US Insights

Marijuana in Mexico Gets Another Lift

Catherine Lang

Analyst

Retail 11.05.2018 / 11:00

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Here's what Mexico's ruling on cannabis means for brands.

The Mexican Supreme Court ruled for the fifth time that the personal use of cannabis is no longer unconstitutional under current law.

This pseudo-decriminalization is not the equivalent of legalizing recreational cannabis as Canada and Uruguay have done. Rather, the argument in Mexico is that prohibiting cannabis infringes on a constitutional right to free development of personality as stipulated by the country's constitution and as cited in Article 22 of the United Nations Universal Declaration of Human Rights. Mexico’s Congress has 90 days from the Oct. 31 ruling to amend the country’s laws that have found cannabis consumption unconstitutional.

Why does this ruling matter in retail?

With growing support for legalized cannabis on both sides of the border, suppliers need to understand gains in cannabis legislation worldwide as the industry continues to transcend socioeconomic parameters and enters the everyday retail landscape.

Here are three insights about legalized cannabis and implications for suppliers.

Economic insight: A study from Aclara Research shows that 62% of medical cannabis users surveyed reduced the number of prescription drugs they take. What’s more, 30% stopped using prescription drugs entirely, thereby eliminating a trip to a retail pharmacy. Legal restrictions on the amount of cannabis (both medicinal and recreational) an individual can possess drives trip frequency and allows retailers carrying such products to capture shopper share of wallet.

Supplier implication: Bulk buying and stock-up shopper missions become areas of opportunity for suppliers, especially for less-restricted products made from CBD (the non-psychoactive compound found in cannabis plants) in both topical and ingestible forms. The larger catalog of cannabis-related products (inclusive of CBD and THC, the psychoactive component of the cannabis plant) aligns with pre-existing brand shifts to a more natural and better-for-you product mix.

Experiential insight: Medical use of cannabis is legal in 31 U.S. states and recreational use is legal in 9. In Canada, where recreational cannabis became legal on Oct. 17, nationwide shortages are already being reported. Today, the cannabis path to purchase is heavily omnichannel. Shoppers can turn to eCommerce and click-and-collect; they can even go online or use an app to reserve cannabis in store. Despite the digital nature of the cannabis path to purchase, the in-store experience continues to drive consumption and build shopper loyalty.

Supplier implication: Differentiate your category by driving destination appeal through holistic means. Dispensaries foster a unique environment that draws on the communal nature of cannabis culture, from consumption to education. Suppliers and retailers should aim to personalize the shopper experience through the omnichannel funnel to establish loyalty and authentic connections.

Consumer insight: The grassroots nature of the cannabis cohort exudes an authenticity unlike any other. The challenge for national brands is how to expand their brand portfolio with authority and legitimacy within a highly curated retail environment dominated by smaller local or challenger brands already established in places that legalized cannabis earlier.

Supplier implication: Experienced CPG suppliers will now have a new platform to better understand cannabis shopper behaviors. Given the product’s authentic appeal, health and wellness suppliers should consider investing in research to better understand the natural and therapeutic attributes of cannabis so they can innovate within their respective categories.

Source: Kantar Consulting

Editor's Notes

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