In October last year, Mexican courts ruled that the ban of marijuana was “unconstitutional,” arguing that adults of legal age have the right to decide “without any interference what kind of play activities they wish to carry out.”
Mexico is the second-largest economy in Latin America, presenting a huge opportunity for Licensed Producers across the globe. Former Mexican president Vicente Fox, who sits on the board for Khiron Life Sciences (TSXV:KHRN) (OTCQB:KHRNF), sees legal cannabis as an opportunity for transformation in the country.
“When it’s no longer illegal, you can put in a lot of research and development — it becomes an industry,” Fox said.
And bringing this industry full-steam into Latin America is on the minds of many pot stocks in our portfolios. Here is a closer look at the companies patiently preparing for the official opening of the Mexican cannabis market:
PharmaCielo Ltd. brings cannabis oils to Mexico with new joint venture
PharmacCielo (TSXV:PCLO) announced a new joint venture with Mexico-based Mino Labs on Monday. The new company, PharmaCielo S.A. de C.V., intends to export cannabis oils and other derivatives to Mexico as early Q4 of 2019.
“Ultimately, our plan is to bring our high-quality cannabis oils to Mexico," David Attard, CEO of PharmaCielo, said in Monday’s press release. “This enables us to focus our efforts and financial investment on the creation of the highest-quality oil-based health and wellness products, which when combined with the expertise of Mino Labs, will enable [us] to participate in the advancement of the medicinal cannabis industry in Mexico."
Mino Labs already possesses all of the necessary licenses for pharmaceutical products in Mexico, and the company currently supplies retail chains, independent drugstores, and government-owned pharmaceutical outlets.
The joint venture will give PharmaCielo access to these patients and put their brand of cannabis oils on shelves throughout the country.
According to Attard, it is this “local expertise” that will help the pot stock develop more market-specific strategies and products to match the needs of the up and coming Mexican cannabis industry. More specifically, PharmaCielo wants to create a “positive economic impact” on the country with this venture, which could boost the brand’s reputation in Latin America.
Aurora Cannabis acquires Mexico’s first licensed cannabis manufacturer
In December, Aurora Cannabis Inc. (TSX:ACB) (OTCQB:ACBFF) entered into a Letter of Intent to acquire Farmacias Magistrales, the first cannabis company to receive a license to import, manufacture, store, and distribute cannabis in Mexico. Acquiring them gives Aurora first-mover advantage and could put them a leap ahead of the competition in Latin America.
"Farmacias has a large distribution network of both retail outlets and pharmacies, which will enable us to quickly scale up our operations across Mexico. Integrating Farmacias with our operations in Canada and Latin America will not only accelerate growth, it will build substantial long-term shareholder value,” said Aurora CEO Terry Booth in a statement.
Farmacias is already positioned as a major cannabis competitor. The company operates a 12,000 square foot facility in Mexico City and has since acquired a strong distribution and research network that has the potential to reach 80,000 different retail points. Once the transaction is final, Aurora will be the exclusive supplier of THC medical products to more than 130 million people.
This is a strategic move on Aurora’s part. Import, sale, and local cultivation of cannabis flower is still illegal in Mexico, at least until the laws change. But with Farmacias’ license for concentrates and oils, Aurora is able to bypass that barrier and bring their brand of cannabis derivatives into a brand new market. And this first-mover status could make them one of the most recognizable brands in Latin America.
Khiron Life Sciences launched the first nutraceutical products in Mexico
With former president Vicente Fox on the board, it should come as no surprise that Khiron Life Sciences is preparing their portfolio for the new Mexican market. The pot stock launched its first line of nutraceutical CBD products in Mexico last month, and the license covers both the import and the sale of three specific CBD products through Khiron’s subsidiary Kuida Life Mexico.
Mexico has the largest commercial consumption of dietary supplements in the world, and Khiron’s three new products, which help with sleep, digestion, and stress respectively, will be marketed across the country accordingly.
"Mexico is a priority market for Khiron, and through a previously announced distribution deal with Farmalisto, the region's leading digital drugstore, we are positioned to leverage their e-commerce capabilities to bring our products to customers across the region,” Alvaro Torres, Khiron CEO, clarified in the press release in December.
While this specific deal does not cover THC products, it places Khiron’s figurative foot in the door and puts their brand of cannabis in the hands of Mexican consumers. Brand recognition is one very big way to stand out among the competition and being one of the first movers in a market this big could put Khiron over the edge.
Having a former politician on the board of directors does not hurt either. Inside knowledge of Mexico’s commercial industries is a strategic advantage other pot stocks cannot readily claim, an advantage that makes Khiron look like a very favorable addition to any investor’s portfolio. But regardless of which of these pot stock investors are looking at now, it is safe to say that Mexico will be an important and profitable variable for investors to consider.