Israeli Together Cannabis Enters The German Market


Marguerite Arnold

September 13th, 2018

Policy


Together (TASE:TGDR), one of two cannabis companies on the Israeli stock exchange, has just made an aggressive move into the German medical cannabis market. According to available information, Together has signed a deal to deliver up to €50 million (approximately 12.5 tons of produce)to a so far unnamed German medical cannabis distribution company. The German company has a distribution network of 100 pharmacies.

Together has also signed a Memorandum of Understanding to acquire 50.1% of the same with a target of closing the deal by October.

The other details on the German company remain sparse. It is an entity that is in the final stages of receiving an import license and already holds an R&D license.

Who Is Together?

Together Cannabis is not a well-known company outside of Israel, but if they keep up their current pace, that appears to be about to change. Earlier in the year, the company announced plans to create a grow area of 10 hectares(25 acres) in an unnamed country outside of Israel earlier this year. This year, Together also sold five tons of cannabisoil to a Canadian company in a deal worth at least $300 million.

The All Important Price Per Gram

The company is coming into a highly price sensitive market in Europe. According to statements, the Canadian deal will see wholesale prices of about $3 per gram. In Europe, they intend to sell product for about 10-12 euros a gram, to pharmacies direct.

This places them in an interesting position with regards to the new unofficial “reference price” to beat in the German tender bid. That price, according to bid documents has to be (well) under 7 euros a gram (wholesale) and to the government.

A Contender For The German Bid?

The last time around, the news about the German bid hopefuls centered on the Canadians. This time that already is not the case. It is also clear that Together would be well-placed to apply, with a footprint and profile that puts it well within the parameters of the German bid.

With money, deals and international distribution lining up, Together has indeed announced it’s global if not European presence and intentions with authority.

Will Jews Repatriate Germany Via The Cannabis Industry?

There are certainly more Jews in Germany these days, coming here for business reasons, than at any other time since WWII. Mainstream German supermarkets are even starting to stock whole specialty sections with kosher food.

Israeli interest in particular in the German cannabis market has been high for at least several years, although international complications (see the continued ban worked out between Donald Trump and Benjamin Netanyahu) and local goofs (see the issuance of the second tender) have slowed this down on a number of occasions.

It appears, however, that this interest is now ramping up to the next level.

It is widely rumoured at this point that the export ban in Israel is going to be lifted within the next year. Some have even suggested that the export ban could be abolished by the time the German government bid deadline is due in October, although that is very unlikely.

And in the meantime, firms like Together are establishing both cultivation and distribution networks on their own, outside of Israel.

This is not the first of its kind deal (or series of them) but it certainly is the largest of its kind.

What Is The Biggest Impact In The Short Term?

Israeli firms like Together are likely to impact the European, if not Canadian market in several ways.

The first is that they are absolutely driven by mind-set, beyond the market, to provide cheap, high-grade cannabis globally. This is in direct contrast with trends coming out of the Canadian market, where producers are starting to make noises about actually raising prices (presumably to meet unstoppable demand).

The second is that the pace of European cannabis cultivation is likely to increase dramatically. Israeli firms have been establishing cultivation sites in places like Eastern Europe and Greece for the better part of the last 18 months.

Several years from now, in other words, firms like Together could well shift the balance if not the bulk of where medical cannabis comes from – even in Europe – and certainly beyond it.

About Marguerite Arnold



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