Israel Writing Playbook to Become Cannabis Gateway to Europe
November 21st, 2019
App, Exclusive, News, Top Story
With unprecedented expertise in cannabis research and perfect weather conditions for cultivation, it only makes sense that Israeli lawmakers took a global leadership position in January 2019 by green-lighting the export of medical cannabis to countries where it is allowed. Then it just became a matter of establishing the framework to become one of only a small handful of countries to allow for cannabis exports. In doing so, Israel is opening a large market for itself and capitalizing on technology that it has developed over decades, rather than letting it go to other countries.
The Ministry of Health is not sitting on its hands with implementing change. Late last week in a statement to the High Court of Cannabis, the health regulator said it will be releasing its guidelines on exports any day now. Of particular interest, the statement read (translated), “For the Ministry of Health, any business that meets the standard for local production and marketing – can market its products abroad.”
That is music to the ears of Isracann Biosciences (CSE: IPOT) (OTC: ISCNF), the first North American-listed pure-play cannabis firm based in the heart of Israel’s agricultural sector. Isracann is fully-funded for a 230,000 square-foot facility with an annual capacity of 23,500 kilograms of dried cannabis that will feed demand in its underserved domestic market as well as the burgeoning European markets. Owing to the climate and existing infrastructure, Isracann estimates it will be able to produce high-end cannabis at just $0.40 per gram, a cost point that will facilitate high margins compared to others in the industry.
Ministry of Health Demanding Production
The Ministry of Health is looking to keep an orderly market between the roughly 20 public cannabis companies and dozens of private outfits. To the point, the regulator expects the owners of the licenses to produce, warning that dealers must fulfill the terms of their license to move products through the supply chain at the appropriate price and quantity or “the Ministry of Health will use all the tools at his disposal, including the revocation of the license.
While the decision by the Israeli government to support exports was made in January, just how the market will look has been a little murky. The Ministry of Health moving forward is a big step towards meeting the goal of export framework being in place early in 2020.
The MOH is also looking to silence a growing choir of voices alleging that cannabis reform has hamstrung domestic supply and caused a spike in prices, ultimately limiting access to cannabis medication that 46,000+ Israeli patients are accustomed to.
Given that the patient population in Israel is forecast to rise to 90,000 by 2020, there is some sense of urgency to institute change and bolster the smaller domestic supply chain while the much larger export market emerges, which falls right into the business plans of Isracann and its agreements within Israel for medicinal marijuana cultivation.
Of course, exports are a two-way street and regulations must also be established in the importing countries that align with Israel’s export laws. Isracann is looking to multiple opportunities in Europe, with Germany, the E.U.’s biggest economy, the top priority. The E.U. medical marijuana market is forecast to reach $64 billion by 2028.
Recently, Isracann added to its coffers with a successful funding round raising a net of C$10.1 million, a cash hoard that is allowing management to accelerate development of phase 1 of its new cultivation campus. Isracann isn’t going it alone, it has support from its regional partners holding preliminary breeding and cultivation licenses from the Ministry of Health.
These stakeholders are responsible to license upkeep, as well as the cost of electricity, property and related land taxes, in addition to participating in the construction of the greenhouse facilities.
This month, Isracann engaged AgroPlan Ltd. and A.R. Factor Group, two esteemed Israel-based companies specializing in construction of agricultural and cannabis facilities. AgroPlan is preparing the architectural design and engineering drawings for the cultivation and harvest facilities. A.R. Factor is handling the security design, while the two work together on the critical input to ensure the facility will be compliant with Israeli Medical Cannabis – Good Security Practices code.
“Engaging leading consultants to assist and guide us through the process helps ensure we meet our aggressive timelines and goals,” commented Isracann CEO Darryl Jones in a news release, adding that the company is already benefiting greatly from their participation.
Against the backdrop of the Ministry of Health working to enact the new cannabis export guidelines and a corridor to Europe, it’s definitely “go time” for Isracann as it looks to cement its name as a part of the most transformative time in the storied history of cannabis in Israel.
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