Can Mexico Change the Current Cannabis Industry Game
By Rian Kochel
Following in the footsteps of countries including Canada and Uruguay, Mexico’s lower house passed a bill in March 2021 to legalize the recreational use of cannabis. A political decision with the potential to create a Mexican green boom: a newly legal industry providing tens of thousands of jobs, millions of dollars in profit for savvy entrepreneurs, and welcome tax revenue for the government.
But many business analysts and economists are more cautious, citing relatively low domestic demand and little chance of exporting the product.
On the other hand, thought leaders at the forefront of shaping this emerging industry remain enthusiastic about the prospect.
Erick Ponce, a Mexican entrepreneur and president of the Cannabis Industry Promotion Group believes the move will, “finally generate income in terms of employment, in terms of the local economy, in terms of taxation.”
According to reports, the Mexican marijuana industry could be worth as much as $3.2 billion dollars annually, and major cannabis companies like Canada’s Canopy Growth are already eyeing the market.
Still, the greatest impact may be more symbolic than monetary. The legal changes would establish Mexico as the world’s largest cannabis market by population size.
As the largest economy to legalize the cannabis to date, Mexico, with roughly 130 million documented citizens, could persuade other countries, including its northern neighbor Uncle Sam, to follow suit.
But the American purist dream of rags to riches doesn’t leave any room for the barriers faced by smaller producers in Mexico. Instead, it suggests that cannabis legalization will not be as effective as it could be in reducing crime.
Mexico’s drug war began in in 2006 after then-President Felipe Calderón tried to dismantle criminal cartels in the state. Much like in here in the U.S., that war still rages on with no end in sight and little to show for it. Small producers left out of the legal cannabis market may continue growing cannabis for the illegal market or look at other illicit crops like opium poppies to make ends meet.
This also complicates the notion that Mexico’s criminal cartels will be subdued in this global political and economic endeavor. Even given that cartels have increasingly turned away from cannabis with a focus shifting to methamphetamine and opioids such as fentanyl for revenue due to the existing growth of the legal cannabis trade in Canada and parts of the US.
Closing one door also opens another. For example, cartels may jump at the opportunity to engage in money laundering or investment in the legal market.
Even if cannabis legalization isn’t the means to end for taming Mexico’s drug cartels, it stands to reduce unnecessary criminal charges for drug possession and contribute to the creation of new jobs and economic growth over the medium to long term.
Regardless of all the facets that tie this quandary together, the most resplendent angle shines from the light of legalization on the regional level. Mexican cannabis legalization will leave the United States sandwiched between two countries with legal marijuana, a situation which is likely to drive expedience on federal cannabis legalization in the US.