Jorge Javier Romero Vadillo, a political scientist at Mexico’s Autonomous Metropolitan University. And “I don’t think this regulation process is going to substantially increase demand.”

The new law’s strict licensing requirements for cultivating, packaging and selling marijuana could keep small farmers and vendors out of the licit market, according to Mr. Romero.

“With the rules they want to apply, which are super restrictive, they’re going to open up a tiny market,” he said. “They’re rules that are so strict, with a barrier for entry that’s so high, that few are going to opt for entering the legal market.”

California, which legalized recreational marijuana in 2018, has had similar teething troubles: In the first year of legalization, legal vendors in the state sold $500 million dollars less worth of marijuana than in the year prior, when it was only permitted for medical use.

Strict regulation and high taxes kept the majority of California’s producers and vendors in the gray or black market, according to Daniel Sumner, director of the agricultural issues center at the University of California, Davis. In many communities, marijuana-related businesses faced fierce local opposition.

may be in medicinal cannabis, which has been legal in Mexico since 2017, as well as industrial hemp, which the new bill also regulates and could be used to produce everything from plastics to paper.

“The market for marijuana is a very small market,” said Guillermo Nieto, president of the National Association for the Cannabis Industry, a Mexico City-based trade group. “Agriculturally, it’s not going to help us like the legalization of industrial hemp.”

In the short-term, some businessmen say, Mexico’s biggest gains may be doing what Mexico already does best: manufacturing — in this case, potentially producing cannabis products like nutritional supplements and cosmetics.

Still, the greatest impact may be more symbolic than monetary: As the largest economy to legalize the drug to date, Mexico, with about 128 million people, could encourage other countries, including its northern neighbor, to follow suit.

“Sometimes it’s nerve-racking to be the first person to take a step into a pond that might be infested with sharks,” said Mr. Miron, the Harvard professor. “But if four or five other people have done it and it’s OK, then more people are going to give it a try.”

View Source