Canadian cannabis producers are setting their sights on Israel, executives said at CIBC's Eastern Institutional Investor Conference earlier this month.
Executives from Cronos Group, Organigram, and Aurora Cannabis told investors they were positioning to enter the Israeli medical-cannabis market, or at least establish partnerships and relationships that give them access to medical-cannabis consumers and academic institutions conducting high-level research in the country.
Israel has long been a popular spot for medical-cannabis research and technology.
To that end, Cronos Group said it exported cannabis to Israel and opened Cronos Device Labs, a research and development center for medical cannabinoid vaporizers, in the country last year. Through Device Labs, Cronos also maintains partnerships with major research institutions working on pharmaceutical applications for cannabis in Israel.
Organigram, for its part, signed a multiyear supply agreement with the Israeli medical-cannabis company Canndoc in June. Organigram completed its first $2.4 million shipment of cannabis to the country in August.
And executives from Aurora Cannabis told investors they were actively looking to enter the Israeli medical market in the "medium-term," according to a wrap-up note of the conference from CIBC's John Zamparo.
Zamparo says that Israel's cannabis market is unique in that it doesn't have a strong illicit market, so most medical customers purchase marijuana from the regulated medical market.
In Canada and the US, the illicit market still offers cannabis more cheaply than most medical providers — meaning that even many medical customers still purchase their marijuana illegally.
Israel is the largest importer of medical cannabis
Israel passed Germany as the largest importer of medical cannabis, with imports surpassing 6 metric tons as of July, according to Marijuana Business Daily, an industry news and date site. Israel has less-stringent import requirements than Germany — the cannabis does not need to be certified under the European Union's Good Manufacturing Practices — as Israel has faced a lack of supply for medical patients in the country.
EU GMP certifications mean that the facility producing the cannabis has been audited to fit into the certification guidelines, which can be a capital-intensive and arduous process for the cultivators.
On top of that, the number of medical-cannabis patients in Israel has more than doubled to 70,000 in the past two years, according to Marijuana Business Daily, a sign that demand in the country is steadily increasing.
Juan Martinez, a partner at the cannabis-focused investment fund Measure 8, told Business Insider that Israel was a "really interesting market for us," though the fund hasn't deployed capital in the country yet, as the industry is still in its "early stages."
"Israeli companies are heavily focused on the research and pharmaceutical route," Martinez said. "They're about clinical trials and technology like specific, measured dosing and proving that out through published papers."
Israeli scientists have led the world on medical-cannabis research for decades.
Dr. Ralph Mechoulam, an organic chemist and professor at the Hebrew University of Jerusalem, was one of the first scientists to explore the pharmacology and clinical effects of cannabinoids like THC in the 1960s. Now 89, Mechoulam is credited with being the first to discover the human body's endocannabinoid system.
Since then, Israeli scientists have led on cannabis research, thanks to friendly regulations and sponsorships from the Ministry of Health. Israel hasn't legalized cannabis for recreational consumption, though cannabis use is decriminalized.
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