Canada’s Xebra Sees Mexican Cannabis Market Reigning Supremo

Canadian cannabis company Xebra has decided Mexico is where the future looks brightest for its investments. Vancouver-based Xebra sees Mexico as having the potential to expand into one of the world’s largest cannabis markets.  Following a strategic analysis of the four countries the company has a presence in — Canada, Mexico, the Netherlands and Columbia — Xebra announced this week it is pulling up stakes in Columbia and the Netherlands.

Since its founding in 2019, Xebra has been committed to obtaining dominant positions in emerging markets.  Xebra’s business model is driven by the view that as more countries legalize, industrial-scale cultivation and manufacturing will occur where cannabis products can be produced and exported at the lowest cost.

The Netherlands and Columbia
After a successful first harvest in the Netherlands, as one of only five companies to be granted a cultivation license, production in the Netherlands was deemed too costly. The company believes the proliferation of hundreds of cannabis licenses existing in Columbia would make it difficult to gain a competitive edge or create a profitable business model with scale.

With an objective to focusing its resources, Xebra’s management has resolved to exit Colombia and the Netherlands and prioritize activities in Canada, where it has established beverage and product brands, and in Mexico, where it has a first-mover advantage.

Mexico is within the North American free trade zone, giving it considerable cultivation and product manufacturing cost advantages over Canada and the United States. Xebra is of the opinion precedent in cross-border agriculture and manufacturing suggests the majority of North American industrial-scale cannabis production activity may ultimately occur in Mexico.

Xebra plans to commence commercial cannabis activities in Mexico this year. The company said it is evaluating several opportunities to partner in cannabis cultivation, processing and manufacturing. Xebra is now only awaiting a final authorization from the Mexican Health Regulatory Agency.

Only legal cannabis cultivator in Mexico
In December, the Mexican Supreme Court granted the Xebra Mexico an irrevocable cannabis injunction., which was finalized in March. As a result winning the injunction, under Mexican Law Xebra Mexico is the only company in the nation legally authorized to import cannabis seeds, cultivate cannabis, process cannabis, extract cannabinoids and manufacture cannabis products. 

Should cannabis be fully legalized for use in Mexico, Xebra Mexico can also sell cannabis products within the country and for export. While possession in small amounts was decriminalized this year in Mexico, no legal framework exists for the commercialization of adult use cannabis. However, Congress is debating a bill and federal legalization could occur as soon as this year. 

The judgement positioned Xebra with an outright first-mover-advantage in the Mexican CBD and CBG market.  Xebra believes its advantage in the Mexican CBD and CBG market could last one to three years. Xebra Mexico’s injunction applies specifically 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, CBG and CBN products. The cultivation of high-THC cannabis is currently prohibited. 

Vertically-integrated Xebra holds in its roster over 150 cannabis cultivars and breeding lines, and has created six CBD-infused beverage brands with trademarks held in over 40 countries.