During the last few months, we have been highly focused on the Israeli medical cannabis opportunity and this is a market that we have been excited about. The country has been slow to issue cannabis businesses licenses and we are favorable on the companies that have a first-mover advantage on this market.
There are a number of reasons that leave us excited about the Israeli cannabis market. From a geographic standpoint, the country is located close to burgeoning cannabis markets in the European Union (EU) and the export opportunity to this market is substantial. From a climate standpoint, Israeli is one of the most attractive markets for cannabis cultivators and this provides companies with a considerable advantage.
Over the next year, we expect to see increased interest in the Israeli cannabis market, and this is an opportunity that we will be closely following. A few weeks ago, we highlighted Isracann Biosciences (CSE: IPOT) (OTC: ISCNF) as a leading play on the Israeli cannabis market and today, we want to provide an update on the opportunity.
Isracann has been highly focused on the Israeli cannabis market and is focused on completing construction of a state-of-the-art cultivation facility. Last month, the company commenced trading on the Canadian Stock Exchange (CSE) and we have been monitoring this opportunity. This new listing represents an international opportunity and is one to keep on your radar for the following reasons:
- Israel’s first pure play cannabis firm to list in Canada giving it first mover advantage.
- Focused on becoming a premiere, low-cost cannabis producer.
- Fully funded to execute on 230,000 sq. ft. of hybrid greenhouse.
- Targeting undersupplied domestic demand.
- With the Israeli export framework in place and expected to be live by mid-2020, Isracann aims to be one of the best positioned low-cost cannabis producers, to supply the European cannabis market.
Although we are excited about Isracann, we want to highlight another company that has been focused on the opportunity in Israel and in the EU. The company, International Medical Cannabis (CSE: IMC) has been executing on a multi-faceted growth strategy and has been working tirelessly to become a leading international cannabis producer.
Two International Growth Stories to be Watching
When you compare Isracann to IMC, we see a lot of similarities and find this to be significant. IMC was founded in 2010 and continues to focus on emerging cannabis markets. This strategy is similar to Isracann and we expect to see Isracann follow in the footsteps of IMC. We believe that the market does not fully appreciate the growth prospects associated with this and will continue to monitor how the Isracann story continues to advance.
IMC is highly focused on the medical cannabis opportunity in the EU and has established a presence in Germany. Through the ownership of Adjupharm GmbH, a licensed distribution company, IMC plans to capitalize on the German cannabis market and this is a market that we have been excited about.
Currently, IMC has a significant market price arbitrage opportunity through its supply partners in Spain. The operators have an EU-GMP facility and this provides IMC with the opportunity to sell product to German distributors at 5 euros per gram. With more than 20,000 pharmacies in Germany approved to sell medical cannabis, we are favorable on the amount of distribution in Germany and find this to be significant.
Germany is the first market that Isracann plans to target in the EU and we are bullish on this opportunity. Currently, Germany has no cultivation laws and imports cannabis from international markets. With a population of 80+ million, Germany represents a huge market and Isracann plans to capitalize on it. Soon after Israel joins Canada and the Netherlands as countries that allow for the legal export of cannabis, we expect to see the company plant its flag in Germany and will monitor this aspect for the business.
Long term, we expect to see both companies benefit from the legalization trend in Germany (as well as in the EU) and will monitor how the management team is able to capitalize on this trend. The company is in advanced negotiations with distribution partners in Germany and this could prove to be a major revenue driver to the entire business.
Major Export News Announced
Last week, the Israeli Ministry of Health announced that it would be releasing guidelines for the Israeli cannabis export market and this represents a major milestone as it relates to the burgeoning opportunity. The opening of the Israeli cannabis export market will support the European cannabis industry and we are favorable on this market opportunity.
The opening of the Israeli cannabis export market will significantly expand the total addressable market for licensed Israeli cannabis companies, and we are bullish on this. We expect the impact that this market will have on cannabis prodders to become more significant over time and will monitor how the market continues to evolve. When you look at the European market from a population standpoint, there is a lot to be excited about as it relates to the Israeli cannabis market and this is an opportunity that investors need to be aware of.
Isracann has Visible and Substantial Growth Prospects
When it comes to the Israeli opportunity, Isracann has visible growth prospects and has fully funded the buildout of 232,900 sq. ft. of cultivation facilities that can produce approx. 23,500 kilograms of premium cannabis on an annual basis. One of the most important aspects of Isracann pertains to its facility and how it will allow them to capitalize on the international cannabis market. The company’s facility is planned to be an IMC-GAP/GSP certified facility will be constructed to meet all regulatory standards and we find this to be significant.
IMC has also been highly focused on the Israeli cannabis market through Focus Medical Herbs Ltd., which is licensed to cultivate, produce and sell medical cannabis and cannabis oil. Through a license and commercial agreement with Focus Medical, IMC is entitled to a 25% royalty on revenue and cost. Focus Medical operates out of a 172,000 sq. ft. facility and can produce cannabis for approx. $0.40 per gram.
In 2020, Isracann expects to complete its first harvest and plans to ramp up production capacity from there. The proposed state-of-the-art facility is located on a property that offers significant room to expand and we are favorable on the growth prospects associated with this. In 2020 and beyond, we expect to see increasing demand for Israeli cannabis products and the focus on increasing production capacity is important for the company’s growth potential.
A New Listing to be Watching
Israel represents the new frontier for the legal cannabis industry and Isracann was an early mover when it comes to this market. Last month, Isracann commenced trading on the CSE under the symbol IPOT and in the US, this past week, Isracann changed its trading symbol to ISCNF, while also securing DTC eligibility. We are favorable on the improved awareness that comes with this listing as well as the enhanced liquidity associated with the DTC eligibility.
The company has visible catalysts for growth, and we believe that this opportunity is underappreciated by the street. Going forward, we will be closely following the Isracann story and will provide updates as needed.
During the last few weeks, Isracann has bounced higher on strong momentum and this is a trend that we are bullish on. To learn more about Isracann, please contact firstname.lastname@example.org to be added to our distribution list.
Pursuant to an agreement between StoneBridge Partners LLC and Isracann Biosciences (IPOT) we have been hired for a period of 365 days beginning December 9, 2018 and ending January 9, 2020 to publicly disseminate information about (IPOT) including on the Website and other media including Facebook and Twitter. We are being paid $10,000 per month (IPOT) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero shares of (IPOT), which we purchased in the open market. We plan to sell the “ZERO” shares of (IPOT) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (IPOT) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.