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Mexico Cannabis FAQ: Part 2 – Cannabis Business Executive

by Adrián Cisneros Aguilar, attorney at Harris Bricken

Welcome to part 2 of this series on Mexican 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?

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

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

As for the production of cannabis in Mexico, it is generally cultivation activities, and to carry them out, you must start by finding a Mexican partner (49% foreign-owned, 51% Mexican-owned), building a greenhouse (currently only indoor cultivation is allowed), applying for a cultivation license, then import seeds or plants. Prior seed registration/qualification and import permits are required.

For import, it is important to mention that only entities holding a pharmaceutical sanitary license and/or a drug factory license can apply for an import permit. If you qualify, then you must secure facilities (warehouse), transport logistics, and have security protocols in place to ensure imported supplies are guarded at all times. If you wish to import medicines, you must first obtain a medical product health registration for each of the products you wish to import, either by requesting such a registration in your possession or by authorizing it from someone who possesses.

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

As for to sell, it depends on whether you want to distribute (i.e. sell to someone further down the productivity chain, such as a licensed pharmacy) or retail from your own licensed pharmacy/pharmacy. If you distribute, you must obtain a medical product registration for each finished cannabis product before it is imported and distributed to a licensed seller. If you are selling retail, you need storage facilities, safety protocols in place, and an operational pharmacy/drugstore with applicable health permits (business license, health license, control books) required of any establishment selling medicine or drugs.

What might be the legal implications of picking up or delivering retail product orders? Point of sale solutions?

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

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

In view of the foregoing, any medical cannabis product company may sell from abroad to any Mexican person who produces a cannabis prescription duly issued by a doctor authorized to dispense cannabis prescriptions or to sell at retail in the country. This can be accomplished by establishing an establishment like those mentioned above and obtaining the necessary licenses/permits, or by partnering with a Mexican importer, distributor or licensed establishment for indirect sale in the country.

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

Your business must not only be expressly related to cannabis (medical or hemp-related), but also directly related to the activity for which you are applying. This means that, within the scope of what is currently authorized, your company could mention any of the activities currently foreseen by medical regulations (i.e. any link in the production chain, from cultivation to sale for medical purposes) and, possibly, the cultivation, marketing, import and export of hemp.

Companies are not legally required to have a commitment related to cannabis in their statutes, but our experience shows that COFEPRIS ((Federal Commission for the Protection against Health Risks) is very reluctant even to examine applications companies that do not have COFEPRIS will be even more reluctant towards companies that originally had a commitment completely unrelated to cannabis, and have simply changed it to apply for a permit/license (which, by the way, is traceable by a quick search of the Public Commerce Register where companies are mandated by law to record any changes in their corporate structure).

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

Republished with permission from Harris Bricken and Canna Law’s Blog

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