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 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.

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.

In the quiet town of Viçosa in southeastern Brazil 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 three million sq. kilometres of land would potentially be suitable for cultivating the new variety.

“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 fibres, 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 percent 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.

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,” said David Culver, the company’s vice-president of global government relations.