Mexico Cannabis FAQ: Part 2

Welcome to Part 2 in this series on Mexico cannabis and frequently asked questions. If you missed us yesterday, Part 1 can be found here.

What are the requirements to start producing, processing and selling cannabis?

Right now, only medical use is fully legal in Mexico, so the requirements discussed here will be those related to medical cannabis.

First, it is important to set up a Mexican cannabis company: as mentioned above, application requirements are applicable/can be complied with only by Mexican companies.

As for producing cannabis in Mexico, this usually refers to cultivation activities, and to conduct them you should start by finding a Mexican partner (49% foreign ownership, 51% Mexican ownership), build a greenhouse (right now only indoor growing is allowed), apply for a cultivation license and then import seeds or plants. Prior seed registration/qualifications and import permits are needed.

To import, it is important to mention that only entities with a Pharmaceutical Sanitary License, and/or a Medicine Factory License can apply for an import permit. If you qualify, you then need to secure facilities (warehouse), transport logistics and have security protocols set up to ensure imported supplies are guarded at all times. If you wish to import medicines you first need to secure a medical product health registration for each of the products you wish to import, either by applying for such registration owned or by licensing it from someone who has it.

If you wish to process cannabis, you must obtain a processing license, import raw materials (you cannot buy them domestically because there are no Mexican raw material suppliers at the moment), obtain all the non-cannabis Government permits/licenses necessary to operate as a factory and sell the final derivative/product to duly licensed cannabis medicine distributors or to pharmacy chains.

As for sale, it depends on whether you would like to distribute (i.e. either sell to someone down the productive chain, like a licensed pharmacy), or sell retail in your own licensed drugstore/pharmacy. If distributing, you need to obtain medical product health registration of every cannabis end product prior to its import and distribution to a licensed seller. If selling retail, you need warehousing facilities, security protocols in place and an operational drugstore/pharmacy with applicable sanitary permits (business license, sanitary license, control books) required from any establishment selling medicines or drugs.

What could be the legal implications of retail product order pickups or delivery? Point of sale solutions?

The general rule is that for medical use (which is the only thing fully legal at the moment) the only establishments allowed to sell at retail are pharmacies, drugstores and the like.

Another thing to consider is that medical products can only enter the country through authorized ports of entry and once the appropriate authorizations for medical product health registration and import permits for each product to be imported into the country have been obtained (see previous question). Delivery via mail or parcel is prohibited.

With the aforesaid in mind, any cannabis medical product company can sell from abroad to any Mexican individual who produces a cannabis prescription duly issued by a physician licensed to issue cannabis prescriptions or retail sale in the country. This may be accomplished by setting up an establishment like the ones mentioned above and obtaining the necessary licenses/permits, or partnering with a Mexican importer, distributor or licensed establishment for indirect sale in the country.

When you form the company what should the official business of the company be listed as?

Your corporate undertaking should be not only expressly related to cannabis (medical or hemp-related), but also directly linked to the activity you are applying for. This means that, under what is currently allowed, your undertaking could mention any of the activities currently provided for in the Medical regulations (i.e. any link in the productive chain, from cultivation to sale for medical use) and, potentially, growing, commercialization, import and export of hemp.

Companies are under no legal obligation to have a cannabis-related undertaking in their bylaws, but it has been our experience that COFEPRIS is very reluctant to even review application materials of companies who do not have such undertaking. COFEPRIS will be more reluctant still of companies that originally had an undertaking completely unrelated to cannabis, and merely changed it to apply for a permit/license (something that, by the way, is  traceable by a quick search in the Public Commerce Registry where companies are mandated by law to record every change in their corporate structure).

We can reasonably expect the same attitude from other agencies in the future. It is more advisable to set up a Mexican cannabis company, with a cannabis undertaking adapted to your particular activity, from scratch.