By / November 28, 2019

Is it worth investing in the Brazilian cannabis market?

With cannabis legalization spreading around the world, many are wondering if it’s worth investing in the Brazilian cannabis market.

Recreational and medicinal use of cannabis is legalized in Canada and Uruguay. Additionally, in the U.S., 10 states allow both recreational and medical use while another 10 allows medicinal use only.

For more information on cannabis in Brazil and other countries from Europe and America, check out the app.

This app collects the latest cannabis investing news in bite-sized chunks that are easy to digest. You can easily find news on how to make money in the burgeoning cannabis industry and other information about cannabis businesses.

The worldwide cannabis market looks promising

According to data from Euromonitor, cannabis-related companies moved $12 billion (around R$50 billion) in 2018.

In just six years, this figure is expected to rise to $166 billion (almost R$700 billion). To have an idea of the importance, this amount is equivalent to 20% of the alcohol industry’s revenue. This figure pertains to revenues from legalized activities. Drug trafficking is not included in the count.

While the cannabis industry will grow by 40% a year, that of alcoholic beverages and tobacco will almost go sideways, advancing just over 1% annually.

Large companies in the “addiction industry” are betting on companies growing the cannabis plant.

The Brazilian cannabis market will influence the world
The business of cannabis is spreading all around the world with more countries making the plant legal for medicinal and recreational use. (Source)

The Brazilian cannabis market

But what about Brazil? Cannabis is partially released only for medicinal use in the country.

Even so, families who wish to use cannabis plant components in medical treatment have to go to court to get the right to import cannabis-based drugs.

A bill in congress discussed the regulation of the sale of medicine and products containing extracts, substrates or parts of the cannabis sativa plant.

Surprisingly, this project is supported by part of the agribusiness bench, which sees the cannabis plant as a potential future commodity.

According to preliminary studies, Brazil has a very favorable soil and climate for the cultivation of cannabis, making the Brazilian cannabis market a promising one.

Cannabis funds help push the Brazilian cannabis market

Until recently, the only way to invest in the cannabis sector was to open an account at a Canadian or U.S. brokerage firm and buy stock in one of the few cannabis companies that are listed in these markets.

Vitreo, the fund manager, launched the first cannabis investment product in Brazil last month called the Vitreo Cannabidiol FIA IE. However, at the moment, only qualified investors can buy shares of this fund.

“The cannabis industry is expected to grow at very high rates – we may be talking about hundreds of billions of dollars in no time. Such a strong trend cannot be ignored by the investor,” says Patrick O’Grady, partner at Vitreo.  “Bringing this as an alternative, even if it is only for qualified investors, confers our pioneering spirit.”

Citizens await the legal Brazilian cannabis market.
The cannabis market in Brazil is favored by the country’s geography. (Source)

Due to great initial demand, the manager launched another fund, Vitreo Cannabidiol Light. Open to all investor profiles, the fund will have 20% invested in Vitreo Cannabidiol FIA IE and 80% in Treasury Direct bonds. The idea is to surf in the appreciation of the parent fund.

In both funds, the minimum investment is $1,000 (R$ 5,000). The administration fee for the Cannabidiol Light fund is 0.056% per year, and for the Cannabidiol FIA IE is 1.5% per year + 20% performance fee.

Legalization plays a huge role in investments

It is a foreign investment fund. The fund’s assets are invested in shares and ETFs of companies in the cannabis industry listed on stock exchanges in the United States and Canada.

“These companies are participants in the production chain, but the most relevant are undoubtedly pharmaceuticals because they are more focused on medicinal use, which has already advanced more in these countries. As the market grows, the use of the cannabis plant will unfold in more sectors,” says O’Grady, from Vitreo.


(Featured image by Cassiano Psomas via Pexels)

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