Why Paraguay may be key to the future of medical cannabis in Brazil

RIO DE JANEIRO, BRAZIL – LACann Group is investing in marijuana plantations in Paraguay to reduce the cost of supplies worldwide, with an eye on the rise of the medical cannabis market in Brazil and other countries.

The market for medicinal cannabis products is becoming the scene of intense investor and entrepreneurial activity in Brazil.

Companies Green Flower Brazil, INDEOV and InterCan Academy, which currently operate in the field, are now part of the LACann Group, a holding company that intends to form a complete chain of products derived from cannabis.

Amid heavy stigma, there are two ways for medical cannabis companies to operate in Brazil, in accordance with the Brazilian Health Regulatory Agency’s (ANVISA) rules: they can operate as e-commerce to offer the import of products such as cannabidiol or, if they are producers, they may take a more bureaucratic route and request ANVISA approval to produce and sell in pharmacies.

The first option has guaranteed a market with over 100 e-commerce businesses that operate mainly in a binational way, buying from suppliers in countries where the market is fully legal, such as Canada and the United States, and selling to consumers in Brazil.

People require only a prescription and a license from ANVISA to buy medicinal derivatives such as cannabidiol, which can be purchased online. Although not widespread, the consumption of these products has been authorized in the country through import since 2015.

The second option, to produce and sell in Brazil, only had Prati Donaduzzi pharmaceutical company operating on the shelves of Brazilian pharmacies. However, a recent decision authorized Nunature, founded by American entrepreneurs, to operate in the Brazilian market. And on Thursday, May 13, ANVISA also authorized the Fiocruz Institute in Rio de Janeiro to manufacture cannibidiol.

The LAcann Group has a plan aimed at this physical market still in its infancy in Brazil. The goal is to plant cannabis in Paraguay and produce derivatives of several types for these companies that succeed in entering the national medical cannabis market with ANVISA’s authorization.

But the project does not depend only on Brazil. Because Paraguay has cheap energy and labor, the holding company’s plan is to become a price-competitive supplier of cannabis to Latin America and the world.

“Paraguay is like the China of Latin America. It’s the same thing as wondering why Apple doesn’t manufacture the iPhone in the United States, but in Asia, although it can,” explains Daniel Rodrigues, co-founder of the group.

According to him, the country has the best cannabis production cost in the world due to the country’s energy being ⅓ cheaper than in Brazil.

Real cost effectiveness

With less costs, the company intends to offer cannabis-derived products with a real effective cost, without abusive values. Today, Prati Donaduzzi imports its raw material from a Canadian company and the price per milligram averages 38 centavos (Can$ 0.07).

LACann Group’s plan is to offer products for brands that can lower the price to around 20 centavos a milligram in Brazilian pharmacies.

In other words, they intend to offer pharmacies that obtain ANVISA authorization a price as good as possible on import. Over the next five years, the group intends to invest around R$80 (US$15) million.

For planting, LACann Group currently owns a 25-hectare plot of land in Paraguay where it intends to build enclosed greenhouses to grow cannabis. The group counts on a team of over 30 dedicated professionals.

Within 18 months, the company should be ready to supply its own medicinal derivatives. So far, the group has received US$2 million in funding from investors. The next funding round intends to raise another US$1.5 million.

While focusing on Paraguay to invest in the production of cannabis plants, a bill has been advancing in Brazil to authorize organizations, companies, and research institutions to plant the raw material in the country.

If passed, companies licensed by ANVISA to sell cannabidiol in pharmacies may also invest in vertical production in an attempt to cheapen the product.

However, this should not interfere with LACann Group’s plans to become a major supplier. Irrespective of whether companies produce vertically or buy from the company in the future, executives believe Paraguay will stand out as a cheap place to produce cannabis raw material.

“We will be able to show Brazilian investors that the effective cost there is lower. It’s a three times lower energy cost, cheaper labor… Irrespective of whether pharmaceutical companies are authorized to plant here,” explains Daniel Rodrigues.

One of the branches forming LACann Group, INDEOV is one of the main e-commerce outlets for cannabis products in Brazil. GFB is the arm authorized to plant and produce cannabis products in Paraguay, while InterCann Academy is the education arm, whose mission is to provide training for doctors on the prescription of medical cannabis.

The new company will be headed by INDEOV founder Camila Teixeira. “We are committed to developing innovative products and services in this sector, with the main goal of promoting health, well-being and quality of life for people who can be positively impacted by the therapeutic use of cannabis. Our main differential is to focus on the Brazilian market, seeking to democratize access to cannabis for therapeutic purposes to our population,” highlights the CEO.

Source: Exame