LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Tuesday, February 2, 2021

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Tuesday, February 2, 2021

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Will Legalizing Bolsonaro Allies Chief Corporate Affairs Officer, Grubhub Win Top Positions Joyce Chang Global Head of Research, Medical Cannabis in Brazilian Senate JPMorgan Chase & Co. & Lower House Paula Cifuentes Director of Economic & Fiscal Affairs, Work for Mexico? Legislators endorsed by Brazilian Latin America & Canada, President Jair Bolsonaro won Philip Morris International the top posts in both chambers Marlene Fernández of Brazil’s Congress. The Senate Corporate Vice President for chose Rodrigo Pacheco, and the Government Relations, Arcos Dorados (McDonald’s) Chamber of Deputies selected Arthur Lira. Peter Hakim President Emeritus, Page 2 Inter-American Dialogue Donna Hrinak Senior VP, Corporate Affairs, ECONOMIC Royal Caribbean Group White House to Jon E. Huenemann Former Corporate and Release $1.3 Billion Government Senior Executive Last month, Mexico’s health ministry published rules to regulate the use of medicinal cannabis in Puerto Rico Aid James R. Jones in the country. // Image: Esteban López via Unsplash. Chairman, The aid was originally meant for Monarch Global Strategies reconstruction after Hurricane Craig A. Kelly Mexico’s health ministry in January published rules to Maria hit the U.S. territory in 2017. Senior Director, Americas It will now be used to protect Int’l Gov’t Relations, Exxon Mobil regulate the use of medicinal cannabis, a major step in a against future climate disasters. John Maisto wider reform that is set to create the world’s largest legal Director, U.S. Education Page 3 Finance Group Q cannabis market. The new regulations allow pharmaceutical

Nicolás Mariscal companies to begin doing medical research on cannabis products. What POLITICAL Chairman, Grupo Marhnos are the next steps in Mexico’s legalization process? Will the efforts spur Haiti May Allow Thomas F. McLarty III significant investment in Mexico, and what sorts of regulations does Diaspora Chairman, the market need? What lessons can Mexico draw from other countries McLarty Associates Members to Beatrice Rangel in the region, such as Uruguay and Canada, that have decriminalized or Director, legalized both medicinal and recreational use of marijuana? Seek Presidency AMLA Consulting LLC The change could be among those Jaana Remes up before voters in a new con- Partner, McKinsey Global Institute Luis David Suárez Rodríguez, president of the Mexican stitution, said President Jovenel Ernesto Revilla Association of Cannabinoid Medicine (AMMCANN): “Can- Moïse. Head of Latin American nabinoid-based medicine (CBM) is already the law of the Page 2 Economics, Citi Gustavo Roosen land. Companies or individuals are already able to apply for Chairman of the Board, A licenses to participate in the research, production, import, retailing and Envases Venezolanos Andrés Rozental distribution of CBM. The authorities have yet to streamline the bureaucra- President, Rozental & cy around this. It could take a few months. We also have to wait for the Asociados General Cannabis Law, due to be ready in April, that should regulate adult Shelly Shetty Managing Director, Sovereigns and industrial uses of cannabis. The two laws complement each other; we Fitch Ratings are halfway there. We believe these efforts will spur investment in Mex- ico. The CBM regulation contemplates the possibilities of foreign companies participating in the industry, for example, by helping develop CBM formulations and through partnerships with local growers to produce raw cannabis. We need these companies, not only as economic resources, but more importantly to learn from their experiences in growing medi- Moïse // File Photo: Haitian Government. Continued on page 3

