Israeli Cannabis Adjusts to War

October 15, 2023 · Green Market Report

Israel has been at the forefront of cannabis legitimization as the country’s scientists are responsible for many of the modern-day medical studies of the plant. Israeli researcher Raphael Mechoulam, the father of cannabis research, passed away this year, at 92 years of age. In the early 1960s, he was the first to reveal the structure of cannabidiol (CBD) and delta 9-tetrahydrocannabinol (THC), molecules setting the stage for the future of cannabis.

Since the U.S.  didn’t consider cannabis to have any medical benefits, research was stunted. That opened the doors to Israel becoming a leader in the research and development of medical cannabis. In 2017 there were more than 110 clinical trials involving cannabis underway in Israel, more than any other country, said Michael Dor, a senior medical adviser at the Israel Ministry of Health’s medical cannabis unit. Many of those studies were funded by the Israeli government. Now the country is facing a major war following the attack from the terrorist group Hamas.

IM Cannabis Corp. (CSE: IMCC) (NASDAQ: IMCC) is a leading medical cannabis company with operations in Israel and Germany.  CEO Oren Shuster said, “There are no words to describe the scale of the horrors that are starting to come to light. Israel is a small country, every single one of us is directly impacted, either personally or through our family and loved ones. IMC supports and stands with all the Israelis that are affected by this war. We also fully support the Israeli Defense Forces. In Israel, Cannabis is defined as a critical infrastructure sector, just like any other pharmaceutical business. I am very proud of how the team is coming together to work through this horrific situation.”

Shuster told Green Market Report that cannabis is an essential industry in the country and that medical cannabis will especially be needed now as residents are traumatized from the attack by Hamas. “It’s not human what happened,” he said. “In times like this, people tend to consume more due to the pressure,” he said, but added, “I prefer it weren’t so.”

He noted that companies are affected as employees leave to join the IDF (Israeli Defense Forces). “The solidarity here is amazing,” he said. He also acknowledged that cannabis medical studies were likely to be delayed as they aren’t necessarily essential.  Shuster also said it would take a lot of time before things get back to normal. While some businesses are benefiting from the war like grocery stores because people are eating at home, restaurants and movies are suffering as people stay inside.

He also noted that IMC, through IMC HoldCo, was able to secure a series of short-term loans on October 3rd, 10th and 11th, respectively, for aggregate gross proceeds of NIS 4,082,000 (approximately C$1,390,000) from certain lenders, including a director and officer of the company.

“In Israel, we are very resilient. We don’t have other choices. Everybody is helping everybody here,” he said. “Someone wants to kill us all the time, so we have to adjust.”

Israeli Exposure

Other cannabis companies with exposure to Israel include:

Israeli medical cannabis company InterCure Ltd. (NASDAQ: INCR) (TASE: INCR) which runs several dispensaries in the Holy Land, including Berner’s Cookies dispensaries in Israel and Austria. Last month Green Market Report wrote that Intercure noted that the new reform in Israeli medical cannabis regulations announced earlier in September was expected to increase the number of patients and demand for medical cannabis products in Israel after a period of stagnation.

Earlier this year Canadian player Decibel Cannabis Company Inc. (TSX: DB) (OTCQB: DBCCF) reported strong financial results for the fourth quarter of 2022 and the full fiscal year ending Dec. 31, 2022, helped by sales in Israel. The company saw significant net revenue growth, with C$25.8 million in the fourth quarter of 2022, up 41% from the previous quarter and 84% year-over-year. That growth was driven by increased demand for derivative products and the company’s first two sales of branded dried flower products in Israel.

In January of 2023,  Atlas Global Brands Inc. (CSE: ATL) began trading on the Canadian Securities Exchange (CSE). Atlas’ entrance into North America’s public markets came after it merged a collection of Canadian and Israeli companies by way of a reverse takeover. Under the accord, two Canadian cannabis companies will contribute to cultivation, manufacturing, and scalability, while the three Israeli companies provide services in the import, marketing, distribution, and sales of cannabis for medical purposes. Unfortunately, Atlas was already behind on filing its financial reports and surely the war won’t help it get back on track.

In July, Green Market Report reported that Tobacco titan Philip Morris International Inc. (NYSE: PM), the maker of Marlboro cigarettes, was poised to spend up to $650 million on an Israeli cannabis company that specializes in metered-dose inhalers for pain management. According to the Israeli publication Calcalist, the deal was planned to proceed in stages, with the first being a $120 million investment by Philip Morris in Syqe Medical, which it already backed with a $20 million investment in 2016. If that money is enough to get Syqe through clinical trials and the company gets approval from the U.S. Food and Drug Administration, Philip Morris has committed to purchasing all of the company’s shares for $650 million, Calcalist reported.

Privately held Israeli Tikun Olum Cannabis supplies medical marijuana and is licensed and supervised by the Ministry of Health in Israel. It was the first of its kind in that country. In 2019, the company opened a 5.7-hectare (14-acre) indoor cultivation facility in California and sells products in numerous medical dispensaries in the state. It works with VidaCann in Florida. Panacea Wellness in Massachusetts, PinCanna in Michigan, First State Compassion in Delaware, and Maine Grown in Maine. (Full Story)

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