When cannabis was legalised across all of Canada, politicians sought to stamp out the illegal black market in the country. And while this task has yet to be achieved, the results overall have been positive.
Now, it looks like Mexico will also be turning over a new leaf in its long embroiled history with a failed War on Drugs. Following a ruling on the 1st of November, 2019, the Mexican government is expected to legalise both medical and recreational cannabis by April 30, 2020.
In an exclusive interview with Strain Insider, the former President of Mexico, Vincente Fox, talks more about why prohibition is a failed strategy, his role as an advisor at the fast-growing, South American cannabis firm Khiron Life Sciences and where he thinks the cannabis industry is headed.
Liam J. Kelly: I’d like to first go back a little bit. Prior to you being president of Mexico, you were also the president of Coca-Cola, Mexico.
Vicente Fox: Yes, sir.
LK: And now you are joining the cannabis sector. Why have you made this choice?
VF: Right after the end of the administration in 2006, I created a presidential library [Centro Fox] in Guanajuato, my home state. And among other activities, it was primarily a think tank.
Through think tanking we came out with the idea of participating in legalisation processes everywhere in the world. The purpose behind this for Mexico was to reduce, or even eliminate, this very violent, very bloody ‘war on drugs‘. From that decision, I became an activist.
I started going to visit every market in the United States. There were no legal states at that time, so I went to the underground to meet the people in the industry that were working illegally. And I started pushing for legalisation. I’m talking about the whole of the west coast of the United States. I’m also talking about Vancouver, Toronto, Quebec, everywhere in Canada.
I then came to Portugal to see what was going on there, and to do some conferences. Then I visited, of course, Holland. At that time, these were the only two countries that had legalised cannabis to some extent.
I went to South America too during those 10 years. I’ve been an activist, pushing and promoting legalisation processes everywhere.
And later on, at Centro Fox, we held conferences which we called Canna Mexico. We invited and gathered a wide variety of participants in the industry, up to 1,500 coming from all around the world. We’ve done it twice. The year before last and, of course, we will follow next year.
A very successful conference gives one the opportunity to learn about the industry, to gather real information. It was helpful to meet and greet everybody. And that’s where I met Khiron Life Sciences’ management team, Andreas Galofre, and Alvaro F. Torres. They had the interest to invite me to the board of Khiron. I accepted the invitation because this company had so many things that fed into my strategy and Centro Fox’s strategy.
This company has been dedicated to, as a priority, medical use. It’s dedicated to patients and bringing health to patients. So, I like that. And I liked that it’s a socially responsible company. They made a big donation to the foundations that I represent, and so I’ve been working with them and, thus, with the industry.
This concludes the @co_garnier Cannabis Conference!
Throughout the two-day event, Khiron leadership – including @VicenteFoxQue, Tejinder Virk & Franziska Katterbach – joined expert panels to discuss the industry view from LatAm & the future of #MedicalCannabis in Europe. pic.twitter.com/jC1TKI3uHl
— Khiron Life Sciences (@KhironLife) November 28, 2019
VF: Now, this company is very successful in the marketplace, not only with medical products but with attending to patients with prescriptions and for guidance and information. It provides a doctor to each patient, so we develop that customer, that patient, and we solve their problems all along.
VF: That’s what we sell: a service, a health service. We provide health services to patients. For example, in Colombia, we acquired a company by the name of the ILANS which has 120,000 patients.
Through that acquisition, we are serving that base of patients with Khiron products. We are ready to grow in Mexico, too. There, we’re talking about serving three million patients, and we’re already looking for an acquisition so that we can provide these same health services in Mexico.
Same thing in Chile, Peru, Uruguay and Paraguay. And, finally, the company came out with a wellness product by the name of Kuida, and, through that product, it’s already penetrating the U.S. market. Starting with California for the first time, a Colombian CBD-based product enters the United States legally. So, we’re starting in the U.S. Market. Then we’re starting here before the end of the year.
LK: ‘Here’, as in the UK?
