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Cannabis firms catch a whiff of opportunity in Brazil

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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.

“By 2025, I would like to be planting hemp in the interior of Pernambuco,” said José Bacellar, founder of Canada‘s VerdeMed, referring to a northeastern state known for illegal marijuana growing.

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A proposal that would legalize cultivation was approved in June by a congressional committee. Lawmakers are weighing if it could be fast-tracked to the Senate for approval. If passed 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 support from some members of the powerful farm sector, a key constituency that helped him win the 2018 election.

SILICON VALLEY OF CANNABIS

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 which is developing the hemp strain for Brazil, said about 3 million square kilometers (1.2 million square miles) of land would potentially be suitable for cultivating the new variety.

Brazil could overtake China, the world’s largest hemp producer, which has about 670 square kilometers (259 square miles) planted.

“Using a part of Brazil’s agricultural land would be enough to give the country the title of world’s largest producer and exporter of hemp fibers, seeds and flowers for medicinal and industrial purposes,” said Dennys Zsolt, an agronomist specializing in the plant.

Brazil bans growing of Cannabis sativa L, the plant that produces hemp and marijuana. Hemp, which has less than 0.3% of the psychoactive compound THC, contains CBD or cannabidiol. This non-intoxicating ingredient has been touted as beneficial for many health conditions including 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.

TROPICAL ADVANTAGE

Among Brazil’s advantages are lower growing costs because its warm climate allows plants to grow outdoors compared to greenhouses in some countries. Stable hours of sunlight due to Brazil’s proximity to the equator are another plus.

Canopy Growth is “actively monitoring the advancement of hemp regulations in Brazil,” David Culver, the company’s vice president of global government relations, said.

But nothing is certain without the change to Brazil’s law, though 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.

“After I finished presenting the maps and hemp’s potential, I was applauded,” he said.

Although the farm caucus has not taken a formal position, members of the group said a majority in both houses of Congress back the proposal. The farm caucus controls slightly fewer than half the seats in the two chambers, and the law requires approval by a simple majority.

Center-right lawmaker Fausto Pinato, a member of the farm caucus, said he supports the bill. “If you are authorizing the sale, why not cultivation?,” he said.

 

(Reporting by Ana Mano in São Paulo, Jimin Kang in Seul and Maximilian Heath in Buenos Aires; Editing by Cynthia Osterman)

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Turning empty offices into housing is a popular idea. Experts say it's easier said than done – CBC.ca

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Turning empty offices into housing is a popular idea. Experts say it’s easier said than done  CBC.caView Full Coverage on Google News

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Tiny wines find home in B.C.’s market, as Canadians consider reducing consumption

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VANCOUVER — Wine lovers have growing options on the shelf to enjoy their favourite beverage as producers in B.C. offer smaller container sizes.

Multiple British Columbia wineries over the last several years have begun offering their product in smaller, single-serve cans and bottles.

Along with making wine more attractive to those looking to toss some in a backpack or sip on the golf course, the petite containers leave wineries with options for a potential shift in mindset as Canadians discuss the health benefits of reducing alcohol consumption.

Vancouver-based wine consultant Kurtis Kolt said he’s watched the segment of the wine industry offering smaller bottles and cans “explode” over the last several years, particularly during the COVID-19 pandemic when people were meeting outdoors in parks and beaches and looking for something more portable to take with them.

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“You’re not taking a hit on quality, you know? In fact, if someone is only going to be having a glass or two, you’re cracking a can and it’s completely fresh, guaranteed,” he said.

It’s also an advantage for people who want to drink less, he said.

“It’s much less of a commitment to crack open a can or a small bottle or a smaller vessel than it is to open a bottle,” he said.

“Then you have to decide how quickly you’re going to go through it or end up dumping some out if you don’t finish it.”

Last month, the Canadian Centre on Substance Use and Addiction released a report funded by Health Canada saying no amount of alcohol is safe and those who consume up to two standard drinks per week face a low health risk.

That’s a significant change from the centre’s 2011 advice that said having 15 drinks per week for men and 10 drinks per week for women was low risk.

Health Canada has said it is reviewing the report.

Charlie Baessler, the managing partner at Corcelettes Estate Winery in the southern Interior, said his winery’s Santé en Cannette sparkling wine in a can was released in 2020 as a reduced alcohol, reduced sugar, low-calorie option.

“We’ve kind of gone above and beyond to attract a bit of a younger, millennial-type market segment with a fun design concept of the can and sparkling, low alcohol — all these things that have been recently a big item on the news,” he said.

Santé en Cannette is a nine per cent wine and reducing the alcohol was a way to reduce its calories, he said. The can also makes it attractive for events like a picnic or golf, is recyclable, and makes it easier for restaurants that might want to offer sparkling wine by the glass without opening an entire bottle.

At the same time, the lower alcohol content makes it an option for people who might want a glass of wine without feeling the same effect that comes from a higher alcohol content, he said.

“So the health is clearly one incentive, but I think more importantly, so was being able to enjoy a locally made product of B.C. from a boutique winery, dare I say, with a mimosa at 11 o’clock and not ruin your day,” he said.

Baessler said the winery has doubled production since the product was first released to about 30,000 cans a year, which they expect to match this year.

He said there’s naturally a market for the product but he doesn’t expect it to compete with the higher-alcohol wine.

“So this isn’t our Holy Grail. This is something that we do for fun and we’ll never compete, or never distract, from what is our core line of riper, higher-alcohol wine,” he said.

Jeff Guignard, executive director of B.C.’s Alliance of Beverage Licensees, which represents bars, pubs and private liquor stores, said the industry has seen a shift in consumers wanting options that are more convenient.

