2020 has been a banner year for the Israeli cannabis industry and it is a market we have been optimistic about since we started covering the cannabis industry.
The main reason for our optimistic outlook on the Israeli cannabis industry has to do with the economy. Compared to Canada, the cost of growing cannabis is much cheaper in Israel and the market is much less saturated. While the overall cost of cannabis is around $ 1 per gram in Canada, the cost in Israel is less than $ 0.50.
Last week, Justice Minister Avi Nissenkorn said Israel plans to legalize recreational cannabis within nine months. This represents a major breakthrough for the industry and Nissenkorn said the recommendations will be released by the end of November. If the recommendations are approved, the law would come into effect nine months after the date of approval and we think this is important.
Over the past year, we have seen a steady increase in the number and quality of companies focused on the desirability of Israeli cannabis. Today we want to highlight 3 companies that are running in the booming cannabis market and we believe these are opportunities to be aware of.
HEXO: Will Molson support HEXO leverage in Israel?
A few months ago, we saw a spike in interest in the Israeli cannabis market after HEXO Corporation (HEXO.TO) (HEXO) announced a supply agreement with Breath of Life (BOL), one of Israel’s leading cannabis companies. HEXO is a Canadian cannabis producer who has focused on the international opportunity and we see BOL as a strategic partner for this.
At around the same time as HEXO’s announcement, Marijuana Business Dailey reported that Israel had overtaken Germany as the world’s largest importer of medical cannabis flowers so far this year and we found that it was a milestone for the emerging market.
One of the reasons for our positive opinion on HEXO’s influence in the Israeli market has to do with its relationship with Molson Coors (TAP.CN). We believe that Molson provides HEXO with the necessary infrastructure to grow and we expect the relationship to play an important role in how the Canadian cannabis producer can perform internationally in the industry.
Kaya Holdings: a less than quality opportunity
Over the summer, a small U.S. cannabis operator jumped on the Israeli cannabis bandwagon and announced a strategic partnership with Day Three Labs (DTL), a cannabis innovation and development lab that runs cannabis operations. scientific research in Israel.
The company, Kaya Holdings Inc. (KAYS), was one of the pioneers of the cannabis industry in the United States and had focused on the opportunity in Oregon. When it comes to the Israeli cannabis market, we don’t have a high level of conviction with Kaya. The company has struggled to capitalize on the Oregon market and does not believe it has the expertise to capitalize on an international market.
Kaya is a great example of a business that needs to learn to walk before it can operate. We believe that the management team must prove that they are able to execute in the domestic market before expanding overseas and that they will continue to be careful with Kaya due to the lack of execution.
IM Cannabis: a story of international growth
We consider IM Cannabis Corp (CSE: IMCC) (IMCNF) to be a forerunner in the Israeli cannabis market and this is an opportunity that we are following. The company has implemented a multinational growth strategy and is striving to become a leading international cannabis producer.
IM Cannabis was founded in 2010 and continues to focus on capitalizing the emerging international cannabis markets. The company has a strong focus on the opportunity for medical cannabis in the European Union (EU) and has established a presence in Germany. Through the ownership of Adjupharm GmbH, an authorized distribution company, IM Cannabis plans to capitalize on the German cannabis market and it is a market that we are passionate about.
In the third quarter, Adjupharm announced that it had added seven distribution partners to distribute and sell branded products to German pharmacies. In September, Adjupharm delivered its first shipment of branded medical cannabis to a distribution partner and has completed seven shipments to date.
Last month, IM Cannabis released an operational update and reported that its pace of execution accelerated in the third quarter. The company has announced that it is seeing impressive growth in deliveries to Israel. IM Cannabis has also reported delivering cannabis to Germany and we are supportive of the company’s progress so far this year.
IM Cannabis operates from an EU-GMP facility and we find this to be an important aspect of the story. By operating from a state-of-the-art facility that meets these strict guidelines, the company can export cannabis products to markets such as Germany and we are optimistic about this opportunity for the company.
A few weeks ago, IM Cannabis filed for listing on Nasdaq and we expect approval to be the catalyst. We plan to continue to monitor the opportunity closely and will monitor how it continues to perform on the international cannabis vertical.