Heavy investors create medical cannabis marketplace in Brazil

The Cannect platform aims to cover the entire universe of cannabis

At the end of March, Fernando Domingues, co-founder and chairman of the board of Conexa Saúde, went for coffee with Allan Paioti, then executive director of Hospital Alemão Oswaldo Cruz. During the conversation, Domingues said he was investing in creating a platform focused on medical cannabis.

“That made my stomach move, I realized that it was something different, that I needed to participate”, he says, when NeoFeed, Paiotti, who asked to enter the business and went to study the market thoroughly.

Now, together with Domingues, and other heavyweight investors such as Rapha Avellar, Ricardo Dias and Gerard de Roure, from Adventures; Thiago Maluf, from Igah Ventures, and doctors Abdalla Skaff and Gustavo Nobre, are officially launching Cannect.

The platform, which for the past three months had been working on an experimental basis, aims to solve some of the pain experienced by users and physicians. “We are an inclusive marketplace. We were already born with 200 products available from a portfolio that we have mapped in Brazil of around 350 products”, says Paiotti, who left the command of Oswaldo Cruz in April and became the startup’s CEO.

The idea is that any medical cannabis drug prescribed by a doctor will be found on the platform that starts with a website and will then get an app. “We have a healthtech head to work on the relationship between the patient, the doctor and the supplier”, says Paiotti. This, he says, is translated by embedded services.

If the patient does not have a prescription to buy the medicine, Cannect has a teleconsultation service provided by Conexa Saúde. Depending on the case, the doctor generates a prescription that goes to the platform and the startup takes care of the entire journey. “We take the prescription, approve it with Anvisa, make the purchase intermediation and deliver it to the customer’s home”, says the CEO of Cannect.

The complicated procedure is one of the biggest obstacles to the popularization of remedies based on medical cannabis. Paiotti says that one of the doctors’ biggest complaints is that, by prescribing the use of medical cannabis, “their headache starts”.

Allan Paiotti (left), CEO of Cannect, and Fernando Domingues, Chairman of the Board

This happens because the patient cannot find the product, or because it is expensive and he has no option, or because it is bureaucratic and has to be approved by Anvisa. A drug takes, on average, 25 days to arrive at the client’s home. Anvisa asks for up to 10 business days to approve the patient’s prescription.

Cannect, say its founders, is curating the products available on the platform. But sellers cannot sell directly. Everything goes through the platform, which makes the midfield and earns a percentage of sales.

“In the future, in a second stage, Cannect intends to create signatures”, says Fernando Domingues, the platform’s creator and the startup’s chaiman. In this model, the patient would have a monthly consultation and delivery of the medication.

Users of this type of drug are not patients with a specific problem, they mostly have chronic diseases and need to use the drug for a long period. “It’s not an alternative herbal, peace and love business. It is medicine, it has contraindications, it has combination effects with other drugs. It has medical rigor”, says Paiotti.

There are several studies showing that medicinal cannabis, with its extracts of cannabidiol (CBD) and tetrahydrocannabinol (THC), has consistent applications in mental health, chronic pain, neurology, pediatric neurology and sports health. It is worth remembering that during the Tokyo Olympic Games the use of cannabidiol was released to athletes.

In addition to focusing on the end customer, on B2C, Cannect is also in conversations with clinics, laboratories and hospitals to sell directly to them – in larger quantities. More: another line of business that the company intends to advance is in food and supplements, clothing and even medication for pets.

Entrepreneurs have their eye on a huge industry. Last year alone, it is estimated that legalized cannabis moved about $20 billion in the United States – half medical and the other half for recreational use.

Studies show that, in 2024, the world market should turn over US$ 104 billion

Studies show that, in 2024, the world market should turn over US$ 104 billion. “Being very conservative, the Brazilian market has the potential to move 10% of what is moved in the United States”, he says, to NeoFeed, Fernando Domingues, the startup’s chairman.

