Yes, it is illegal, but I have to mention the area is a known hippie haven. If you are looking for a good time, you go there.
There isn't a fear of getting arrested for drinking, smoking a J or hitting the hookah into wee hours of the morning. Within reason. MOO
I did find some additional quotes regarding that situation though:
"The owner of the hostel where Miss Shaw was last seen claimed the young backpacker had given cookies laced with cannabis to guests.
The boss of Eco Hotel Mayachik claimed she herself had fallen ill and had nightmares and hallucinations after trying the biscuits.
The Austrian woman, who did not want to be named, said: ‘They came and put a box of cookies on the bar and said: “Everyone, have some.” I tasted two and an hour later, I was completely under [the influence of] drugs. I think these cookies had drugs in them.’
After the alleged incident, the woman claims she told Miss Shaw to leave, adding: ‘I confronted her. She said: “It’s just love. It’s just nature.”
The hotel has a strict no-drugs policy.’
Guatemalan search party find jacket belonging to missing British backpacker two miles from hostel | Daily Mail Online