Cannabis data, analytics, and intelligence firm Headset estimates Mexico’s legal cannabis market could be worth $843.7 million with an average item price of $10.22, according to a report release this week.
While the market would be the world’s largest by population – Mexico’s adult population is 76.3 million – the market would fall short of being the world’s most valuable as California would remain tops in the world with a $1.47 billion market, the report says. California’s adult population is about 29 million.
The report notes that Mexico’s push toward legalization was sparked by a 2018 Supreme Court decision rather than broad popular support – as is the case in most U.S. states where legalization is driven by ballot initiatives approved by voters. In Mexico, support for legalization is 40%, the report says.
The first six months of Mexico’s market would be marked by supply constraints, following similar trends in U.S. states that have legalized cannabis and Canada, which passed its legalization reforms in 2018.
Headset estimates that Mexico’s cannabis market would mirror the first year of Canada’s market by not initially allowing edibles and beverages – which the Great White North allowed one year after permitting flower sales.
“As a result, we expect the Mexican market to resemble the Canadian market, which allowed only combustible inhalables, topicals, and ingestible-oils to start. These markets usually begin with a 90% or more market share to flower and pre-rolls as these products are the most familiar and easiest to produce. We usually see a rapid take off of non-combustible inhalables (such as vapor pens and concentrates), in months 4-6 as the products are finally through the manufacturing process.” – Headset, “Projections for Mexico Adult-use Cannabis Sales,” Jan. 2021
While the Mexico Supreme Court has on several occasions set a deadline for lawmakers to approve legalization legislation, it also allowed extensions for the implementation of the reforms, most recently last December – about a month after the Senate approved a legalization measure.
Headset suggests that while new U.S. markets often experience supply constraints, Mexico may have an edge because the nation has long been a “major cannabis producer.” However, the government’s plan to require consumers to register to by cannabis could impact demand through legal channels.
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