VF: Yes. And also in Europe. Maybe Germany, or perhaps we introduce these products to France.
That’s the story around my joining Khiron.
Now, in Mexico, cannabis itself is not legal yet, but up to now, we have two things that guarantee that legalisation is very close by. One is that the supreme court has stated and forced the executive branch and the Congress with instructions, that every single Mexican should have access to this product. It’s a human right now in Mexico to have access to this product. I think this is a very smart and just approach.
LK: And when you say, ‘this product’, do you mean cannabis products overall?
VF: No, these medical products.
LK: From Khiron?
VF: Well, it’s a general solution by the supreme court, which says that every single Mexican should have access to cannabis, to marijuana products, whatever they might be. In Mexico, drug consumption is not prohibited. It’s not criminalised. But now, in the case of cannabis, it’s legal to a certain degree because the supreme court approved. Congress is, thus, forced with a due date in April next year to draft the respective law and to come out with the regulation needed for that law.
It would be two-fold. It will cover not only medical but also recreational use. Mexico pretty soon will become the second-largest economy that goes for the whole enchilada. Meaning both approvals.
LK: So, it will happen in April 2020 for certain?
VF: Yes. It has to happen. It’s the mandate of the supreme court. It has to happen.
VF: What we’re waiting for is what kind of legal framework and specific regulations they will draft. In any case, Congress is forced to come up with a law because supreme court decisions have to be accepted. There’s no alternative. This will make it the largest country with the largest population to earn both approvals.
We, together with Canada, will become the leaders of the industry.
LK: Do you think the United States will follow after?
VF: The United States is very particular. There is a lot of religious background, and a lot of dogmas in the federal government have prevented approval. But, each time that approval is closer and closer. If fully approved, it will make the United States the leader and the largest market by far.
They have refrained from federal approval because it’s only approved in some states. There are still a lot of problems. This will put Mexico and Canada leading the expansion of this industry worldwide.
Mexico’s competitiveness will be on the production side, on growing the plant. We’re very competitive. We provide up to 70 percent of vegetables and fruits to the United States.
LK: And the climate is quite good for this kind of growth.
VF: Yeah. We can grow all year round. We have the perfect climate to grow and we’re neighbours. We have a NAFTA agreement, so it’s natural that Mexico will come together with Canada, the leading country in the world on this subject.
LK: I would like to just take a step back. When you were doing this activism after 2006, and you were visiting the United States, California, and British Columbia, what was the climate like at that time around legalisation?
VF: Well, it was illegal everywhere. I had to meet with the underground players, the illegal players, and they invited me to help promote and to do conferences.
I’ve done dozens of conferences since then, to all kinds of audiences. One anecdote would be that at that time the people I would meet with will have long, horsetail hair. They would have earrings in their ears, would have their jeans all scratched up, and the smell of marijuana, of course. And those were the audiences. Today, like here, in this place—
LK: It’s investors, businesses.
VF: Exactly. Investors are meeting with farmers, with growers, with processors. Dressed in a tie and a jacket, very elegant. That physically shows the tremendous changes that this industry has experienced in the last five years, only five years. It’s a legal industry in most places, and it is an industry with a great future because it provides a service, it provides health and pain support to users.
The paradigm change is taking away this beautiful plant from criminals, and putting it in the hands of the business community, investors, academics, researchers and innovators.
Every day, this industry is discovering its way to the future. Every day, this industry is exploring new ideas and innovating. Yes, it has ups and downs. It went up like a rocket with the value of the projects, and now it has come down drastically. It will pick itself back up again.
Right now, the industry is cleaning itself.
It’s going to get rid of those who are not productive, those who do not have high ethical and moral standards, those who do not invest and have the right product, or those who still are selling fake products with lousy quality in the marketplace. All of them are going to go out, no doubt, just like any other industry in the world.
LK: Is that what you mean when you say Khiron Life Sciences is a socially responsible company. Can you define that a little more?
