Months ago, Mexico’s Supreme Court decriminalized the recreational use of cannabis, calling prohibition unconstitutional. Now, there’s speculation the Senate in Mexico could soon legalize cannabis sales in the country, as well. In fact, according to Marijuana Moment, “Senate Majority Leader Ricardo Monreal Avila of the ruling MORENA party has been pushing for the reform and recently said that there’s agreement among leading lawmakers to prioritize legislation to regulate cannabis.” Even better, with the higher court ruling, and potential legislation, Mexico could become one of the hottest cannabis markets in the world. Helping, according to New Frontier Data, “Mexico is the second-most populated country in Latin America, with more than 1.4 million cannabis consumers, including nearly 850,000 regular users. Mexico’s total potential market revenues are substantial.” All could be substantial catalysts for companies such as Xebra Brands (CSE:XBRA), Aurora Cannabis (NASDAQ:ACB)(TSX:ACB), Canopy Growth (TSX:WEED)(NASDAQ:CGC), Tilray Inc. (NASDAQ:TLRY)(TSX:TLRY), and OrganiGram Holdings (NASDAQ:OGI)(TSX:OGI).
Xebra Brands’ (CSE:XBRA)(OTC:XBRAF) Progressing Quickly with CBD and CBG in Mexico
Xebra Brands Ltd., a cannabis company, provides and update on its Mexican activities. Xebra’s wholly owned Mexican subsidiary, Desart MX, SA de CV, has been granted an injunction by the Mexican Supreme Court, that has positioned it with an outright first-mover-advantage in the Mexican CBD and CBG market. Official licenses will be granted by the Mexican Health Regulatory Agency (COFEPRIS) in due-course.
The Supreme Court decision is irrevocable and cannot be appealed. Mexico is on a path to full cannabis legalization, likely in 2022, however Xebra’s injunction does not depend on legalization. In fact, the longer Mexico takes to legalize then the longer Xebra’s first mover advantage will be. Once a legal framework is adopted by Congress in Mexico, it could be up to three years before any entity (besides Xebra), can commence any commercial cannabis activities, due to the long approval process that applicants will be subject to; this lengthy process was the case in Canada, Colombia and elsewhere, and is very likely to be the case in Mexico as well. The Mexican Senate and the Chamber of Deputies are expected to continue debating a proposed cannabis bill in February 2022; however, it seems that the debate could be protracted.
Xebra is moving quickly to take advantage of its absolute first mover advantage. Discussions are underway to secure up to 300 hectares of suitable land for cultivation, and multiple Canadian and American companies with cannabis processing and extraction expertise have expressed an interest in partnering in Mexico. Manufacturing joint-venture opportunities with established Mexican parties have been identified, and distribution channels are being explored.
Xebra Mexico’s injunction applies specifically to the industrial cannabis sector, and explicitly to cannabis with low-levels of THC (under 1%), therefore, in practical terms, to hemp cultivation and processing, and to the manufacture and sale of mainly CBD and CBG products, such as tinctures, oils, topicals, edibles, beverages, concentrates, distillates, emulsions, and biomass etc., and certain uses of the cannabis flower.
Xebra believes Mexico has the potential to be one of the largest near-term country cannabis consumer markets in the world. Mexico is also within the North American free trade zone (USMCA), giving it considerable cultivation and product manufacturing cost advantages over Canada and the United States. Xebra is of the opinion that there is sufficient precedent with many agricultural crops and manufactured products, to suggest that there is a possibility that ultimately the majority of North American industrial scale cannabis production activity will occur in Mexico. More information will be provided on Xebra’s Mexican plans in due-course.
Other related developments from around the markets include:
Aurora Cannabis, a Canadian company defining the future of cannabinoids worldwide, together with 22nd Century Group, Inc. announced a three-way non-exclusive agreement to license biosynthesis intellectual property to Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) ("Cronos Group"), intended to assist in the advancement of research and development on the biosynthesis of cannabinoids. Biosynthesis, a process common in the pharmaceutical industry, involves using living micro-organisms to convert simple substances into complex compounds. Through biosynthesis, cannabinoids, particularly those that are rare such as cannabigerol (CBG), cannabichromene (CBC) and cannabinol (CBN), are expected to be produced efficiently and reliably at high levels of purity.
Canopy Growth has entered into an agreement to divest its subsidiary business, C³ Cannabinoid Compound Company GmbH to Dermapharm Holding SE, a European pharmaceutical company headquartered in Grünwald, Germany. The C³ business develops and manufactures pharmaceutical products and is comprised of Spectrum Therapeutics GmbH, based in Neumarkt-in-der-Oberpfalz, Germany, THC Pharm GmbH The Health Concept, based in Frankfurt, Germany, and Spectrum Therapeutics Austria GmbH, based in Vienna, Austria. With the divesture of C³, Canopy Growth is continuing its evolution into a CPG-modelled organization and furthering its strategy of driving focus and consistent business across its core markets. The Company will continue to leverage its high-quality supply of Canadian cannabis products for the medical channel in its core international markets, including Germany, while also serving adult-use consumers in Canada.
Tilray Inc., a leading global cannabis-lifestyle and consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, announced the strategic acquisition of Breckenridge Distillery, a leading distilled spirits platform located in Breckenridge, Colorado widely-known for its award-winning bourbon whiskey collection and innovative craft spirits portfolio. Tilray expects the acquisition to be immediately accretive to EBITDA. Irwin D. Simon, Chairman and CEO, said, "Tilray’s strength lies in our ability to identify and significantly expand leading CPG lifestyle brands that resonate powerfully with consumers. Breckenridge Distillery is an iconic addition to our platform in this respect based on its portfolio of award-winning spirits, passionate consumer engagement, and a strong sales and distribution network. We see tremendous potential for Breckenridge and our existing SweetWater brand to complement each other, expanding their respective reach and driving further profitable growth in our beverage alcohol segment.”
OrganiGram Holdings, a leading licensed producer of cannabis, announced its results for the fourth quarter ended August 31, 2021. “The results in Q4 Fiscal 2021 demonstrate the momentum we have achieved from our efforts to lead innovation and increase efficiencies. In the quarter, we introduced exciting new products that were embraced by consumers and we achieved higher crop yields at a lower cost” said Beena Goldenberg, Chief Executive Officer. “We are particularly pleased with our market share gains in the quarter to become a #4 LP and will build on these successes into Fiscal 2022.”
Legal Disclaimer / Except for the historical information presented herein, matters discussed in this article contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Winning Media is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. For making specific investment decisions, readers should seek their own advice. Xebra Brands has paid three thousand five hundred dollars for advertising and marketing services to be distributed by Winning Media. Winning Media is only compensated for its services in the form of cash-based compensation. Winning Media owns ZERO shares of Xebra Brands. Click here for disclaimer.
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