According to Paiotti, looking at the growth curves in the US and Canada, Brazil may have 30 million medical cannabis users. The Cannabis Economic Impact Report, produced by Kayamind, points to 7 million users in Brazil in four years.

But there is still a long way to go for that to happen and medical cannabis becomes popular as it quickly became in the United States and 50 other countries. In Brazil, only 0.2% of doctors prescribe medicines based on medical cannabis.

Opening up a market that is still in its infancy is nothing new for Domingues. This is because he entered the telemedicine segment when few spoke about the subject and currently Conexa Saúde, co-founded by him, is the largest company in the sector, with investors the size of General Atlantic.

To make medical cannabis more common, Cannect will do extensive work to raise awareness in the medical community. “We built a very strong medical corps with the following thesis: we are only going to promote the use of cannabis based on scientific knowledge and evidence”, says Paiotti.

The company has set up a medical team headed by the Chief Medical Officer (CMO), Rafael Pessoa, and specialists in the areas of pain, palliative oncology, neurology and sports health.

Therefore, it is compiling all the scientific material available in the world, systematizing it, creating a practical analysis of the evidence, generating protocols for the use of cannabis and also developing a training program with physicians.

political struggle

According to Paiotti, this is the perfect window to enter the market. “Between 2021 and 2023, this business is going to be driven by the discussion of medical cannabis,” he says. The conversations have been taking place, above all, in Congress.

Two years ago the discussion began and gave rise to Bill (PL) 399/15, authored by Deputy Fábio Mitidieri (PSD-CE), which regulates the planting of cannabis sativa in Brazil. “The country can import and produce medicines, but it cannot plant,” he says to the NeoFeed, deputy Luciano Ducci (PSB-PR), the rapporteur of the PL.

Former mayor of Curitiba, a doctor by training, Ducci says that the impact of the controlled plantation would be brutal for patients. “That would make the drugs cost up to a third of what they currently cost,” he says.

Deputy Luciano Ducci (PSB-PR) is the rapporteur of the Bill that allows the planting of cannabis sativa for medicinal purposes

In addition, it would stimulate research, which today is almost non-existent in the country, and would make room for an entire industry that ranges from pharmaceuticals, passing through textiles, cosmetics and cellulose. “It’s an industry in rapid development and we’re wasting time,” he says.

In June, the PL was voted on and approved by a committee in the Chamber of Deputies. The vote was close. There were 17 votes in favor and another 17 against. Ducci, who is the rapporteur, cast his vote for Minerva and, in the end, was ranked 18 to 17.

It turns out that the government caucus, which is against the PL, filed an appeal for the discussion to go to the plenary and stopped the agenda. Now, it depends on the president of the Chamber, Arthur Lira (PP-AL).

If the appeal is approved, the deputies will have to vote in the plenary. If rejected, it goes straight to the Senate. But, in addition to the political game, Ducci says he is still fighting a big fake news machine.

“This is false news that this will release marijuana in Brazil, which would be chaos for Brazilian children and families. This is something of an ideological group”, he says.

In conversation with supporters at Planalto Palace, President Jair Bolsonaro said that, if approved in Congress, he would veto and added that “the left always takes an opportunity to want to liberate drugs.”

The president also said on another occasion that “he would veto the bill, since the proposal, according to him, is ‘crap’ and that his debate is ‘ridiculous’. Israel, a country frequently praised by Bolsonaro, is one of the most advanced in medical cannabis.

Thousands of families like Anny Fischer, the child portrayed in the documentary “Illegal”, definitely don’t find the discussion ridiculous. Anny suffers from a rare disease called CDKL5, which gave her about 80 seizures a week.

Before the medicinal use was approved by Anvisa, her parents started to illegally import cannabidiol to be able to treat their daughter. Seizures, which were daily, became sporadic. The family sought legal authorization and became a symbol of the struggle for the approval of medical cannabis in the country.