Mexico's legal cannabis business takes next step with CBD-focused firm (updated)

Xebra Brands

10/03/2023 24:50

(Adds comment from government statement)
    By Diego Oré
       MEXICO CITY, March 9 (Reuters) - Mexico's nascent legal
cannabis industry on Thursday welcomed its first company
authorized to grow at commercial scale,  focused on a booming
niche market that mostly sidesteps the mind-altering qualities
of the plant's flowers.
    The local unit of Canada's Xebra Brands  XBRA.CD  is the
first company to obtain permits to cultivate, process, produce
and market cannabis in Mexico, the firm said in a statement.
    The authorizations mark the latest step in a major shift
away from the Mexico's decades-long criminalization of the plant
that was once a major source of revenue for powerful drug gangs.
    However in a potential setback, Mexico's health regulator
COFEPRIS said later on Thursday in a joint statement with the
interior ministry that officials could not vouch for the safety
of the company's plans.
    The statement added that the agencies will seek to cancel
the authorizations due to the health risk they pose. 
    The health regulator had to approve the permits after
Mexico's Supreme Court in late 2021 gave Xebra Brands'
subsidiary Desart MX a partial greenlight to import seeds, and
grow, process, sell and export cannabis products with 1% or less
THC, the plant's psychoactive substance.
    Desart MX, however, is more focused on marketing products
with another of the plant's components known as cannabidiol, or
CBD, which does not make users high but is used to treat
ailments such as insomnia, pain and anxiety.
    COFEPRIS granted final approval in late February, the
company said.
    Xebra Brands said it faces no restrictions where it can grow
cannabis in Mexico, the size of cultivation facilities or
processing volumes.
    "This represents an important moment for cannabis globally,"
Xebra Brands CEO Jay Garnett said in the statement.
    Xebra Brands said it is actively looking for farm land and a
site to build an extraction facility to produce CBD-rich hemp
derivatives.
    In an interview with Reuters in late 2021, the firm's former
president said regulatory authorizations would position Mexico
as the industry's most important North American player.
    In 2021, Mexican lawmakers approved a law to decriminalize
cannabis for recreational, scientific, medical, and industrial
uses, but key regulations remain stalled in the Senate.

 (Reporting by Diego Ore; Editing by David Alire Garcia,
Marguerita Choy and Sonali Paul)
 ((david.aliregarcia@thomsonreuters.com; +52 55 5282 7151;
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