Tequila in Mexico", except that it may be diluted with water for bottling in Canada. Similar to the law of Canada, the U.S. law (27 CFR 5.22 (g)) says that tequila must be "manufactured in Mexico in compliance with the laws of Mexico regulating the manufacture of Tequila for consumption in that country". Tequila Tequila () is a regional distilled beverage and type of alcoholic drink made from the blue agave plant, primarily in the area surrounding the city of Tequila, northwest of Guadalajara, and in the Jaliscan Highlands ("Los Altos de Jalisco") of the central western Mexican state of Jalisco.
Tequila tequila exported in bulk to the United States is bottled in those plants. On January 17, 2006, the United States and Mexico signed an agreement allowing the continued bulk import of tequila into the United States. The agreement also created a "tequila bottlers registry" to identify approved bottlers of tequila and created an agency to monitor the registry. The Tequila Regulatory Council of Mexico originally did not permit flavored tequila to carry the tequila name. In 2004, the Council decided to allow flavored tequila to be called tequila, with the exception of 100% agave tequila, which still cannot be flavored.