless of the 90 working day deadline.

While medical use is already completely legal, one may not be able to do all of the regulated activities to begin with, even if it is already intended and legally effective. Permits / license applications could not be submitted or effectively processed, which would lead to delays in issuance and inevitably postpone deadlines in market forecasts and business plans … unless companies are willing to circumvent delays.

How you do that? What to do if an activity does not have procedural guidelines or specific requirements that medical regulations should be open and therefore in practice you cannot apply for a specific license or permit? Well that depends on the situation.

Agencies may receive your application, but they never process it and therefore never respond. If guidelines or specific application requirements are not issued, submit your application with the basic requirements set out in the medical regulations and the competent authority will have 90 days to respond. If not, file an Amparo lawsuit claiming that the agency failed to reach a resolution despite a legal obligation. This would be possible because:

  1. From a legal point of view, you are entitled to exercise your right to pursue an activity from the date on which the medical regulations come into force, as it contains the basic means to exercise the right (the application). and
  2. Since rights and resources are provided in medical regulations, the government’s unwillingness to process applications is irrelevant to the exercise of those rights. It’s worth noting that since medical cannabis is completely legal, the chances of spread have increased.

It can also happen that agencies react, however, in such a way that a certain authorization becomes unusable. For example, medical regulations stipulate that imports by post or parcel service are prohibited. Instead, all imports of medical cannabis may only be made through expressly approved ports of entry. When you receive an import permit, a list of authorized ports of entry will be attached.

Now this list should be jointly drawn up by COFEPRIS and the Tax Administration, but there is currently no list and no signs that it will be soon. If you want to import (as US companies have already done) and want to get an import permit without knowing which ports of entry to use for your product, you can be proactive and request permission to import through a specific port of entry. If they deny your request, file an Amparo lawsuit on the grounds that they will not give you the means to comply. To do this, COFEPRIS and the tax administration have to prove that they published a list and told you what they cannot do if they do not draw up a list in time. As a result, you could potentially prevail and import via the port of entry of your choice.

Bottom Line: The fact that medical regulations are in place now may not mean that a person or company can do everything that is intended from day one. However, according to the examples above, there are ways to get around this and take advantage of the lack of guidelines to effectively apply for permits / licenses for medical use.

You can now apply for a permit license other than the one for growing activities. Corporations and individuals have the rights and resources to exercise these rights in accordance with medical regulations. If the authorities are slow to build a structure for service applications, it is in your best interest (and indirectly for everyone else in the industry) to ask the Mexican government to meet its obligations.

In other words, if you take your time anyway, it’s better to get over the onslaught. Start with the application now!