Mexico’s Supreme Court Ruling Just Gave This Cannabis Company First Mover Advantage

On December 1, the Supreme Court granted Xebra Brands’ (CSE:XBRA) injunction that now positions the company has an outright first mover advantage in the Mexican CBD and CBG markets. It now authorizes it as the first in Mexico to legally cultivate hemp, and includes the right to commercialize hemp derived cannabinoids, such as CBD and CBG. Other top cannabis companies to keep an eye on include 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).

The Supreme Court decision is irrevocable and cannot be appealed.

Next the Supreme Court will mandate the Federal Circuit Court that previously heard the case, to enforce the Supreme Court's final decision and direct the Mexican Health Regulatory Agency (COFEPRIS) to grant Xebra all authorizations. Xebra expects this process to be completed as soon as practicable.

As a result of the granting of the injunction and Mexican Law, Xebra Mexico is the only company in Mexico that will be authorized to legally carry-out the following activities: import cannabis seeds, cultivate cannabis, process cannabis, extract cannabinoids, and manufacture cannabis products. Xebra Mexico could also sell cannabis products within Mexico and for export. Xebra believes its first-mover-advantage in the Mexican CBD and CBG market could last 1 to 3 years. Commercialization of high-THC cannabis remains prohibited in Mexico; however, Mexican Congress is in the process of debating a bill to fully legalize. Earlier this year, possession of small amounts of cannabis was decriminalized.

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.

There is a significant amount of misinformation circulating about the legal status of cannabis in Mexico. While personal possession of small amounts of cannabis has been decriminalized, and legalization is underway, the fact is that until today's Supreme Court decision in favor of Xebra Mexico, commercial cannabis activities have been very limited and presently fall into 3 categories:

INDUSTRIAL USE - Only Xebra Mexico will be authorized to legally cultivate and process hemp, and manufacture CBD and CBG products such as tinctures, oils, topicals, edibles, beverages, concentrates, distillates, emulsions, and biomass, and can commercialize the cannabis flower. To the best of Xebra's knowledge, perhaps only two other companies in Mexico presently legally have limited offerings of CBD products on shelves, which they import into Mexico for distribution and sale. The companies obtained those rights through a legal process; however, they cannot cultivate or manufacture, and their right was not granted by the Supreme Court and can therefore be revoked by authorities at any time. No company in Mexico can do anything with THC at this time under the industrial category.

MEDICINAL USE - This regulation under the General Health Law (Law of 2017) was enacted in January 2021. This category applies ONLY to the pharma industry and includes THC and all other cannabinoids such as CBD and CBG. Cultivation and processing only for the manufacture of cannabis pharmaceutical drugs is allowed, however in practice, to approve a cannabis drug under this category, lengthy many-year human pharma-trials are required, so in essence it is not expected that any company will cultivate or commercialize under this category in the foreseeable future. This category also includes research licenses granted to labs, universities, big pharma etc.

ADULT USE - No legal framework exists for the commercialization of adult use cannabis however, Congress is debating a bill, and federal legalization may occur in 2022. If a legal framework is approved, it could be up to 3 years before any company can commence operations, due to the fact that a lengthy application and approval/inspection process would likely be necessary.

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.

Other related developments from around the markets include:

Aurora Cannabis, the Canadian company defining the future of cannabinoids worldwide, announced the naming of the Company's new genetics licensing business unit – Occo – a leading innovator in the scientific discovery and commercial advancement of novel cannabis cultivars, backed by Aurora's state-of-the-art breeding and genetics facility in Comox, British Columbia. Occo, derived from the Latin word for 'tilling of the field,' refers to the brand's reverence for the cannabis plant, and its mission to support the people who grow and consume it. With the largest catalogue of high-quality genetics available for licensing in Canada, Occo is aptly positioned to reach its goals of further developing the scientific understanding of cannabis, commercializing high-quality products, providing value for cannabis growers, and helping to realize the full potential of the cannabis plant.

Canopy Growth, a world-leading diversified cannabis, hemp, and cannabis device company, unveiled a new lineup of premium flower offerings across its 7ACRES, 7ACRES Craft Collective and DOJA brands, including a range of national and limited-edition craft strains. These sought-after strains meet the growing demand of the Canadian flower market and deliver the Company’s commitment to deliver on consumers’ evolving preferences. Expanding on the successful 7ACRES portfolio, the Company unveiled two new national strains – 7ACRES Wappa 49 and 7ACRES Papaya – grown in the Company’s state-of-the-art hybrid-greenhouse cultivation facility in Kincardine, Ontario and now available in 7 gram formats. Following the original release of 7ACRES Wappa in 2018, which quickly grew in popularity, the 7ACRES team brought the strain back with a new phenotype – #49 – selected in-house for its pungent aroma and high THC potency.

Tilray Inc. announced that two of its leading brands, SweetWater Brewing Company and RIFF Cannabis, have collaborated for the exclusive U.S. launch of SweetWater RIFF -- SweetWater’s first ready-to-drink (RTD) cocktail and its inaugural entry into the spirits category. SweetWater RIFF brings a unique twist on RTD vodka sodas in two offerings: SweetWater RIFF Citrus and SweetWater RIFF Strawberry Mule. “SweetWater’s entry into the spirits category reflects the essence of the SweetWater brand: original, compelling and enticing,” said Brian Miesieski, SweetWater’s Chief Marketing Officer. “SweetWater RIFF delivers a great-tasting ready-to-drink cocktail with a premium taste developed in partnership with RIFF’s own highly curated, expertly made approach. We are incredibly excited to expand and create something that is a great alternative to our incredible selection of beers and seltzers.”

OrganiGram Holdings 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. We are excited for what Fiscal 2022 holds for Organigram. Looking ahead, we expect to continue our momentum as we maintain our focus on increased points of distribution, bringing new, impactful and innovative products such as Edison Jolts, SHRED and SHRED’ems to market, and improve our ability to fulfill the growing demand for our products.”

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.

Contact Information:
[email protected]