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June 09, 2023


Investment information for the new generation

Isracann (IPOT.C) in cat seat as Israeli politicos write new cannabis laws

When you’ve invested in a company that operates under foreign laws, you’ve got to keep an eye on national politics.

Isracann (IPOT.C) is Israel’s first pure-play cannabis firm to list in Canada,” wrote Equity Guru’s Chris Parry last summer when IPOT first got on our radar, “It is focused on becoming a premier, low-cost cannabis producer.”

Since then, Israeli politics have undergone a dramatic upheaval.

In the last four months, there have been three dead-locked national elections.

Prime Minister Benjamin Netanyahu, who has been in office for 11-years, struck a power-sharing agreement with rival Benny Gantz.

Mr. Netanyahu is currently under investigation for corruption.

The political marriage has been less tranquil than the brief feces/ice-cream/fisticuffs union of Amber Heard and Johnny Depp.

The 36-minister government agrees on almost nothing.

There is so little harmony, there is a danger that parliament will dissolve later in the summer – triggering another round of Israeli elections.

One of the very few things this coalition government does agreed on, is changing the cannabis laws.

Proposed Israeli cannabis reforms:

  • Cannabis use permitted for those aged 21 and up
  • workers in security-related jobs are excluded
  • No driving stoned
  • designated shops will sell the drug
  • Strict advertising guidelines
  • Some taxes go to drug-use education

IPOT recently acquired a 50% interest in a JV called Cannation, for a phased partnership of two near-term farm operations located in the Hefer Valley region of Israel.

Isracann is constructing a 230,000 square-foot facility in southern Israel. It’s received facility design and land use approvals from the Israeli government.

Phase l will include two 57,500 square-foot hybrid greenhouses and a packing facility with a 6,500 square-foot post-harvesting area.

“We have achieved a partnership agreement with a farm operation that is constructed,” confirmed Isracann CEO, Darryl Jones, “it has already closed a major offtake agreement for the next three years. This accelerates our timeline to production and revenue.”

The Cannation farm properties are Israel Medical Cannabis (IMC) compliant and designed to EU-GMP certification standards.

Only medical cannabis from EU-GMP certified facilities can be sold in the European Union.

Chris Parry’s Isracann Upside:

  1. LOW PRODUCTION COST: Isracann estimates per gram costs as likely to be around $0.40 per gram.”
  2. THE DOMESTIC PLAY: An estimated 27% of Israelis use cannabis. Nobody producing cannabis is going to ship the stuff currently because the local market is, amazingly, so under-served by legal product.
  3. PATHWAY TO EUROPE: Isracann plans to make their facilities IMC-GAP/GSP certified, which means their products will be export-ready. Israel’s proximity to Europe, and its established trading partnerships and shipping routes could be an important component of Isracann’s future revenue streams.
  4. MORE SUN = MORE HARVESTS: “Cannabis likes warm weather. While cannabis will grow in temperatures sub-20 degrees Celsius, sugars will not move around the plant as well, and taste and yield will suffer. Cannabis doesn’t just want sun, it likes humidity, so a hybrid grow allows you to keep things just right.”

“Israel could become the next country to legalize adult-use cannabis after lawmakers gave preliminary approval to two bills calling for the decriminalization of cannabis and the regulation of its sale for recreational and medical use,” confirms CFN Enterprises.

“The country has some of the highest per capita cannabis usage rates in the world at nearly one-third of people between the ages of 18 and 65-creating an enormous market opportunity,” continued CFN.

IPOT has an expected annual capacity of more than 23,000 kilograms of dried cannabis at its Cannisra farm and with Israel’s favorable climate, management anticipates becoming a low-cost cannabis producer with costs of just $0.40 per gram-translating to attractive margins.

Last week, Netanyahu and Gantz’s offices issued a joint statement promising “to resolve the issue of cannabis decriminalization and legalization…via a responsible model suited to the State of Israel”.

The beginning of recreational weed in Israel is likely to boost IPOT’s bottom line.

Your antennae may not be turned to Israeli politics – but don’t worry – ours is – we’ll keep you in the loop.

  • Lukas Kane

Full Disclosure:  Isracann is an Equity Guru marketing client.

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