Top Israeli Cannabis Companies Targeting European Markets

Seattle, Washington--(Newsfile Corp. - November 13, 2019) - CFN Media (OTCQB: CNFN), the leading agency and financial media network dedicated to the North American cannabis industry announces publication of an article discussing Isracann Biosciences Inc. (CSE: IPOT) (OTC: ATLED).

Understandably, there is a lot of buzz about the cannabis market and the opportunity in North America given most that Canada has legalized adult-use and 33 U.S. states now allow medical use in addition to 10 of those permitting recreational cannabis consumption. Still, interstate commerce in the U.S. is illicit and the Canadian markets are ultra-competitive as nearly 150 licensed producers vie for sales to the nation's 37 million people, creating market congestion and low margins.

When investors take off the horse blinders putting only the U.S. and Canada in view, Europe quickly enters the picture as a lucrative market twice the size. With a population of approximately 743 million, the emerging E.U. cannabis market is relatively underserved, with high barriers to entry slowing competitors from joining, while positioning companies in motion to meet demand in a prime position.

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Top Israeli Cannabis Companies Targeting European Markets

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With limited producers in the bloc, E.U. countries will turn to imports, which means looking to only three countries with export framework, including Israel, a country steeped with a rich history in cannabis.

Click Here To Receive Isracann's Investor Presentation

This backdrop provides some context why freshly public Israel-based International Medical Cannabis (IMC) has become a popular name, raising over $9.1 million in 2018 ahead of restructuring (to meet Israeli regulations). Also building a footprint in Israel and Europe is Isracann Biosciences Inc., a company that shares many similarities to IMC and the first Canada-listed pure-play cannabis company based in Israel.

A Word on Israel and Europe

Both IMC and Isracann are intent on serving their local Israeli markets and becoming leaders in Europe as well. Israel, which legalized medical cannabis in 2007, is recognized globally for its expertise in cannabis thanks to 50+ years of extraction research. Despite the experience, a limited number of producers has also created a domestic supply shortfall. Helping fuel demand, Israel is among the highest cannabis use-per-capita in the world at over 27%. Right now, more than 46,000 patients are accessing medical cannabis, a figure that is expected to essentially double to at least 90,000 by next year.

Helping margins, in October Israeli regulations changed allowing cannabis prices to increase from $3.30 per gram to $7 - $8 per gram.

Looking at market potential, Europe shines compared to North America. If legalization happens in all 50 U.S. states, the base market is forecast by Barclays to reach $41 billion by 2028. At the same time, Deloitte expects the Canadian market to reach C$8.7 billion (US$6.62 billion). That's an aggregate of US$47.6 billion.

Assuming legalization across the European Union, Prohibition Partners predicts a €123 billion (US$136.2 billion) market by 2028.

Click Here To Receive Isracann's Investor Presentation

Germany, the largest economy in the E.U., has legalized cannabis for certain medical purposes, although recreational remains illegal to the nearly 83 million Germans. Policy and practice are favorable for importers, with supplies lacking and a direct-to-pharmacy price of €9.80 / gram of cannabis (US$10.85 / gram). Public health insurers covering 90% of the population are mandated to cover up to 141.75 grams of cannabis per month per patient.

While medical cannabis is legal in 10 European countries, Germany's medical market could be larger than the rest of the block combined, making it a top priority for both IMC and Isracann.

Israeli export operations expected to be in full swing early in 2020, uniquely positioning the country to access the E.U. through Malta with flower and oils produced under established Israel and E.U. good manufacturing practices.

Similarities & Differences

In Israel, IMC has partnered with Focus Medical Herbs Ltd., a licensed producer of cannabis and cannabis oil for medical purposes that has been operating for nine years. Per license and commercial agreements covering IMC's IP and branding, IMC is entitled to a royalty of 25% of Focus revenue while shouldering 25% of Focus costs.

Focus operates a 172,000 square foot, state-of-the-art growing facility. Current capacity is 3,000 kilograms per annum. Production costs are just C$0.40 / gram.

2018 revenue was approximately C$5.2 million and earnings before interest, taxes, depreciation and amortization (EBITDA) was C$3.3 million.

Only 8 licensed producers in Israel hold a GAP (Good Agricultural Practices) license, which allows for export to E.U. markets. Focus is one of them.

Isracann is trailing IMC in that it has not yet reached the production stage, but it certainly speaks to where IPOT could be headed. The models are slightly different, as Isracann is not targeting a partnership as IMC did, meaning profits and costs aren't shared.

Isracann holds preliminary licenses - and is fully funded - to construct and cultivate on its 230,000 square feet of land in Israel. Like Focus, Isracann will employ cutting edge greenhouse technology to capitalize on the near perfect climate and geography of Israel for cannabis operations. A modular layout is conducive to start growing while additional structures are being developed.

Plans are for the facilities to achieve GAP/GSP (Good Security Practices) certification, clearing the way for exports for Isracann to Europe. Both companies have Germany's lucrative markets as an initial target, but distribution agreements show the two won't initially cross paths after that. IMC has partnerships and assets in Spain, Portugal and Greece, whereas Isracann has distribution agreements accessing the U.K., Poland and Denmark markets.

IPOT management expects to produce flower at the same $0.40 / gram price point of Focus/IMC. A big difference is that IPOT sees capacity at 23,500 kilograms annually, far exceeding that of IMC currently.

Isracann isn't letting off the gas in its bid to reach commercialization, saying this week that it has engaged AgroPlan Ltd. and A.R. Factor Group, two consultancies with deep experience in Israeli cannabis, for development of its new cultivation and processing facilities.

Click Here To Receive Isracann's Investor Presentation

To learn more about Isracann Biosciences Click Here

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Isracann Contact:

Darryl Jones
Investor Relations
+1(604) 343-8661
info@isracann.com
www.isracann.com

Frank Lane
206-369-7050
Flane@cannabisfn.com

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