“The pharmaceutical industry does not plant its inputs”. Based on this premise, American Kyle Detwiler, CEO of Clever Leaves, presents himself as the preferred farmer to supply inputs extracted from cannabis. “We have worked for over four years and have invested a quarter of a billion dollars to achieve this standard of cultivation and processing. This puts us in a privileged position to negotiate with industries interested in substances obtained from the plant”, he said in an exclusive interview to Cannabiz last week. Detwiler essentially refers to the certification granted by an authority of the European Union in July of last year and considered a reference in the pharmaceutical segment. With the document in hand, Clever Leaves intends to explore the opportunities opened in Brazil by Anvisa’s RDC 327/2019, which establishes rules and criteria for the import, manufacture and sale of products containing cannabis.
Unlike the numerous companies that operate here importing their medicines based on RDC 17/2015; that disciplines compassionate use, the Colombian multinational bets on the pharmaceutical front to dominate the Brazilian market. “Brazil has found an interesting way to regulate cannabis. By privileging the pharmaceutical standard for the registration of products, the country will offer patients very high quality therapies at very affordable prices”, he says. To produce the APIs (active pharmaceutical ingredients) that it intends to sell cheaply and in large volumes, Clever Leaves maintains 177,000 square meters of cannabis plantations in Colombia and Portugal. At its European-certified extraction unit on the outskirts of Bogotá, the company has the capacity to process 104 tonnes of dehydrated flowers per year, with an expected expansion to 300 tonnes/year in the short term, depending on small investment, according to its prospectus for investors.
With such a large offer of biomass, Detwiler minimizes the advantages of an eventual release of cannabis cultivation in Brazil, an idea that is being discussed in the Chamber of Deputies under PL 399/2015. “Not all countries need to participate in all stages of the medical cannabis chain. I believe that Brazilian companies will be much more efficient when concentrating on commercial and distribution strategies, to expand the population’s access to therapies with the plant. There is already enough raw material available at affordable prices, not everyone needs to cultivate it”, he defends. For the executive, the creation of a cannabis agroindustry in Brazil focused on the production of certified pharmaceutical inputs would consume years of work and would cost millions of dollars, leaving patients unattended in the period.
Now, less than three years after starting its first cultivation in Colombia, in November 2018, Clever Leaves believes it is ready to conquer markets around the world as one of the pioneers in supplying the industry. “In fact, if you look at the compassionate segment, there is a certain saturation, with oversupply. When, however, you look at the side of inputs with pharmaceutical grade quality and international certification of good practices, the numbers remain very favorable”, defends Detwiler. In practice, Clever Leaves is positioning itself to sell, at reduced prices, the substances extracted from the plant to any industry that intends to establish a cannabis brand in Brazil or anywhere else in the world. In the goals for the 2021/2022 biennium, Detwiler included the first commercial exports from Portugal, sales with its own brand in Germany and the launch of the first CBD product in the United States. “Our objective has always been to produce and sell cheap medicines”, he repeats.
Among the Brazilian companies, Detwiler has already signed agreements with GreenCare, Verdemed and Entourage Phytolab. The partnerships were celebrated in the model known as “white label”, in which Clever Leaves supplies the APIs and the buyers complete the industrialization to market them with their own brands. In the agreement with GreenCare, for example, it received $2 million in the act and a commitment to purchase another $4 million worth of products over the next three years. With Verdemed, in addition to Brazil, Clever Leaves will also supply medicinal cannabis to Peru, a market where this partnership has a relevant presence. Entourage went even bolder, with a $11.4 million contract, also over three years – including ready-to-use formulations for compassionate use, in addition to the APIs.
Detwiler sees room for more aggressive expansion in the region. “We are the only cannabis producers in Latin America with a pharmaceutical standard certified by a European health authority. This is a considerable advantage, as our potential competitors will take at least the same amount of time and need the same amount of capital to get where we are today”, he adds. So, if the business fundamentals are right, the entry of medical cannabis from Clever Leaves in Brazil could deteriorate the economic conditions for establishing competitive legal crops here. For that to happen, however, it is necessary that the company’s cannabinoids reach prices substantially lower than those practiced by companies that today have registered labels in the country: GW Pharma and Prati Donaduzzi. We will have the answer when GreenCare, Verdemed and Entourage products reach pharmacies.