Economist Joaquim Castro talks about the Cannabis market: “The best time to invest in Brazil is now”
By Katterina Zandonai | September 15, 2021
Economist Joaquim Castro has been revolutionizing the Cannabis Medicinal market in Brazil. With an entrepreneurial vision and attentive to changes in the world market, he created the Clínica Gravital, a pioneer and most solid medical network in the country, specialized in the care of patients seeking treatments based on cannabis. Castro spoke exclusively to the Green Science Times about his vision of Cannabis Medicinal, commented on the current market scenario, his vision of industrial use and made projections for 2022 about investments in the plant.
Anyone who thinks he’s new to this business is wrong. Following the extraordinary growth of the therapeutic, recreational and industrial use of the plant outside Brazil, in 2016, Castro decided to invest in companies focused on the cannabis industry in the United States. Its diversified portfolio and its ability to see new opportunities made it expand its business and create an offshore fund, Blue Dream Capital Partners.
From the first investment in the American Cannabis Company Inc., a Denver Colorado company that advises operators who want to enter the plant segment, to the installation of Gravital was a long journey. His vast experience in economics, added to the years of investments and management acquired abroad, made the Gaucho from Tapera (in the Northwest of Rio Grande do Sul) turn his attention to Brazil.
Castro’s bet on the potential of our country has always been great, even though he is aware that with the favorable climate and 80% of the arable areas suitable for the production of the plant, it would not be possible to invest in planting and research due to the restrictions imposed by Brazilian legislation. The sale of products to headshops, specialized stores in the field, was also analyzed, but the opportunity to innovate in the health area was stronger.
The bet worked
With an innovative proposal in Brazil, inspired by the offices of the United States and Canada, the Clínica Gravital was inaugurated in 2019 in the city of Rio de Janeiro. Today, in addition to the headquarters in the Botafogo neighborhood, there are also branches in Porto Alegre (RS), Itajaí (SC), Curitiba (PR) and São Paulo (SP). Apart from face-to-face care, doctors also provide teleconsultation.
Offering a pleasant environment and with internationally certified professionals to prescribe cannabinoids, the clinic emerged and became a reference in the country, serving today more than 2,100 patients with various clinical conditions and autoimmune diseases, insomnia, anxiety, migraine, Alzheimer’s, Parkinson’s and carriers of the Autistic Spectrum Disorder (ASD).
In the midst of the pandemic, the clinic specializing in cannabinoid medicine practically doubled the number of consultations. The time is now for expansion with the installation of two more new units, in Natal (RN) and Sorocaba (SP). The prospect of investments for next year is even greater, anticipates the founding partner.
We would like to have at least 10 clinics with open doors. Whenever possible, the patient likes to have a physical place to go. I believe it brings credibility, trust and legitimacy to the business. The opening of more units will mean a team of approximately 30 prescribing physicians. Today, our multidisciplinary team comprises 17 professionals, including psychiatrists, neurologists and endocrinologists.
Cannabis (Medicinal/Industrial): “The best time to invest in Brazil is now”
Last year, the global cannabis market had a turnover of USD 18 billion and, according to a survey by the Bank of Montreal, it will reach USD 194 billion by 2026. and flowers for medicinal and industrial purposes, but without strong legislation and regulatory improvements would create another reality.
Although the cannabis market is attracting more and more companies from different sectors, such as universities, importers, pharmaceuticals, laboratories, pharmacies, transport, security, Castro is emphatic in stating that we are still at a very early stage.
In fact, we see all these players moving, but the amount of resources circulating is negligible. You hardly see big investments being made or announced yet (I mean over USD 10 million). There is little merger and acquisition movement. Coming out of the medical market and into industrial hemp, it’s also still virtually non-existent. In practice, it is not possible to buy items made from hemp in Brazil, whether for food, clothing or other applications. We are at the stage of setting up the structure and defining the foundations.
Despite this, Joaquim is increasingly optimistic about the domestic market.
I think our growth in industrial hemp and Medicinal Cannabis will be driven by the domestic market, as soon as legislation starts to allow the cultivation. It is a fact that the political situation does not favor the rapid expansion of the market in Brazil, but, once again, I see an opportunity there for those who, as is the example of Gravital, invest and help this market to grow from now on. The best time to invest in Brazil is now.
Keep following the interview with economist Joaquim Castro, founding partner of Clínica Gravital:
Green Science Times (GST)– Born in Tapera (RS), he is 43 years old, has a degree in economics from UFRGS (2000) and a master’s degree in economics from EPGE/FGV-RJ (2007), lives in Rio de Janeiro. Since 2017, he has managed a small cannabis investment fund in the United States, Blue Dream Capital Partners. How did you decide to invest in cannabis?