VF: This industry is highly dependent on regulators. And Khiron fulfils total compliance but also goes over and above compliance. We set our own obligations, which are ethical obligations, that we must have products with quality, products that really serve their purpose.
Products that really cure or assist users with their health problems. We don’t claim that we solve cancer or heart pain. But we are very concentrated or neuroscience, Alzheimer’s, down syndrome, anxiety—
LK: Epilepsy as well.
VF: And we don’t sell these products over the counter. We sell products under a prescription and under the guidance of a doctor paid by Khiron.
You consume what the doctor prescribes, the amount, the dates, the products and so on. That’s why, at Khiron, we measure our success by the number of patients that we have, not the kilos that we produce. I should say that the company is participating in the whole chain of the industry too. And we’re concentrated in Latin America. We’re champions now in Latin America; perhaps the most well-known brand, and we’re expanding. Expanding in the United States, in Canada and in Europe to reach critical mass.
Up to now, it’s been a money or financial game. You needed to attract funds and investments. Now the industry has to respond with hard facts in invoicing, in sales, in revenue, in profit to sustain the expectations that we have grown around the world.
LK: I just spoke with Aphria about this as well. They mentioned this kind of brass tacks profitability, and how sound business models are crucial at this phase.
And, moving along, I’m not sure if you remember this, but, in 2014, you wrote an opinion piece for The Globe and Mail, a Canadian publication. And you wrote that ‘the legalisation of not just marijuana, but all drugs is the right thing to do.’ Do Do you still feel this way?
VF: Absolutely, yes. Of course, the market is opening up to all drugs, it’s still cannabis, medical cannabis specifically, that has earned favourable public opinion for the industry. But the ethical and moral sustainability of my opinion towards drugs is because, we, as human beings, are created free.
It’s a freedom that we must exercise with responsibility, and it’s not governments that can tell us what we should consume or what we should not. It’s our own free, responsible decision to access drugs. And it’s our own decision whether we consume with moderation or consume with a doctor’s guidance. In the end, we should make our own decision. This is how I formed my position on drugs. It’s not a government issue. It’s a human being’s issue.
Even the founding fathers in the United States made freedom the most important value for American Society. It was dogmas and religions that created the prohibitions. And now we understand that prohibitions don’t work in any aspect of human life.
Especially when governments enforce these prohibitions. We have torn off any barrier of prohibition, and now the world moves into total freedom exercised with responsibility, with adequate information, with adequate education, and with the adequate preventative measures.
LK: And during your presidency, what kind of attempts did you make to legalise or decriminalise cannabis?
VF: None. It was not the time.
This process has been long in the sense that those pioneers that were in the arena promoting this industry took a long time to force the authority to discuss it publicly, to bring the issue before Congress and to attain laws that would back the industry.
In my time in Mexico, nobody wanted to even speak about drugs, or if you spoke about drugs you would go to jail. So, it was not the time.
LK: You mentioned prohibition doesn’t work. So, the war on drugs is and/or was a failure.
VF: Failure, total failure for me.
LK: How did you experience that as the president of Mexico?
VF: Let me tell you that the year 2006 was the best ever crime rate indicator in the history of Mexico. In that year, we brought the crime rate down to nine out of 100,000 inhabitants.
(Source: Reforma Ejecutometro)
That’s the way you measure criminality worldwide. The number of crimes committed by every 100,000 inhabitants. We brought it down in my administration to nine. Ten would be a good average. Under 10, you’re in good shape.
Over 10, you begin to have problems. The year after that, when the new administration came in, Calderon’s administration, he brought the army to fight the war against drugs into the streets of Mexico. And what happened?
That rate moved from nine to 32. Over 300 percent the year I left my administration. Why? Because you don’t combat crime and drugs using the stick, using the army, using force. You must use other means and ways to control crime and drugs.
LK: Do you have some examples of non-violent ways of dealing with this kind of thing?
VF: It means having very strong policing work on every corner, on every block, in every city, in every town, which we have not had in Mexico since 2006. Since then, the cartels have become extremely strong in Mexico. And this is because of the huge income they earn from selling drugs in the United States.
