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“Investors have no idea how to get started”

Yossi Bornstein, President of Cann10, brings some order: Israel’s new regulatory environment has attracted great interest from investors. Forecasters see the world cannabis market on a roll, with annual volume reaching $100 billion in 2025

Natural selection - sorting the cannabis flowers after the trimming (Photo: Mor Bernstein)

Israel’s new regulatory environment is attracting great interest to the cannabis industry from both local and foreign investors. “Lots of companies in Israel have received conditional licenses from the Medical Cannabis Unit to establish cannabis farms or production facilities, but they have no idea how to get started. On the other side, there are lots of investors just looking for places to invest their money in the cannabis industry but they don’t know how or where.

"To succeed in such an untried sector, which outsiders see shadowed by many questions, they need a partner on the journey. That’s where we come in,” says Yossi Bornstein, President of Cann10 — a leading international company in the medical cannabis sector, specializing in development of products and technologies.

Yossi Bornstein, Chairman of Cann10 (Photo: Reuven Kapuchinsky)

Why you in particular?

“Cann10 is made up of three veteran companies — Gilad Government Relations & Lobbying, which is Israel’s leading lobbyist firm; Shizim, which is an entrepreneurial company in pharmaceuticals, biomedicine, and biotechnology; and Seach, which is the second-largest among eight medical cannabis growers approved by the Ministry of Health. So in combination, we can avail ourselves of a wealth of information along with practical experience regarding unique methods of growing cannabis, regulatory conditions in various countries around the world, and professional infrastructure for scientific research into cannabis as well.”

The world cannabis market is on a roll. Today it amounts to some $6 billion a year, and according to Bornstein “on the global scale, the forecast for 2025 sees the annual volume at $100 billion. In the current race to produce and market medical cannabis, there’s a resemblance to the California Gold Rush of the mid-19th century. But compared with gold, investment in cannabis is much more complicated.

"Lots of rich people around the world have pegged it as one of the fastest-moving high-profit markets, and so they’re eager to get a foothold of their own in the industry. But because so many people have no clear idea how this market can be expected to work, in lots of cases businesspeople gamble their money on big immature plantations or on people without the appropriate cannabis-growing experience.

"Smart investors, if they’re from outside the cannabis sector, should engage a consultant who’s on the inside. Lots of pitfalls are caused by lack of knowledge. For example, most countries approve the crop known as hemp. That’s industrial cannabis and it includes one of the active cannabis ingredients, CBD, which is not psychoactive. Hemp has very low amounts of THC, which is the plant’s psychoactive substance. If you don’t know the ins and outs of cannabis, you can be trapped into thinking that a license for hemp is a license for medical cannabis.”

By appearances, conditions in Israel seem promising. Seventeen companies in the cannabis sector are currently listed on the Tel Aviv Stock Exchange, and some of their shares have already soared by hundreds of percentage points to win top yields — even while the Tel Aviv share indexes were yielding virtually zero.

Bornstein: “In Israel there are 40 thousand patients being treated under Ministry of Health approval, with a potential for hundreds of thousands more, so in terms of sales the market is by no means small. But to my regret, there is almost no foreign investment in Israel. On the contrary, the Israeli environment has even managed to chase them off.”

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What’s the reason?

“Mostly it’s because of restrictive regulations. As a matter of principle, a foreign company can’t assume a stake of more than 5% in a plantation. That regulation has to change so that foreigners can own companies too. In that connection, recently for example a foreign company showed an interest in investing $50 million to buy a cannabis plantation in Israel. When it turned out that the company could buy less than 5% of the plantation, it cancelled the offer. It said that financially, the benefit wasn’t there. And the investment, of course, went to another country.

“That’s why Canada, for example, enjoys so much investment in medical cannabis, including investment in the capital market. There are more than 100 companies in the cannabis sector that have issued shares on the Canadian securities exchange alone. Liberal as regulation is there, they’ve opened up not only to cannabis use for medical purposes but for recreational use too, and today everyone aged 18 or older can buy cannabis at pharmacies. In Israel, on the other hand, because the industry is still uncertain regarding export regulations, to my regret many companies are refraining from expanding their activities.”

Cann10 is a leading international company in the medical cannabis sector, focused on developing products and technologies

Medical cannabis products

Owner of the Cannareet brand and its line of products, which are sold at licensed pharmacies throughout Israel, including the leading chain Super-Pharm.

The product line includes oils, whole inflorescences, and chopped inflorescences, approved by the Ministry of Health and manufactured and marketed under GDP/GMP/GAP standards.

Center for technological innovation in medical cannabis

Research, development, and marketing of innovative technologies from the pharmaceutical and agronomic sectors.

Cultivation and manufacturing

Holder of several conditional licenses in Israel for cultivation, reproduction, extraction, and manufacturing

Currently constructing manufacturing facilities and cultivating medical cannabis in Portugal

Education

Administrative center for the study of medical cannabis in cooperation with the Technion in the fields of science, medicine, botany, and technology. The goal of the studies, held in Tel Aviv and Australia, is to acquire professional tools for taking our place in the medical cannabis sector, in Israel and elsewhere.

