Following Mexico’s Issuance of Medical Cannabis Regulations, Clever Leaves Enters Market

A public company with a strong focus on the international market is stepping into Mexico’s nascent medical cannabis industry.

Clever Leaves, a cultivator, manufacturer and distributor listed on the Nasdaq, announced its entrance into Mexico last month with an active pharmaceutical ingredient (API) supply agreement with CBD Life, beginning with cannabidiol (CBD) isolate.

In 2017, Mexico legalized medical cannabis with tetrahydrocannabinol (THC) concentrations below 1%. But Mexico’s health ministry didn’t pass medical cannabis regulations, including those addressing cultivation and harvesting, until this January. (The country’s supreme court also declared adult-use cannabis prohibition unconstitutional in late June.)

Luisa Conesa, an attorney and cannabis activist, told Reuters of the medical regulations: “[The ] is not aimed at patients growing their own cannabis, it is aimed at pharmaceutical companies producing pharmaceutical derivatives of cannabis which are classified as controlled substances that need prescription.”

Some companies aiming to create products can import cannabis plant material, according to the news source.

A June press release from Clever Leaves said the company’s partnership with CBD Life “is Clever Leaves’ first commercial agreement in the Mexican market, and it comes shortly after regulations were fully approved in the country, providing a strategic growth opportunity in one of the world’s largest pharmaceutical markets.”

Speaking with Cannabis Business Times and Hemp Grower, Clever Leaves CEO Kyle Detwiler said he and others at the company see Mexico as a “great demand center for medical cannabis, for other cannabinoid products.”

The opening of the market is allowing Clever Leaves to get in on the ground floor with shipping cannabis product there. “I think an announcement like our first shipment to Mexico is a reminder that—listen, in other geographies, cannabis hasn’t really reached the saturation—both societally as well as regulation-wise—as it has in the U.S.,” Detwiler said. “A lot of these countries are just beginning their cannabinoid journey.”

Photo courtesy of Clever LeavesDetwiler

Clever Leaves follows in-depth quality procedures to produce the pharmaceutical-grade product the Mexican government requires, Detwiler said, noting the company’s adherence to European Union Good Manufacturing Practices (EU-GMP).

Clever Leaves has about 400 employees, 2 million square feet of greenhouse production and 70 million square feet of expansion potential in Colombia, and more than 100,000 square feet of greenhouse production on 9 million square feet of “agricultural and agro-industrial land” in Portugal, according to U.S. Securities and Exchange Commission (SEC) filings.

“So, we have a smaller operation [in Portugal], but it’s for the production of flower, whereas Colombia’s for the production of extracts right now based on what’s permitted in those two geographies,” Detwiler said.

Simultaneously, Clever Leaves is focused on other operations around the globe, including in the U.S. Its wholly owned subsidiary Herbal Brands, which “manufactures and distributes non-cannabinoid nutraceutical products to more than 15,000 retail locations” across the U.S., per the SEC filings, entered into a partnership with LooperGroup and TruSource Hemp Group in February to import CBD into the U.S.

Detwiler said the goal there is to build upon existing relationships with U.S. to provide them with CBD products, pending greater regulatory clarity in the country.

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