They sell drugs in the United States to big drug dealers. The amount of money that comes back into Mexico and then down to Colombia, Bolivia, Ecuador, which are the producers of the drugs, is over $55 billion. That makes those cartels extremely powerful. They have all kinds of weapons and ammunition.
They have all kinds of intelligence and strategy. They have some of the best business minds related to crime. You really have a government opponent that is very powerful and this is the problem in Mexico today.
And that’s why we have to get out of that trap. But how?
In the first, the United States should continue legalising. That will help a lot because the money that used to come back to Mexico, to the hands of the criminals, now it’s going to the authorities in the form of taxes or income. We are taking away part of the money power of those cartels.
LK: Absolutely. And, just before we end, where do you expect to see Khiron in five years?
VF: In five years, I see Khiron as a number one, worldwide company, regardless of the legalisation processes that have been completed. I see Khiron as the leader on medical use through its patient’s network. I see Khiron stock going up higher than the original one dollar stock. It will reach $8, $9, maybe $10 each.
(Source: Yahoo Finance)
I also see Khiron as an ethical and compliance leader in this industry. I don’t see many competitors right now. There could be thousands of small producers, but most of them are insignificant, many of them illegal.
I see a cleanup in the industry where we’re going to end up like the soft drinks space with a Coke, a Pepsi, and a Schweppes. Just a few big brand names and corporations.
You just have to stay on the path. You just have to have a clear definition of purpose through your company. You just have to have a clear strategy. Which Khiron has. So, we’re on the move.
LK: For someone coming out of a more traditional business sector and who wants to get started in cannabis, what kind of advice would you have for them?
VF: There are many, many small segments and small pieces of the whole spectrum of the cannabis space. What you will see is, yes, maybe 10, 15, 20 big, big brands and corporations.
But it’s structured just the way the automobile industry is structured or the Coca-Cola company is structured. What I mean by that is that you will have a GM corporation leading the marketplace with a few huge manufacturing centres around the world, which are all company-owned.
After that everything is outsourced, everything is partnerships, everything is alliances and associations. In this pyramid of the automobile industry, you’ll see the manufacturing on top, the big state-of-the-art manufacturing places. Then you’ll see 50 suppliers that come to General Motors’ production line that are independent companies. And then each one of those has 50 suppliers on their own.
You’ll see a pyramid of companies. The first level, second level, third level, fourth level, all of them working under the same orchestra director, which is the information technologies that determine what automobile, of what model, of what colour is going to be produced.
They then decide it will be built on October 7, at 12 o’clock in the morning, for example. And every supplier from that huge amount of close to 500 people working for that automobile will arrive on time. And they will come with the right product, and that product is going to be assembled in that manufacturing plant.
You see a network of 500 corporations, close to over 250,000 people working to produce that car for General Motors. And then you have Volkswagen, Toyota, and Mazda. That’s the structure I see in the cannabis industry.
Khiron now has a CEO or president for Europe, has a CEO or a president for Latin America, and has a CEO or president for North America. Pretty soon, we’ll have one in Asia. We have big vice presidents by regions of the world. You’ll see the company structure through all these alliances, outsourcing and partnerships.
Everybody will have an opportunity. The small guy and the medium-sized companies will be participating in these clusters, working on their speciality. Either security for the industry, or growers, farmers, processors, marketers, or funds supporting the industry.
It’s this conglomerate that will make this industry the way I dream it. And that’s why I’m in Khiron, that’s why I’m using all my experience from the Coca-Cola company to try to apply the same model, with the same philosophy.
This philosophy means you don’t try to take everything. Don’t do all the change yourself. Leverage associate partners, like the Coca-Cola company, partnered with bottlers, and bottlers partnered with car manufacturers. And so on down the line.
Strain Insider would like to thank Vicente Fox for taking the time to speak with us at the inaugural Cannabis Conference hosted by Bryan, Garnier & Co.