WORKWEEK

Cannabis Cultivation In Brazil

Breaking down the bill that would legalize domestic cannabis cultivation…

Brazil has a rich history with cannabis.

Cannabis was first introduced by the Portuguese in the early 1800s, and Brazil’s tropical climate is perfect for cultivating cannabis outdoors.

Domestic cultivation…

In 2015, Brazil legalized cannabis for medical purposes.

Patients that were terminally ill and patients that had exhausted all other treatment options were allowed to access cannabis.

Unfortunately, Brazil doesn’t permit the cultivation of cannabis at home, however, a bill is seeking to change this.

The details…

Bill 399/15 would legalize the cultivation of cannabis for medical and industrial purposes in Brazil.

The proposal was approved by the special commission in June, however, it will be subject to two further votes before it becomes law.

A vote is expected to take place by the Brazilian Chamber in November, and from here the bill will be debated in the Senate.

The opposition…

The current Brazilian president Jair Bolsonaro who was previously a member of the Social Christian Party campaigned on promoting family values.

He has called this move to allow the cultivation of cannabis “crap” has gone on record saying he will personally veto the bill.

Despite this, many in the region remain optimistic that this bill will still receive the required level of support and become law, as the Brazilian congress can overturn the president’s veto on this bill.

(Brazilian president​ Jair Bolsonaro)

Looking forward…

The biggest hurdle is not convincing those who oppose this bill to suddenly start supporting it, rather it will be retaining the existing support they have in the Brazilian National Congress & Federal Senate.

Our Take

Cannabis is already the 5th most valuable crop in the United States today.

With a population of 212.6 million people and an ideal climate to cultivate cannabis — Brazil is perfectly positioned to capitalize on this new cash crop.

The Great Canadian Reshuffling

Large Canadian cannabis companies continue to lose market share…

Certain Canadian producers are once again reducing the size of their workforce as they continue to lose market share.

Most recently Canopy Growth announced they are letting go of 30 staff and Hexo is also letting go of 155 staff.

Declining market share…

From September 2020 – September 2021:

• Tilray’s market share has dropped from 20% to less than 14%.
• Aurora Cannabis’ market share has dropped from 8% to less than 4%.

Tilray merged with Aprhia to increase its market share.

Aurora Cannabis has acquired several of its competitors to win more market share in Canada, spending a grand total of $3.85 billion USD on its last 6 acquisitions alone.

Increased competition…

Cannabis sales are increasing in Canada, and so is the level of competition.

Companies like Organigram are increasing their market share during this period where Aurora & Tilray are losing market share.

Organigram started the year with 3.9% market share, however, they have since increased this to 7.7% market share.

We are also seeing craft cannabis producers capturing more market share in Canada as producers continue to receive licenses to supply the legal market.

Our Take

Large cannabis companies will continue to acquire small cannabis companies.

Not every acquisition will work out, and in cases such as Redecan getting acquired by Hexo — they would have been much better off remaining independent.

Legal Cannabis In Connecticut

Breaking down the future of Connecticut’s adult-use cannabis market…

The movement to legalize cannabis may have started on the West coast, however, the East coast is quickly catching up.

Currently, there’s a great deal of excitement surrounding New Yorks move to establish a legal cannabis market, however, its neighbor Connecticut is also on track to create a sizable legal cannabis market.

The numbers…

The state of Connecticut is home to over 3.5 million people.

Adult-use cannabis sales will commence at the end of 2022, and year 1 sales are estimated to exceed $250 million USD, with total sales reaching $750 million by year 4.

East Coast social equity…

It remains unclear how many licenses Connecticut will issue in total.

The current medical cannabis companies in the states will have the opportunity to move into adult use sales, however, 50% of the adult use store licenses will be allocated to social equity applicants.

The fee to secure a license is $3 million USD for existing producers and $1 million for existing cannabis retailers.

These fees are reduced to $1.5 million and $0.5 million when existing companies partner with social equity applicants.

Our Take

Cannabis can be used as an opportunity to rectify some of the wrongs of the war on drugs and I commend Connecticut’s desire to focus on social equity.