Cannabis Demand Remains Healthy Despite COVID-19 Challenges
June 25th, 2020
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Oregon cannabis sales topped $100 million for the first time since legalization despite the impact of COVID-19, according to the Oregon Liquor Control Commission. While COVID-19 has impacted nearly every part of the economy, cannabis businesses have remained open as essential businesses in the United States and other parts of the world.
Canadian demand is also expected to be robust. While the country closed many retail shops, the system has long relied on mail delivery as a primary means of distribution. The re-opening of retail outlets over the past few weeks could also help pave the way for an increase in revenue as customers start to venture back out into society.
In Europe, pharmacy-based distribution models may limit demand to some extent, but the region still faces a severely constrained supply and enormous pent-up demand. Prohibition Partners estimates that the market could be worth north of $136 billion by 2028, or about four times larger than the projected value of the U.S. cannabis market.
Gearing Up for a Rebound
The Israeli Ministry of Economy signed a Free Export Order on May 13, 2020 that implements an earlier decision to approve cannabis exports. The order is scheduled to go into effect in June and will allow licensed producers of medical cannabis in Israel to apply for an export permit to ship products to international markets—including Europe.
“Supply in both the domestic and European markets is lagging behind demand, especially in Europe, as more countries work on less restrictive regulations,” says Isracann Biosciences Inc. (CSE: IPOT) (OTC: ISCNF) CEO Darryl Jones. “Our marketing strategy aims to leverage Israeli-branded products as fundamentally superior.”
In June, Israel’s Police Minister also backed the easing of enforcement of existing laws following a joint statement by the Prime Minister and Defense Minister outlining their intent to advance legislation “to resolve the issue of decriminalization and legalization”—ostensibly referring to recreational cannabis use in the country.
While the statements didn’t provide any specific timetable for the moves, experts believe that it could take about four months to advance legislation. The new rules could permit cannabis use for adults over 21 and cannabis sales would take place in designated shops. As in other markets, advertising would be restricted and an educational fund would be set up.
Isracann Biosciences, Israel’s only publicly-traded cannabis pure-play, has already tasked regional consultants with ensuring applications for an export permit will be made as soon as possible. Management believes that the country’s unique environment, advanced agro-economics and history of cannabinoid innovations will drive adoption.
“We are incredibly pleased by the recent news and are highly supportive of the initial proposals moving towards medical and recreational reform,” said Mr. Jones in a recent press release following the support for recreational legalization. “We look forward to building on this legislative framework as we continue to execute our strategic plans in the region.”
Finding the Best Opportunities
Canada’s cannabis market experienced a tumultuous couple of years. After U.S.-based demand failed to meet expectations, Canadian companies are hoping that the move into edibles, beverages and other “Cannabis 3.0” product formats will help spur domestic demand and pave the way for greater demand over the coming quarters.
The U.S. market continues to experience strong demand—even during the COVID-19 crisis—but the legal framework remains uncertain. While some states have legalized cannabis, there are high barriers to entry when it comes to licensing in some states and a chronic oversupply of the market in other states.
Europe remains one of the most promising bright spots for cannabis over the coming years. As legalization unfolds, investors may want to look for opportunities on the ground floor rather than trying to play catchup in more established markets. Countries like Israel could also see opportunities given their proximity to European end markets.
The COVID-19 crisis has impacted many parts of the global economy, but cannabis demand remains relatively stable. With many parts of the global economy opening back up, consumers are likely to return to medical and recreational cannabis markets and lawmakers may continue to explore opportunities to liberalize their drug laws.
Isracann Biosciences Inc. (CSE: IPOT) (OTC: ISCNF) is well-positioned to take advantage of the recovery as European end markets open up and export laws are liberalized to permit exports and the possibility of recreational legalization appears to be on the horizon. With existing operations in place, the company’s experienced management team is capable of scaling into new markets with innovative products.
For more information, visit the company’s website at www.isracann.com.
Isracann Company Contact:
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