Mexican Supreme Court Legalizes Marijuana

Mexico Cannabis Legalization
Mexico Cannabis Legalization

Marijuana is now legal for recreational use in Mexico after the Mexican Supreme Court declared that the country’s ban on marijuana is unconstitutional. The ruling came after years of delays by Mexico’s legislators to pass a cannabis reform law. What effect will marijuana legalization have on the Mexican economy? And just how quickly will international cannabis operators be able to gain entry into this emerging cannabis market? Keep reading this blog to find out.

Mexico’s Supreme Court Declares Ban on Marijuana for Personal Use “Unconstitutional”

In 2018, Mexico’s Supreme Court ordered the nation’s lawmakers to reform existing law and figure out a way to implement a new national policy on marijuana possession. The deadline for implementing those reforms kept getting pushed back, as the Mexican Legislature repeatedly got stuck trying to sort out the details and logistics of legislative proposals that advanced through the Congress but ultimately stalled. For example, the Senate passed a bill at the end of 2020, but by the time the bill was revised by the Chamber of Deputies and then sent back to the Senate, legislators determined that the amended legislative proposal was unacceptable.

The most recent deadline imposed by the Supreme Court was April 30, 2021, and that deadline came and went without official action by legislators. That’s when the Mexican high court stepped in to effectively legalize cannabis. Justices on the nation’s highest court, also known as the Supreme Court of Justice of the Nation, voted to strike down the ban on marijuana possession and cultivation by an 8-3 margin. The ultimate effect of the court’s ruling is expected to be the decriminalization of marijuana possession by individuals, as well as the legalization of marijuana cultivation for personal use.

Mexican Lawmakers Expected to Pass Comprehensive Cannabis Reform

Although enthusiasm is high in the wake of the court’s ruling, there is belief among industry observers that legislators must take action in order to ensure that the sale of marijuana is regulated. In fact, the Mexican Legislature is still expected to get involved during a special legislative session and pass a law, or multiple laws, to more comprehensively regulate cannabis possession, distribution, and cultivation. The good news is that Mexico lawmakers will have the advantage of seeing the problems that other countries, such as the United States and Canada, have run into with cannabis legalization: lack of equity for minority and economically disadvantaged communities; the stigma attached to prior convictions for possession of marijuana; different ways of defining “cannabis,” “marijuana,” and “hemp”; and conflicts with local laws and regulations.

In the absence of any action by elected officials, Mexico’s Ministry of Health is expected to have limited regulatory powers when it comes to residents who plan to grow marijuana in their homes. Previously, anyone who wanted to grow a small number of marijuana plants at their residence needed to fill out a lot of paperwork and submit an application to the government agency.

What Is the Future of the Cannabis Economy in Mexico?

Ricardo Monreal Avila, the Senate Majority Leader, has previously said that a ruling like this one by the Supreme Court would cause “chaos” because lawmakers might then feel pressured to make quick and imprudent revisions to cannabis laws. The reality is that Mexico lawmakers may now take a closer look at previous iterations of the legalizations measures that stalled on their way through the Congress. For example, the most recent proposal included a provision that would allow anyone over the age of 18 to legally buy and possess up to 28 grams of marijuana. Another provision would allow Mexican residents to grow and cultivate as many as six (6) cannabis plants, as long as those plants were being grown for personal use only. What remains to be seen in any future legislative proposals is how the government would regulate the commercial cannabis market, including how cannabis licenses would be granted, as well as what limits might be placed on quantity and potency of cannabis sold at retail dispensaries.

Regardless of what form the cannabis legalization law in Mexico takes, the global cannabis industry is certainly paying close attention. The move by the Mexican Supreme Court to legalize cannabis has been met with a great deal of excitement among those who have long advocated for full legalization. The expectation is that the legal sale of marijuana for recreational use will create a booming cannabis economy, which should have a positive impact on the national economy. Cannabis operators are already looking at Mexico as a major opportunity to make inroads in a burgeoning market and lay the groundwork for additional opportunities as the Latin American nation’s cannabis economy inevitably grows and expands in the years ahead.

Contact Scythian Cannabis Real Estate Today

While the recreational cannabis industry is just getting started in Mexico, there is already a thriving cannabis market north of the border in the United States. Scythian Real Estate is a Denver-based cannabis real estate fund that helps cannabis operators in states where marijuana is legal for recreational and/or medical use, including Colorado, North Dakota, and Pennsylvania. If you are a cannabis company looking to expand into a new region or territory, email Scythian today for more information.


Colorado Cannabis Sales Set Record in Q1 2021

Colorado Cannabis Sales
Colorado Cannabis Sales

Colorado continues to set new records when it comes to cannabis sales. Data maintained by the state government shows that marijuana sales in Colorado surpassed $560 million during the first three months of 2021, marking a quarterly high. The staggering success of legal cannabis bodes well for cannabis dispensaries and operators Colorado, as well as the cannabis industry more generally. Keep reading this blog to learn more.

Recreational & Medical Marijuana Sales Hit Record Highs in Colorado

Sales data from the first quarter of 2021 shows that cannabis is more popular than ever in Colorado. Dispensaries that sell recreational marijuana reported more than $560 million in sales in January, February, and March of this year. The cannabis sales figures come from the Colorado Department of Revenue, which tracks retail sales through tax revenues collected from dispensaries. (While the state keeps track of both recreational and medical cannabis sales, it does not monitor sales figures for cannabis accessories or related products such as pipes and grinders.)

In March of 2021, dispensaries reported approximately $207 million in cannabis sales. These sales came with three different taxes imposed by the state:

  1. Sales Tax: There is a 2.9% sales tax on any recreational or medical cannabis sold in dispensaries.
  2. Retail Tax: Colorado imposes a heavy 15% tax on the front-end for cannabis operators who sell adult-use cannabis in dispensaries.
  3. Retail Excise Tax: There is also a 15% tax paid directly by the businesses, which is similar to the tax typically imposed on goods like gas, alcohol, and cigarettes.

Cannabis Sales Generate Tax Revenues to Fund Colorado Government Programs

The remarkable surge in Colorado cannabis sales during the COVID-19 pandemic merely continued an upward trend that has been clear since adult-use cannabis became legal in 2014. Since that official beginning to the legal Colorado cannabis market, the state has generated more than $1.7 billion in tax revenue from dispensary sales.

The popularity of cannabis among Colorado residents and tourists has pumped money back into Colorado: the state uses cannabis tax revenues to fund the public school system, health care, police departments, important infrastructure projects, and other state and local government programs in need of financing. Under laws established by Colorado legislators when marijuana was first made legal in 2014, the state must place at least 71% of all cannabis sales tax revenues into a Marijuana Tax Cash Fund, and this fund is then used for many of these government programs. Another 12% of sales tax revenues must be used exclusively for the Colorado Public School Fund, and the remaining 17% goes into a General Fund to support health care, human services, and the state’s correctional system.

Contact Scythian Cannabis Real Estate for Information on Sale-Leaseback Deals

Scythian Real Estate is a Denver-based cannabis real estate fund that helps sophisticated cannabis operators get needed financing through sale-leaseback transactions. Scythian works with large cannabis companies across the U.S., including operators with a presence in the nation’s most mature cannabis market in Colorado. If you are a cannabis company interested in adding capital, email Scythian today.