Uruguay attracts Brazilians to ExpoCannabis; perspectives for the segment open space for new investment options

ExpoCannabis Uruguay

ExpoCannabis Uruguay

About 18,000 people gather annually at ExpoCannabis Uruguay – and believe it or not, almost half are Brazilians who travel to the neighboring country looking for the feeling, at least for a few days, of living in a legal place. With the borders reopened, allowing the entry of tourists after long months of isolation, Uruguay will receive, until Sunday (5), thousands of Brazilians in an atmosphere of celebration for the return of in-person events, the summer and whatever else there is to celebrate.

There is no better place for this than Uruguay, a country full of opportunities. In this case, business opportunities in cannabis. Or did you think that facing more than 1,000 km of travel was just to interact with her live and in color?

Getting close, touching, smelling and smoking the weed during the event is a great attraction for some of the visitors – but not all. The fair is so popular that even Leonardo Sbaraglia, one of the most prestigious Argentine actors, posted a video on Instagram confirming his presence at the event.

Cannabis fairs and events are known for generating a valuable network of contacts, as they are meeting points for various segments of the industry. In the same pavilion where the medicinal sector tents are displayed, adult use, the impact of the drug war and even the potential for economic recovery, both in tax collection and in the injection of capital and turnover into the market, are also discussed.

A fair lasting just two days can be the scene of millionaire negotiations. The 2019 Berlin edition of the International Cannabis Business Conference (ICBC) witnessed transactions totaling $100 million, according to Alex Rogers, founder of the event. He plans, for next year’s edition, to take the fair to a space measuring 65,000 square meters to meet the demand of cannabis investors.

In the case of ExpoCannabis Uruguay, considered one of the most important fairs in the sector in the world, more than 150 stands of brands of products or services in cannabis are present. Courses, workshops, and several other socialization opportunities help set the scene. You can add a food court with options for all tastes and budgets, as well as concerts and concerts by reggae groups – just like a festival.

During the event, politicians, businessmen, investors, doctors, social organizations, scientists, patients and users have the opportunity to get to know each other and share information. But it is not just inside that meetings that lead to business take place.

Outside, there are dozens of activities planned, in an extra official agenda that promotes businesses of various sizes – from self-cultivation workshops to dinners. All this movement around the Expo encourages discussions about the present and future of direct or indirect investments in cannabis.

How to invest in cannabis?

There are different views on the future of the cannabis market. The shares of Aurora – a Canadian cannabis producer based in Edmonton – are not unaffected by the ups and downs of the stock exchanges. The company’s shares, listed on Nasdaq, retreat almost 20% in 2021 and have a drop of more than 30% in 12 months. Already the shares of its competitor, Tilray, had increases of 44% and 96%, respectively.

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Despite the uncertainties about the roles of a newborn industry, the bet is that the regulatory changes expected for the coming years – such as a possible release of cannabis at the federal level in the United States, or the relaxation of rules that currently make it difficult to offering banking services to enterprises in the sector – unlock the growth of the segment.

With an eye on this possibility, financial institutions have been dedicated to creating new investment products. O InfoMoney found that the manager Investo is developing what could become the first index fund (ETF) dedicated to the cannabis segment of the Brazilian market. The forecast is that the ETF (acronym for Exchange Traded Fund. with shares traded on the stock exchange) will be ready in the first half of 2022. At the moment, according to the calculation, the manager is awaiting the approval of the Brazilian Securities Commission (CVM). ) to proceed with the project.

There are also already multimarket funds that provide access to the cannabis market for retail investors, with exposure to shares listed in Canada and the US. XP, for example, manages the Trend Cannabis FIM, with an initial investment of R$100. The fund follows the variation of the MG Alternative Harvest ETF, the largest and most liquid ETF in the sector in the American market.

The portfolio includes companies with more than 50% of the revenue directly or indirectly related to the legal cultivation process, production, marketing or distribution of products, for medicinal purposes or not.

Vitreo, in turn, allocated one of its cannabis funds to qualified investors who have a portfolio of at least R$1 million or who are certified to operate professionally in the market.

Read more: XP launches Cannabis fund with a minimum investment of R$100

To invest directly in new companies that develop projects in the segment, an alternative is the fundraising rounds. equity crowdfunding, collective financing modality based on the purchase of shares in the business. The Dr. Cannabis platform, for example, which bridges the gap between doctors and patients, has already raised funds in this way twice, and is planning a third round for next year. The company had more than 100 investments ranging between R$5,000 and R$10,000.

Large industries from other segments, such as pharmaceuticals, tobacco and beverages, are also eyeing cannabis companies. Constellation Brands, for example, which owns Corona beer in the United States, bought part of Canopy Growth for US$ 5 billion and is now its majority shareholder.

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In a similar move, drugmaker Jazz Pharmaceuticals paid $7 billion for GW Pharmaceuticals, which developed Epiodolex, one of the best known CBD drugs in the world. The assessment is that these industries are approaching the cannabis segment – ​​a potential threat to their business – to also be aware of the therapeutic arsenal that it carries.

Hands-on

At least among the attendees of ExpoCannabis Uruguay, many are interested in, if not invest, at least understand a little more about the topic. To become even more known among this audience, Juicy Fields agreed to be a sponsor of the event. The collective grow platform connects people with medical marijuana businesses looking for funding.

The focus is to serve both those looking to invest and those looking for investment alternatives, as well as those who believe in and want to support the cause. Operating in the market since last year, the company has attracted thousands of investors by connecting virtual plants to real plants grown on farms in Portugal, South Africa and Colombia. Expansion plans include new crops in other countries such as Uruguay – presumably.

What differentiates an investor who buys shares in a company or shares in a fund from an investor who subsidizes collective plantations is that the former expects the share price to rise, always based on future estimates. Those focused on collective cultivation do not depend on general industry conditions or the performance of financial markets. The expected profit of each participant is estimated at the time of purchase of the plants.

For those who work with collective farming, this characteristic makes the modality a profitable and safe choice. Zvezda Lauric, communication director at Juicy, for example, argues that the risk is low – but does not deny that there are uncontrollable factors, such as too much or too little rain, too much cold or heat, infestation of insects or fungi. If they affect the quality of the harvest, they can cause losses to the investor.

Persons over the age of 21 with Internet access can become investors in Juicy Fields, regardless of nationality or country of residence. A minimum initial investment of 50 euros – around R$320 – is the final criterion for becoming an investor in virtual cannabis farms.

Invest from R$100 on XP’s first cannabis fund: open an account – it’s free!

About Abhishek Pratap

Food maven. Unapologetic travel fanatic. MCU's fan. Infuriatingly humble creator. Award-winning pop culture ninja.

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