“It’s not a massive change in consumer behaviour but it is a definitely a noticeable one, which is why you see big companies responding to it,” he said.

Guignard said the latest CCSA report is creating an increased awareness and desire to become educated about responsible consumption choices, which is a good thing, but he adds it’s important for people to look at the relative risk of what they’re doing.

“If you’re eating fast food three meals a day, I don’t think having a beer or not is going to be the single most important determinant of your health,” he said.

“But from a consumer perspective, as consumer preferences change, of course beverage manufacturers respond with different packaging or different products, the same way you’ve seen in the last five years, a large number of low-alcohol or no-alcohol beverages being introduced to the market.”

While he won’t predict how much the market share could grow, Guignard said non-alcoholic beverages and low-alcoholic beverages will continue to be a significant piece of the market.

“I don’t know if it’s reached its peak or if it will grow. I just expect it to be part of the market for now on.”

This report by The Canadian Press was first published Feb. 5, 2023.

 

Ashley Joannou, The Canadian Press

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Indian tycoon Adani hit by more losses, calls for probe

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NEW DELHI (AP) – Trading in shares in troubled Adani Enterprises gyrated Friday as the flagship company of India’s second-largest conglomerate tumbled 30% and then rebounded after more than a week of heavy losses that have cost it tens of billions of dollars in market value.

The debacle, which led Adani to cancel a share offering meant to raise $2.5 billion, has drawn calls for regulators to investigate after a U.S. short-selling firm, Hindenburg Research, issued a report claiming the group engages in market manipulation and other fraudulent practices. Adani denies the allegations.

Opposition lawmakers blocked Parliament proceedings for a second day Friday, chanting slogans and demanding a probe into the business dealings of coal tycoon Gautam Adani, who is said to enjoy close ties with Prime Minister Narendra Modi.

“We have no connection″ with the Adani controversy, Parliamentary Affairs Minister Pralhad Joshi told reporters outside Parliament on Friday.

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In an interview with CNN News 18, Finance Minister Nirmala Sitharaman brushed off concerns that the losses would spook global investors and said India’s financial market was “very well regulated.”

“As a result, the investors’ confidence which existed before shall continue even now,” she said, adding that the controversy wasn’t “indicative of how well Indian financial markets are governed.”

Amit Malviya, the governing Bharatiya Janata Party’s information and technology chief, said in a television interview that the opposition was using Adani’s crisis to target the Modi government over a private company’s shares and their market movements. “Regulators are looking into” what happened, he said.

The market watchdog, the Securities and Exchange Board of India, has not commented. The Economic Times newspaper reported, citing unnamed SEBI sources, that it had asked stock exchanges to check for any unusual activity in Adani stocks.

Shares in Adani Enterprises fell as much as 30%, to 1,017 rupees ($12), on Friday. At the end of trading, the price had recovered to 1,531 rupees ($18.70) but was still down by 2%. The company’s share price has plunged more than 50% since Hindenburg released its report last week, when it stood at 3,436 rupees ($41). Stock in six other Adani-listed companies were down 5% to 10% on Friday.

So far there has been no indication that the company’s woes might threaten the wider financial sector in India. Its equities market is large enough to sustain the fallout at this moment, said Brian Freitas, a New Zealand-based analyst with Periscope Analytics who has researched the Adani Group.

“Adani stock forms a small part of the equities market and investor concerns right now are restricted to the company, not the whole system or market itself,” Freitas said. India’s Nifty and Sensex indexes were both higher on Friday.

It could take time for problems to surface, Shilan Shah of Capital Economics said in a report. “From the macro perspective there are few signs of contagion,” he said. “But it is too early to sound the all clear.”

The S&P Dow Jones indices said Thursday it would remove Adani Enterprises from its sustainability indices beginning Tuesday, following a “media and stakeholder analysis triggered by allegations of stock manipulation and accounting fraud.”

That might dent the Adani Group’s sustainability credentials and could affect investor sentiment, Freitas said.

Adani, who made a vast fortune mining coal and trading before expanding into construction, power generation, manufacturing and media, was Asia’s richest man and the world’s third wealthiest before the troubles began with Hindenburg’s report.

By Friday, his net worth had halved to $61 billion, according to Bloomberg’s Billionaire Index, where he dropped to the 21st spot worldwide.

He has said little publicly since the troubles began, though in a video address after Adani Enterprises canceled its already fully subscribed share offering he promised to repay investors. The company has said it is reviewing its fundraising plans.

Hindenburg’s report said it was betting against seven publicly listed Adani companies, judging them to have an “85% downside, purely on a fundamental basis owing to sky-high valuations.” Other issues in the report included concerns over debt, alleged use of offshore shell companies to artificially raise share prices and past investigations into fraud.

Adani’s speedy, debt-led expansion in recent years caused his net worth to shoot up nearly 2,000%. Even before last week, critics said his ascent was aided by his apparent close ties to Modi and his government. Analysts say he has been successful at aligning his priorities with those of the government by investing in key sectors, but point out that he also has major infrastructure projects in states that are ruled by opposition parties.

“The question now turns to the future of the Adani Group and how they will grow,” said Aveek Mitra, founder of Avekset Financial Advisory.

As a company heavily involved in infrastructure — from airports and ports to highways — it needs financing to grow in order to service its debt, which stands at $30 billion, out of which $9 billion is from Indian banks.

Adani may be able to sell some assets and continue its expansion, but at a much slower pace than earlier, Mitra said.

“Banks, financial institutions and investors will think five times before investing now,” he added.

Associated Press writer Ashok Sharma contributed to this report.

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