Joaquim Castro (JC) – The investment in cannabis began in August 2016 after selling a property in Florida and having available resources that needed to decide between repatriating or continuing to invest. Under the recommendation of a friend who already knew that there were publicly traded companies in the cannabis segment, I started looking at the opportunity. After analyzing the situation, we made investments in small companies in the cannabis industry in the US, building a diversified portfolio that gave rise to the Blue Dream Capital Partners fund some time later. Our first investment was in a Denver, Colorado company called American Cannabis Company, Inc., a company that advises operators looking to break into the cannabis business.
GST – Clínica Gravital currently has five units in Rio de Janeiro, Porto Alegre (RS), Curitiba (PR), Itajaí (SC) and São Paulo (SP). In addition, there are two units that are being assembled: Natal (RN) and Sorocaba (SP). How did the idea of setting up the network of clinics come about?
JC – The idea of setting up the clinic came from investments we made, via Blue Dream, in a network of clinics that operate in Canada, such as Aleafia. In fact it was by exclusion. Assuming that medical cannabis would reach Brazil more consistently, it had to choose the best way to position itself, within the legality. So we exclude cultivation. The sale of products to headshops was an alternative, but there were already other players. We excluded only research initiatives as we advanced on the subject and concluded that it was very difficult to do in Brazil. The activities of a clinic, on the other hand, are protected by ANVISA Resolutions, in addition to, in the form of current regulations, everything starts with a medical recommendation. So we are on the front line, with the possibility of obtaining precious information such as the patient’s profile, what he has been using, how much he is willing to spend, how the medical class sees it these initiatives, etc.
GST – Gravital in numbers: how many patients have you seen? How many professionals do they have in attendance? And what is the prospect for 2022?
JC – Today there are more than 2,100 patients, aged between 3 and 91 years. Most are women. 17 physicians are available and trained, including 6 psychiatrists, 2 neurons, 2 endocrinologists, among other specialties. We would like to have at least 10 clinics with open doors. Which will mean a team of approximately 30 prescribing physicians. Whenever possible, the patient likes to have a physical place to go. It brings credibility, trust and legitimacy to the business.
GST – Which countries do you observe, to look for references on what is quality and health for Medicinal Cannabis patients?
JC – We look at all the countries where Medicinal Cannabis is already more advanced. But especially the United States. And we are looking more and more to our neighbors Colombia and Uruguay, expecting to have products at more affordable prices. The Cannabis market is very promising and coveted, and companies from different sectors, such as universities, importers, pharmaceuticals, laboratories, pharmacies, transport and security companies are investing heavily in this niche.
GST – How do you assess the Brazilian Medicinal and Industrial Cannabis market?
JC – Speaking of the medical market, we are still at a very early stage. In fact, we see all these players moving, but the amount of resources circulating is negligible. You hardly ever see big investments (I mean over USD 10 million) being made or announced. There is little merger and acquisition movement. The measurements are still in the thousands in terms of the number of patients and will soon be in the millions. Large companies in the world are not actually here yet, as they missed the step in their internationalization strategies and are now recovering from these losses. Coming out of the medical market and into industrial hemp, it’s also still virtually non-existent. In practice, it is not possible to buy items made [with fibers] of hemp in Brazil, whether for food, clothing or for other applications. We are at the stage of setting up the structure, defining the bases. So I think it’s still a great opportunity for investors.
GST – Do you believe that Brazil will still be a world power in Cannabis?
JC – I believe that Brazil will have a large domestic market and that it will be supplied by a national product in about 5 years. Everyone wants to be an exporting power (Colombia, Canada, Uruguay, Paraguay, the United States and Mexico), but in practice there are few relevant importing countries and the restrictions on the international trade of cannabis are immense. So, I think our growth in industrial hemp and Medicinal Cannabis will be driven by the domestic market, as soon as legislation starts to allow the cultivation. However, the cultivation will be on what basis? For our product to be cheap it cannot be based on indoor cultivation. And on the other hand, if it is not indoor cultivation, quality control is more difficult with the levels of demand that the medicinal market needs. It is a fact that the political situation does not favor the rapid expansion of the market in Brazil, but, again, I see an opportunity there for those who – as is the example of Gravital – invest and help this market to grow from now on. In fact, investments will not be relevant until we have a well-defined legal framework.
GST – What message do you leave for people who want to invest in the Cannabis market?
JC – The best time to invest in Brazil is now. There is still time to make mistakes, adjust routes, with relatively small losses. If you want to invest in a product, have a clear business plan, how the production will be sold, which is a great challenge, and consider decreasing prices for cannabis-based products.
To learn more about Clinica Gravital, visit the website: www.clinicagravital.com.br.