18 June 2021
In the first quarter of 2021, we noticed a significant spike in interest in the Mexican cannabis market. The catalyst behind the increased interest was related to legal cannabis legislation that was quickly advancing through the Mexican government.
The legislation garnered support from Mexico President Andrés Manuel López Obrador and all signs were pointing towards legalization After the bill hit a snag in the Senate, Mexican lawmakers were unable to meet a Supreme Court deadline to end cannabis prohibition.
After lawmakers missed the deadline and failed to ask for an extension, rumors about a special legislative session after Mexico holds elections this month started to surface. We expect the passing of the legislation to prove to be a catalyst for the entire cannabis sector and have been closely following how the bill advances in the back half of 2021.
According to a study that was conducted by Grand View Research, the global legal market for cannabis could be worth $73.6 billion by 2027. With markets like Mexico advancing legal cannabis legislation, we believe the size of the cannabis market could be larger than what Grand View predicts and will monitor how the sector evolves from here.
According to leading cannabis market research firm New Frontier Data, Mexico’s annual cannabis sales would be between $1.8 billion and $2 billion. Today, we want to highlight two cannabis companies that have different business models and are focused on the Mexican cannabis market.
Cannabics Pharmaceuticals: Awaiting Patent Approval in Mexico
Cannabics Pharmaceuticals Inc. (OTCQB: CNBX) is a US company that conducts research and development (R&D) in Israel and is laser focused on the development of cancer related cannabinoid-based therapies. The company is highly focused on creating a portfolio of valuable intellectual property (IP) and patents.
A few weeks ago, Cannabics reported an important milestone and announced that its patent for a System and Method for High Throughput Screening of Cancer Cells was granted by the European Patent Office. Concurrent with the announcement, the company reported to have been granted corresponding patents under the same title in Israel and in South Africa.
One of the most exciting aspects of the Cannabics story is related to the opportunity in Mexico. The company’s patents are under examination in Mexico and we expect a positive response to serve as a catalyst for growth. Last month, Cannabis received a Notice of Allowance from the Mexican Patent and Trademark Office (IMPI) and we will be closely monitoring how the management team is able to drive the story forward.
Canopy Growth: A Mexican Cannabis Leader in the Making?
Canopy Growth Corporation (WEED.TO) (CGC) is a potential beneficiary of a changing legal landscape in Mexico. We believe the company will be a beneficiary due to the relationship that it has with Constellation Brands (STZ).
With more than $2 billion of cash on the balance sheet, the Canadian cannabis producer is well positioned to acquire strategic assets and expand its footprint in Mexico. We believe the management team is focused on strategic markets like Mexico and will monitor how the team is able to position the business for growth.
A Burgeoning Market to be Aware of
We believe the Mexican cannabis industry is not even in the first inning of a major growth cycle and this is a market that we are closely following. Over the next year, we expect to see large-scale US and Canadian cannabis operators expand into Mexico and this is a trend that our readers need to be aware of.
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