Jan 6, 2022
A few years ago, Israel overtook Germany as the world’s largest cannabis importer and this is a market that we have been bullish on.
A core pillar of our bullish view on Israel’s cannabis market is related to how the climate is ideal for cultivating cannabis. When compared to Canada or the United States (US), the cost to cultivate a gram of cannabis is much lower in Israel. As a result, the economics that are associated with cultivating cannabis are much more attractive in Israel and our readers should be aware of this.
During the last two years, we have noticed a spike in interest in the Israeli cannabis market from Canadian Licensed Producers (LPs). By having leverage to Israel, Canadian LPs can ship products faster and cheaper to certain markets in the European Union (EU). We consider the lower shipping costs to be another core pill of our bullish view on Israel’s cannabis market and will be monitoring how the industry evolves this year.
Aurora Cannabis Ships C$10 Million Worth of Cannabis to Israel
Earlier this week, Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB) announced what it believes to be the largest shipment of medical cannabis to Israel to-date. In December, the Canadian LP reported to have shipped approx. C$10 million of medical cannabis to Israel and we consider this to be a significant milestone for the business.
2021 was a challenging year for Aurora Cannabis and we will monitor how the business is able to bounce back. The management team is highly focused on executing on an international growth strategy to become a leader in the global cannabinoid industry and we will monitor how this aspect of the story evolves from here.
In late 2021, Aurora Cannabis formed a joint venture in the Netherlands to participate in an experiment which is part of an recreational cannabis pilot program. We consider the EU to be an attractive long-term opportunity and will monitor how the company is able to capture market share in certain high growth international markets.
Going forward, the management team is focused on expanding its international business and we are favorable on the markets that it has targeted. We believe the market has lost faith in Aurora Cannabis and consider 2022 to be a make or break year for it.
Israel Represents an Attractive Long-Term Opportunity
When compared to other international cannabis markets, Israel is much less saturated and we consider this to be an important aspect of the story. Currently, there are several Canadian LPs with leverage to the Israeli cannabis market and we will monitor how these businesses benefit from this market in 2022 and beyond.
In 2022, we expect the Israeli cannabis market to record substantial growth and will monitor how the industry continues to advance. During the year, we forecast an increase in the number of companies that exporting cannabis to Israel and will monitor how the trend continues.
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