POLITICAL NEWS NEWS BRIEFS Haiti May Allow Bolsonaro Allies Diaspora Members Guyana Won’t Engage in Venezuela Talks Before Win Top Positions to Seek Presidency Fishermen’s Release: Ali in Brazil’s Congress Proposed amendments to Haiti’s constitu- Guyanese President Irfaan Ali has said his tion could allow Haitians living outside their government will not engage in bilateral talks Allies of Brazilian President Jair Bolsonaro on native country to run for president and other with Venezuela until it releases 12 Guyanese Monday won the top positions in both houses high-ranking offices, President Jovenel Moïse fishermen who he said were illegally detained of Brazil’s Congress, which is expected to help said Monday, the Associated Press reported. by the government of President Nicolás Madu- Bolsonaro fights efforts to impeach him, the Moïse made the remarks during a public ro last month, the Jamaica Observer reported Associated Press reported. The Chamber of address during which he reiterated that he today. “We will continue to look for a peaceful Deputies selected Arthur Lira of the cen- would remain in office until February of next solution to Venezuela’s aggression,” Ali said ter-right Progressives party as its president, year, the wire service reported. He also urged in an address to the nation over the weekend. while the Senate selected Rodrigo Pacheco of Haitians to support the drafting of a new The fishermen were arrested on waters that the center-right Democrats party as its leader. constitution, an issue that Haitians will vote on both countries claim, but which have generally Any move to impeach Bolsonaro would have to in a referendum in April. “It’s time to change been recognized as part of Guyana’s exclusive begin in the lower chamber. Outgoing Chamber it,” said Moïse. ‘We can’t continue like this. The economic zone. of Deputies President Rodrigo Maia has been country is paralyzed.” The proposed changes a tough critic of Bolsonaro, but he has rejected to the constitution are expected to be made calls for ousting Bolsonaro, the AP reported. public this week. Opposition leaders have Mexico’s Cemex to Sell In Monday’s vote, Lira garnered 302 votes urged Moïse to leave office this Sunday, saying among his colleagues in the lower house, while his five-year term began when former President 24 Concrete Plants in Deputy Luiz Felipe Baleia Rossi received 145. Michel Martelly’s term ended in February 2016. France to LafargeHolcim Lira also leads the Centrão bloc, a group of 230 However, the country’s election to replace Mexican cement producer Cemex announced legislators known for giving political support Martelly was chaotic and led to the appoint- Monday that it had signed binding agreements in exchange for government appointments ment of interim President Jocelerme Privert, for the sale of 24 concrete plants and one or allocations in the government budget, the who served for a year, until Moïse took office aggregates quarry in France to Swiss building Financial Times reported. Ahead of Monday’s in February 2017. Haitians have taken to the material firm LafargeHolcim, Reuters reported. congressional leadership elections, Bolsonaro’s streets in recent weeks to demand that Moïse The Mexican company said that the divestment government freed up hundreds of millions of step down. Monday was also the first of a two- of the assets was part of a larger plan to focus dollars in the federal budget for 250 legislators day strike by transportation workers, an action its portfolio development into high growth mar- to spend on public works projects in the areas that has paralyzed parts of the country and led kets, according to the report. Cemex expects to they represent, Brazilian newspaper O Estado to the closures of schools, banks and other close the sale by April. de S.Paulo reported before the votes. “A part- businesses. The country’s provisional electoral nership based more on interest than ideology, council, which Moïse unilaterally appointed, however, carries its own risks, particularly if announced nearly a month ago that Haiti’s Bolsonaro’s popularity crumbles further amid a presidential election would be held on Sept. Bassols Tapped as rising Covid-19 death toll and economic woes,” 19. However, critics of the current government Mastercard’s Country Anya Prusa, a senior associate at the Wood- have questioned whether the country can hold Manager for Brazil row Wilson International Center for Scholars, a free and fair election under its current elec- Mastercard announced last Friday that it had told the Advisor in a Q&A published Jan. 28. toral structure. “No serious election can occur named Estanislau Bassols as its country In the Senate race, Pacheco had the support with this provisional electoral council,” Simon manager for Brazil. Bassols, a former chief of opposition parties, despite Bolsonaro’s en- D. Desras, a former president of Haiti’s Senate, executive officer of SKY Brasil, will take on the dorsement. Pacheco won the Senate presiden- told the Advisor in a Q&A published Jan. 25. new role at Mastercard as of Feb. 15. He will cy by a vote of 57-21 against his rival for the The current electoral council is “unilaterally report to João Pedro Paro Neto, Mastercard’s position, Senator Simone Tebet. In their victory nonconsensual” and also “unconstitutional” be- president for Brazil and the Southern Cone. speeches, neither Lira nor Pacheco mentioned cause it was not properly sworn in as required “Brazil’s strength and growth over the years has Bolsonaro, and they both vowed to lead an by Haiti’s constitution, said Desras. Raymond been instrumental for the company worldwide,” independent Congress, the AP reported. Joseph, a former Haitian ambassador to the Paro Neto said in a statement.

