6 Israeli Cannabis Stocks that Won the Export Lottery

While many international cannabis markets continue to grow at a painfully slow pace, one small Middle Eastern company is racking up a series of big wins.

Not only has Israel become the #1 importer of cannabis in the world, but it just hit a new record of medical cannabis patients. On top of that, the country is in the early stages of legalizing cannabis exports.

It’s a good time to be a cannabis company in Israel. The relatively small country of 9 million just reported three important cannabis milestones and six relatively-unknown stocks are in a position to cash in.

#1 – Israel Just Become the World’s Top Importer of Medical Cannabis

Israel recently passed Germany as the #1 importer of cannabis in the world. Here are some more details from mjbizdaily.com.

Israel overtook Germany as the No. 1 importer of medical cannabis flower in the world so far this year, according to data compiled by Tel Aviv-based Israeli Cannabis Magazine and Marijuana Business Daily. As of July, Israeli imports surpassed 6 metric tons, Oren Lebovitch, editor of Israeli Cannabis Magazine, told MJBizDaily. He gathered the import numbers from companies’ public disclosures as well as replies he received from several executives involved in the import side of the transactions.

#2 – Israel Achieves Record Number of Medical Cannabis Patients

Israel just reported that it has achieved a new record number of medical cannabis patients. Here are some more details and a chart from mjbizdaily.com.

The number of authorized medical cannabis patients in Israel has more than doubled in the past two years – topping 70,000 – despite persistent supply and regulatory challenges, according to new data from the Israeli Medical Cannabis Agency (IMCA). Israel recently overtook Germany as the top importer of medical cannabis flower in the world, according to data compiled by MJBizDaily and Tel Aviv-based Israeli Cannabis Magazine.

Chart of Active Patient Licenses in Isreal from MJBizDaily

This steady growth of medical cannabis patients should stimulate more demand for cannabis. The spike in demand should be good for Israeli cannabis companies.

#3 – Israel Is in the Early Stages of Legalizing Cannabis Exports

While Israel’s domestic cannabis market continues to expand, the country is also positioning its cannabis industry to be a major supplier to international markets. In May, Israel legalized cannabis exports and now the country is dishing out export permits to a select group of cannabis companies. Here are some more details from calcalistech.com.

The Ministry of Health has announced that it will temporarily authorize the export of medical cannabis for the coming three months, until the Israeli government approves its new budget. Companies will only be allowed to export after committing to the ministry that they have an available inventory for the local market and that they will lower prices of 66 cannabis products currently being sold to Israeli patients.

Israel is still in the very early stages of legalizing cannabis exports. But, this legislation sets the stage for exports to flourish in the next 12-24 months.

With this legislation, Israel will help lead the world with a legal framework for a booming cannabis export industry.

Companies with Permits to Export Cannabis

Six publically traded Israeli companies have received permits to export cannabis.

  • Seach Medical Group (TASE: SEMG)
  • Intercure (OTC: IRCLF, TASE: INCR) subsidiary Canndoc
  • Panaxia Labs (TASE PNAX)
  • Together Pharma (TASE: TGTR)
  • Tikun Olam (TASE: TKUN)
  • Univo Pharmaceutical (TASE: UNVO)

From this group, I have chosen to highlight two companies that look particularly promising because of their size, product portfolios, and partnerships.

Panaxia Labs (TASE: PNAX) is headquartered in Lod, Israel. Panaxia has quickly grown into one of the largest cannabis companies in the country with a market cap of $225 million. According to Panaxia, the company sells 600 medical cannabis products in 30 international markets.

Panaxia has been cashing in on growing demand for its medical cannabis products. The company reported huge revenue growth in Q1 and Q2 of 2002, climbing 370% from the first six months of 2019. Gross profit jumped to 1.6 million from a loss of 102,000 in the first months of 2019.

Despite the impressive revenue growth, shares of Panaxia are down 20% in 2020. Looking forward, Panaxia is in a position to capitalize on Israel’s growing medical cannabis industry and export laws.

Chart from tradingview.com

Intercure (OTC: IRCLF, TASE: INCR) has an interesting subsidiary named Canndoc. The company is headquartered in Herzliya, Israel, and their resume is loaded with impressive accomplishments. For example, in January, Canndoc became the first company to receive a shipment of commercial-grade cannabis into Israel. The delivery came from Tilray via its Portugal production facility.

After receiving the imports, Canndoc quickly started making deals to sell its product. In March, Canndoc announced a distribution deal with one of Israel’s largest pharmacy chains. Here are some more details from the Cannabis Business Times.

InterCure has announced that wholly owned subsidiary, Canndoc, has entered into a strategic partnership agreement with Super-Pharm, Israel’s largest drugstore chain. Under the term of the agreement, Super-Pharm commits to acquiring 10 tons of Canndoc’s GMP medical cannabis products during a three-year period. Canndoc’s products will be securely transferred from its manufacturing facilities array to Super-Pharm’s distribution center, who will be responsible for the distribution to its 41 medical cannabis authorized pharmacies.

Moving forward, Canndoc is in a position to capitalize on the growing demand for medical cannabis in Israel and European countries with its new cannabis export license.

The way to invest in Canndoc is by owning shares of Intercure. Intercure trades on the Tel Aviv stock exchange and U.S. OTC markets. Shares of Intercure ripped higher in 2018 and 2019 with the broader cannabis sector. Shares proceeded to crash in the second half of 2019 and 202o and currently trade near the multi-year low. Moving forward, I expect shares to rebound and this looks like an opportunity to capitalize on a potential long-term low.

The Big Picture

The Israeli cannabis industry has recently been scoring some big achievements.

Israel is now the #1 cannabis importer in the world, and the size of its domestic medical cannabis market just hit a new all-time high. The country is also in the early stages of becoming a big exporter of cannabis to Europe.

Investors need to be paying attention to Israel, including the six companies that received permits to export cannabis. These young and promising companies are in position to grow into industry leaders in the next 12-24 months.

Best,
Michael Vodicka
Editor, Cannabis Stock Trades


About the Author & Cannabis Stock Trades

Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.

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