The CannX Conferences are international conferences in Israel, in Brazil, and soon in Europe, providing high-level professional and scientific information in the fields of science and medicine, innovative technology, business, and agriculture.

Opening Israel’s gates for exports

The medical cannabis reform is expected to put an end to long years of tortuous bureaucracy for numerous patients. The reform, awaited enthusiastically by many in the cannabis industry, is a first step in the possible positioning of Israel as a cannabis superpower with respect to science, agriculture, technology, and business. However, according to Bornstein, Israel has considerable work to do before it can be called Cannabis Nation. “Until a year ago, foreign investors found Israel very attractive in the sector; but then Canada intercepted the ball.”

How did that happen?

“Two years or so ago, the government issued a decision on ‘Use of Cannabis for Medical and Research Purposes.’ It allowed those active in the sector to apply for licenses to grow, manufacture, and trade in medical cannabis for export. Further to that decision, an interministerial team was set up to examine the feasibility of exports, and in August 2017 it recommended approving exports.

"In fact, it called for activity to start in 3 months. But 7 months later, Prime Minister Netanyahu froze the progress of the reform. He told the Minister of Health and the Chair of the National Economic Council to re-examine the subject. On all the investors, entrepreneurs, and growers who had approached the marketplace with high hopes, he dumped the cold water of Israeli reality.

“They were afraid that foreign elements would take control of the country’s drug market. In some countries, the regulation process for medical cannabis does lead indirectly to legalization of recreational cannabis, because it suddenly emerges that what the public had feared greatly and tabooed is not so terrible. The government needs simply to take decisions, because when the export gates are opened, a great deal of investment will stream into Israel.”

Why, in your opinion, hasn’t it happened yet?

 “Recently there’s been an improvement because elections are coming, and the law passed its second and third readings. Now all the parties are trying to take credit for that success, but the real test will be the time that goes by between the decision and the writing of regulations for actual exporting. I’m afraid that once more, bureaucracy will be stronger than logic, the process will be too long, and we’ll lose precious time again.”

Unlike Israel, some other countries are working intensively to position themselves in global cannabis market as leaders of the sector. “In Canada, for example there are 3 leading medical cannabis companies all working hard to invest and to take part in projects, cultivation, start-ups, research, and production facilities for cannabis and for related products outside the national boundaries — especially in Europe and South America, with activity beginning now in Asia as well. Since Cann10 is already active in those markets, many international companies attempting to penetrate the cannabis industry approach us for business cooperation, consultancy, and assistance from our store of knowledge.”

World leadership

Cann10, founded in 2015, brings together three organizations in synergetic action to bring advancement to the medical cannabis sector in Israel: Shizim, owned by Bornstein; Seach; and Gilad Government Relations & Lobbying. Bornstein explains: “On the company-wide level, including Israel and other countries, our primary activities are marketing the Cannareet brand and performing research studies, development, and marketing of innovative technologies from the spheres of pharmaceuticals and agronomy.

"Cannareet is our line of medical-cannabis products for Israel and elsewhere. In Israel they’re marketed through pharmacies throughout the country, including the leading chain Super-Pharm. The brand, which includes oils, whole inflorescences, and chopped inflorescences, is GMP certified and GAP certified by the Ministry of Health. Among our additional activities, we are setting up production facilities in Israel and Portugal, and cooperative commercial projects in Brazil, Mexico, and Portugal. Furthermore, since the cannabis sector is new and those active in it are eager for information, we invest in providing scientific and professional information in cooperation with the Technion’s center for cannabis research.

"The goal of the studies, which are conducted in Tel Aviv and in Australia, is to acquire professional tools for taking our place in the medical cannabis sector, in Israel and elsewhere. Another excellent way of staying up to date on innovations in the cannabis industry is through the international CannX conferences, where hundreds of industry representatives participate annually.”

Do you foresee the possibility of a significant Israeli exit in the sector during the next few years?

“When the gates open for exports, I foresee four major possibilities for an exit. First companies can sell in the hundreds of millions of dollars. Second, today in Israel there are very interesting technologies for the use of medical cannabis, some of them patented, and they can provide solutions for patients. The third possibility is the development of a cannabis-based medication that receives FDA approval; and then there is the possible purchase of an Israeli company by a large corporation.”

Conference

CannX, an annual international conference, is a meeting place for everyone in the medical cannabis sector, from Israel and from elsewhere. The conference is headed by Prof. Raphael Mechoulam, who is known for discovery of cannabinoids in the plant, including the THC substance.

Hundreds of businesspeople, scientists, physicians, farmers, the hi-tech community, and senior figures in regulation are exposed at the conference to the sector’s hottest news — the latest scientific studies, innovative cultivation techniques, and new technologies that are on exhibit — along with business opportunities and a competition among cannabis start-ups.


The conference will next take place on September 9–10 at the Expo Tel Aviv international convention center. Further details are at www.cannx.org.

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