United States, told the Advisor in the same Q&A FEATURED Q&A / Continued from page 1 that Moïse set up the electoral council “without regard to constitutional norms.” He added, “It cal-grade cannabis. In terms of regulation, scientific research could—and has—shown is illogical to think that a budding dictator will nonpsychotropic cannabinoids are overreg- promise for medical uses of some of these organize free and fair elections after he has ulated, as they are in the same category as properties, such as CBD, for example. With- dismantled the country’s already weak demo- the psychotropic cannabinoids (mainly THC) cratic structure.” and require a controlled prescription just as morphine or barbiturates. This obviously is The value of the pro- far from the science of CBM, where even the gram established will ECONOMIC NEWS WHO acknowledges CBD’s nonpsychotropic depend on the scien- activity. If we can get the legislative cham- tific foundation and Biden Administration bers to change the General Health Law, and the transparency of reclassify cannabinoids, it would liberate the regulations gov- and ease the use of these cannabinoids for to Release $1.3 Billion erning the research.” therapeutic and cosmetic uses, for example. — Melvyn Levitsky in Aid to Puerto Rico A lot of the Uruguayan experience requiring stricter regulations for CBM is enacted in The administration of U.S. President Joe Biden our regulation. Canada also has been very out the intoxicating element (THC), Mexico is planning to release $1.3 billion in delayed aid important, especially as it has been success- could possibly find legal uses for chemicals to Puerto Rico, originally meant for reconstruc- ful in educating their teenagers about the extracted from the plant. However, so-called tion after Hurricane Maria hit the island in risks and benefits of adult cannabis. This ‘medicinal marijuana’ has been used in 2017, The New York Times reported Monday. has helped increase the age at which people some American states as a wedge to open The aid is now intended to protect against fu- start using cannabis, effectively reducing the the door to legalization of the intoxicating ture climate disasters, the administration said, risks for this specific population. We need smoked or imbibed products of the plant; adding that it is beginning to lift some restric- to learn how much resources Canada has this clearly violates U.S. obligations under tions that the Trump administration had put on devoted to education as to how to navigate a the drug conventions. In Mexico’s case, as an additional $4.9 billion for the U.S. territory. regulated cannabis market.” in other countries, the devil’s in the details. Biden has promised a quick delivery of the That is, the value of the program established long-delayed disaster relief package, the Miami Melvyn Levitsky, professor of will depend on the scientific foundation and Herald reported. “The president has made clear international policy and practice the transparency of the regulations govern- ... that it is a priority for his administration at the University of Michigan’s ing the research. Mexico would do well to to release this funding,” Jen Psaki, the White A Gerald R. Ford School of Public inform and coordinate its program with the House press secretary, said on Monday, The Policy and former U.S. assistant secretary International Narcotics Control Board, the Hill reported. Congress had earmarked more of state for International Narcotics Matters: treaty-based organization headquartered in than $60 billion in aid for Puerto Rico following “In the international drug conventions that Vienna established to monitor the implemen- the devastating hurricane, which damaged Mexico and virtually every country in the tation of the conventions’ provisions.” the island’s power grid and destroyed other world has signed, cannabis is listed as an infrastructure. However, only about $20 billion illegal, banned drug with no ‘medical or Gary J. Hale, drug policy fellow of that aid has been distributed so far, The Hill scientific’ uses. The conventions do allow and Mexico studies scholar at reported. The Trump administration had put research into the properties of illegal drugs. the Baker Institute and retired restrictions on the aid’s disbursement over Opium, from which heroin is produced, is A DEA Houston Division chief concerns of alleged corruption in Puerto Rico. also listed as a banned drug, but through of intelligence: “Mexico’s legalization of The administration reportedly required Puerto scientific research, products based on raw marijuana will have multiple consequences Rico to provide the Department of Housing and opium, such as morphine, codeine and other and may result in Mexican domination of the Urban Development (HUD) with more informa- analgesic drugs, are widely used under North American marijuana market. For the tion and documentation than what is required controlled conditions for pain reduction. time being, Mexico is behind the curve in of state governments about its spending plans, In the United States, the DEA has autho- establishing a legitimate framework under according to Stan Gimont, then-deputy assis- rized the University of Mississippi to grow which Mexican cultivators and cannabis en- tant secretary for grant programs at HUD. “It marijuana to allow for research into the trepreneurs can conduct serious, large-scale seemed like it was excessive,” Gimont told The chemical properties of the plant. Careful clinical trials to definitively establish the New York Times. Continued on page 4

