Mexico's Supreme Court Decriminalizes Cannabis

The United States is quickly getting left behind as both of its direct neighbors have now legalized cannabis.

In Today’s Issue 💬

→ Mexico’s Supreme Court Takes Action

The Rising Demand For Legal Cannabis

→ U.S Supreme Court Justice Speaks Out

Mexico’s Highest Court Takes Direct Action

After lawmakers failed to act more than two years later, the Mexican supreme court has stepped in to legalize cannabis.

Since 2018, Mexicans have patiently waited on their lawmakers to legalize cannabis after they successfully demonstrated that the prohibition of cannabis was unconstitutional.

On Monday, the supreme court voted to end the criminalization of cannabis on its own with lawmakers in Mexico having failed to pass a legalization bill by a key deadline that had been extended on a number of occasions.

We had known this was going to occur with Minister Norma Lucía Piña Hernández, who serves on the high court having filed a general declaration of unconstitutionality earlier this month which resulted in Monday’s vote.

Having secured an 8-3 victory, the personal possession & cultivation of cannabis is now legal across the nation, however, there remains much work in need of completion before Mexico will have a fully legal cannabis market.

Good news, or bad news?

Senate Majority Leader Ricardo Monreal Avila said in April that if the court were to make a declaration of unconstitutionality before a measure to regulate cannabis was approved, it would result in “chaos.”

“We must not allow ourselves to be pressured by interests” — Senate Majority Leader Ricardo Monreal Avila.

The Opportunity

Mexico has a population of 126 million people, which makes it the largest legal cannabis market in the world, however, in spite of this victory in favor of decriminalizing cannabis — Mexicans still don’t have access to legal cannabis.

Lawmakers missing this deadline may be portrayed as a desire to get the regulations right such that they can prevent large pharmaceutical & tobacco companies from dominating the legal market, and while this might be true — their inability to have this legalisation adopted does not inspire confidence.

Our Take

The level of uncertainty we are seeing in their attempt to create a legal cannabis framework will likely have a significant impact on the amount of capital we will see flowing into this new market.

The cannabis market in Mexico has so much potential with an ideal climate for cultivating cannabis and Mexico could become a global leader in the cannabis industry, if only they can succeed in creating a legal framework.

Consumers Really Like Cannabis

The ever-increasing demand for cannabis globally is a clear sign of the disconnect between the cannabis industry and cannabis stocks.

If the stock prices of cannabis companies were an accurate reflection of the cannabis industry, we would see a continuous increase in the prices of cannabis companies’ stocks, however, this is not the case.

Despite the volatility in the prices of cannabis companies stock prices, the cannabis industry continues to grow year over year, regardless of what challenges are put in front of the industry.

From the inability to access banking services to a global pandemic & cannabis companies consistently having their social media accounts deleted — the cannabis industry continues to thrive.

Ever-Increasing Demand

The sales for cannabis in Canada continue to climb with a staggering $309.7 million CAD being spent on legal cannabis in the month of April alone.

This point is often overlooked as many are of the impression that the Canadian cannabis industry is not going according to plan with the stock prices of many Canadian companies having sharply declined since cannabis was legalized in October 2018.

Our Take

There is significant growth left to go in the region’s cannabis is already legal.

Using Canada as one example, nearly 50% of all sales still occur in the illicit market, and additionally, there remains a very large percentage of the population who remain opposed to consuming cannabis due to the stigmas.

As this stigma continues to be erased over time, alongside the updated regulations many regions are now adopting such that the legal industry can displace the illicit market — legal cannabis sales will continue to increase for the foreseeable future.

The Confusion Surrounding Cannabis In U.S

The cracks continue to appear in the efforts being made to keep cannabis illegal at a federal level in the United States.

The current federal laws for cannabis in the United States highlight the hypocrisy of the democratic principles the nation was founded on.

Despite the fact that some 36 U.S states have now legalized cannabis for medical-use purposes alongside some 18 states who have legalized cannabis for adult use purposes — U.S federal laws have remained unchanged, and a supreme court justice is now taking aim at these outdated laws.

Supreme Court Justice Clarence Thomas said that federal laws against the sale and cultivation of cannabis are inconsistent, making a national prohibition unnecessary.

“A prohibition on interstate use or cultivation of marijuana may no longer be necessary or proper to support the federal government’s piecemeal approach” — Supreme Court Justice Clarence Thomas.

The problem which he is alluding to is one that has been brewing for almost two decades now as more and more states have gone in the opposite direction of the federal laws in place for cannabis.

“Federal policies of the past 16 years have greatly undermined its reasoning,” Thomas added. “The federal government’s current approach is a half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana.”

The core issues this disconnect in State laws vs Federal laws creates are:

  • The inability for cannabis companies to access the banking system which results in cannabis companies having to store very large amounts of cash which in turn makes them clear targets for organized crime.

  • Additionally, cannabis companies are currently forced to pay extremely high taxes, due to their inability to deduct business expenses.

Our Take

We all know it’s just a matter of time until the U.S follows in Canada’s & Mexico’s footsteps and legalizes cannabis at a federal level.

With more & more Americans living in a state where cannabis is either legal for medical or adult-use purposes (or both), we are already seeing the normalization of cannabis across society, and with this, the onus is now on the federal government to play catch up such that U.S cannabis companies are given an equal opportunity to compete on the global stage.


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