- Title: Cannabis firms catch a whiff of opportunity in Brazil
- Date: 19th August 2021
- Summary: MINAS GERAIS, BRAZIL (AUGUST 18, 2021) (REUTERS) CANNABIS PLANTS AG-TECH ADWA STARTUP WORKERS TENDING PLANTS IN GREENHOUSE HAND SHOWING PARTS OF PLANT WORKERS WITH PLANTS AG-TECH ADWA STARTUP DIRECTOR, SERGIO ROCHA, TAKING NOTES (SOUNDBITE) (Portuguese) AG-TECH STARTUP ADWA DIRECTOR, SERGIO ROCHA, SAYING: "Our objective is to develop cannabis varieties for medicinal and industrial use that can be grown in Brazil with a low cost, the same way it was done with soy in the 50s. We need varieties that will adapt to our climate and soil, that way we'll be successful and Brazil will become into a competitive player in the international cannabis market." VARIOUS OF ROCHA EXAMINING PLANTS (SOUNDBITE) (Portuguese) AG-TECH STARTUP ADWA DIRECTOR, SERGIO ROCHA, SAYING: "We still don't have regulations that establish the criteria for the cultivation (of cannabis) in Brazil. In this sense, PL399 (law project for the legalization of cannabis cultivation for medicinal purposes) has been a breakthrough for the country and it puts the country among major international players, it contributes to the development of agro-industry and social development in Brazil. It will allow more research and the development of a market that attracts an big number of investors and which employs millions of people worldwide." WORKER MEASURING SIZE OF PLANT WORKER PUTTING LABEL WITH QR CODE ON PLANT GREENHOUSE SEEN FROM OUTSIDE (SOUNDBITE) (Portuguese) AG-TECH STARTUP ADWA DIRECTOR, SERGIO ROCHA, SAYING: "This is the only experiment related to the improvement of cannabis genetics in Brazil but in other countries as the U.S., Israel and various European countries there are a lot of companies working in this market. Our goal is to triple the area we are cultivating by the end of the year. Starting next year we also want to start cultivating bigger areas with our partners." WORKER SHOWING CANNABIS PLANT
- Embargoed: 3rd September 2021 00:30
- Keywords: Brazil marijuana
- Location: MINAS GERAIS, BRAZIL
- City: MINAS GERAIS, BRAZIL
- Country: Brazil
- Topics: South America / Central America,Economic Events
- Reuters ID: LVA001ER33WW7
- Aspect Ratio: 16:9
- Story Text:International cannabis companies are showing interest in Brazil, both its large consumer market for medicinal products and a proposal that could legalize planting of the crop.
Major producers like Colombia's Clever Leaves and Canada's Canopy Growth are developing and selling medicinal cannabis products to a Brazilian consumer segment estimated at 10 million to 13 million people. This results from a 2019 regulatory change allowing the import, sale and manufacturing of such products.
But permission for cultivation of hemp and cannabis in Brazil would be a bigger prize. If granted, the industry could blossom in four to five years, based on the experience of other countries such as Colombia.
A proposed law that would legalize cultivation and production of more hemp and cannabis products was approved in June by a congressional committee. Lawmakers are weighing if it could be fast-tracked to the Senate for approval. If cleared there, President Jair Bolsonaro would have to sign it into law.
While Bolsonaro's far-right positions may seem an unlikely match for the bill, the proposal has the backing of some members of the country's powerful farm sector, a key constituency that helped him win the 2018 election.
The odds of passage could improve if former President Luiz Inácio Lula da Silva is re-elected next year, said Lucas de Aragão, a political analyst at Arko Advice. Lula has previously supported legalizing recreational marijuana.
In the quiet town of Viçosa in southeastern Brazil - which some call the Silicon Valley of cannabis - researchers are developing a hemp variety better suited to the tropics. If the law is changed and research is successful, Brazil could become a top grower of cannabis and hemp, experts said.
Sérgio Rocha, director of ag-tech startup Adwa, said about 3 million square kilometers (1.2 million square miles) of land in Brazil is potentially suitable for hemp flower cultivation using a South American variety.
Although Brazil may never cultivate that much, it could still overtake China - the world's largest hemp producer -- which grows it on about 670 square kilometers (259 square miles).
Brazil bans growing of Cannabis sativa L, the plant that produces hemp and marijuana. Under a U.S. definition, hemp contains less than 0.3% of the psychoactive compound THC and is used for food, fiber and industrial applications.
Hemp also contains CBD or cannabidiol, a non-intoxicating ingredient in medicinal products that has been touted as beneficial for a wide variety of health conditions such as childhood epilepsy.
Growing the plants in Brazil would lay the foundation for a vertically integrated industry. A stable source of the raw material would support manufacturing of medicinal cannabis products, growth of a retail market and exports. Recreational cannabis would remain illegal.
Gabriela Cezar, chief executive of New York-based Panarea Partners investment banking firm, sees Brazil playing a leading role in hemp in Latin America, a region she calls the "epicenter of world hemp production."
Panarea plans to form a Brazilian cannabis company focused on pharmaceutical products for pets while seeking to broker more cannabis deals in Brazil.
Among Brazil's advantages are lower growing costs because its warm climate allows plants to grow outdoors compared to greenhouses in some areas. Stable hours of sunlight due to Brazil's proximity to the Equator are another plus.
But nothing is certain without the change to Brazil's law. Some signs suggest the prospects are favorable. When Rocha spoke to a congressional committee about hemp in 2019, he was surprised that conservative lawmakers were not hostile.
"PL399 (law project for the legalization of cannabis cultivation for medicinal purposes) has been a breakthrough for the country and it puts the country among major international players, it contributes to the development of agro-industry and social development in Brazil," he said.
Although the farm caucus has not taken a formal position, members of the group said a majority in both houses of Congress support the proposal. The farm caucus controls about 47% of seats in the lower house and 48% in the Senate. The law requires approval by a simple majority.
Center-right lawmaker Fausto Pinato, a member of the farm caucus, said he supports the bill.
(Production: Washington Alves, Sergio Queiroz, Nina Lopez) - Copyright Holder: REUTERS
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