FEATURED Q&A / Continued from page 3 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2021 health benefits of all the different cannabi- put the reforms into effect. Now that it has noids and to legitimize the plantation-scale finally been published, it turns out that there Erik Brand grows that have been focused on quantity are so many rules that the resulting market Publisher [email protected] and not quality. These changes in Mexican will be small and expensive for patients law will also likely see the emergence of a (because it only allows access to drugs Gene Kuleta Editor separate marijuana cultivation sector that and not the plant, because it maintains the [email protected] will mimic the production of high-quality Anastasia Chacón González strains that currently emerge from north- Reporter & Associate Editor ern California and that are grown for both Unfortunately, [email protected] personal and medicinal use. Canadian com- despite progress, panies and other multinational investors may the path to regulation

also begin cultivating in Mexico because has not been without Michael Shifter, President the latter’s climate allows for year-round its challenges, and Rebecca Bill Chavez, Nonresident Senior Fellow harvesting, which is less costly than indoor many problems Sergio Bitar, Nonresident Senior Fellow growing operations that take place in the remain unsolved.” Joan Caivano, Senior Advisor northern climes. Mexican providers will likely Michael Camilleri, Director, Rule of Law Program — Lisa Sánchez petition their government to add cannabis to Kevin Casas-Zamora, Nonresident Senior Fellow the list of commodities that can be imported Héctor Castro Vizcarra, Nonresident Senior Fellow into the United States under the USMCA. obligation to request permits to consume it Julia Dias Leite, Nonresident Senior Fellow If that happens, the market share may be and because it privileges rules for producers Ariel Fiszbein, Director, Education Program inverted, thereby reducing the U.S. share of but not for consumers). The regulation will Peter Hakim, President Emeritus a business that is already generating a new do little to improve safety, as patients will Nora Lustig, Nonresident Senior Fellow wave of investors worldwide, and this shift continue to be punished both administrative- Margaret Myers, Director, Asia and could suddenly place Mexican entrepreneurs ly and criminally, making it difficult for police Latin America Program Manuel Orozco, Senior Fellow on the top of the heap.” work to be redirected toward the prosecution Xiaoyu Pu, Nonresident Senior Fellow of other crimes. Another example is the law Jeffrey Puryear, Senior Fellow Lisa Sánchez, general direc- to regulate adults’ personal use of cannabis, Mateo Samper, Nonresident Senior Fellow tor of Mexico United Against which by a court order must be approved be- Tamar Solnik, Director, Finance & Administration Delinquency (MUCD): “Thanks fore April 30. Despite having been discussed Lisa Viscidi, Director, Energy Program to pressure from organized civil for more than two years, and modified on A Denisse Yanovich, Director of Development, society, which questioned the illegality of several occasions, the proposal is still External Relations & Special Projects cannabis in court and got the Supreme Court flawed, making it both unfair and unconsti- to declare its prohibition unconstitutional, tutional. Current legislation would allow the Latin America Advisor is published every business day, except for major U.S. holidays, Mexico is moving toward the legal regulation creation of a private production and com- by the Inter-American Dialogue at of cannabis for medical, industrial and per- mercialization market, but it would maintain 1155 15th Street NW, Suite 800 Washington, DC 20005 sonal uses. Unfortunately, despite progress, criminalization for users and aggravate www.thedialogue.org the path to regulation has not been without their prosecution both through criminal and ISSN 2163-7962 its challenges, and many problems remain administrative channels. Correcting these Subscription inquiries are welcomed at unsolved. A clear example is the impossibili- defects will be key to improving Mexicans’ [email protected] ty of launching a national market for medici- health and safety—that’s what we, as civil The opinions expressed by the members of the Board of nal cannabis despite the fact that legislative society, are committed to.” Advisors and by guest commentators do not necessarily reforms to allow it have been approved since represent those of the publisher. The analysis is the sole 2017. Why? Because the federal government The Advisor welcomes comments on its Q&A view of each commentator and does not necessarily represent the views of their respective employers or firms. has delayed for more than three years the section. Readers can write editor Gene Kuleta The information in this report has been obtained from publication of the regulation that would at [email protected]. reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have any questions relating to the contents of this publication, contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permission from the publisher.