Association Québécoise de l'Industrie du Cannabis
  • The Israeli cannabis market: a booming market

The Israeli cannabis market: a booming marketInternational

Publié le 27 July 2022 par AQIC

I recently had a chance to visit Israel and learn about the Israeli cannabis market from the best growers and distributors. And yes — cannabis can indeed be Kosher. Like all countries, regulators have made progress and could do much more to support the industry growth and patients’ needs. Additionally, as is seen in the cannabis industry, there are passionate and creative entrepreneurs forging and cultivating strong businesses to help patients receive the best quality flower and hottest new strains. Israel is a medical market with slight hints of recreational undertones.

Israel distributes cannabis through pharmacies. I have long contended that pharmacies are a natural distribution center with the broadest reach to get cannabis to patients efficiently. Some of the more prominent vertically integrated players I have met, like Intercure’s CannDoc,  BOL Pharma, and Seach Medical Group, own their pharmacies. For the most part, they only sell cannabis flowers and extracted drops. Still, by law, they must carry some traditional pharmaceutical products to protect access to conventional pharmacy products for local communities. Some of the dispensaries are branded like the Cookies pharmacy and medical dispensary located in a central area of Tel Aviv. On the inside, they look like traditional pharmacies with plexiglass cashiers. I was handed a paper menu with categories and a variety of strains.

One of the cleverest regulatory rules in Israel’s cannabis system is that patients are prescribed a flower category and can choose from various strains within their type or one category below. For example, a patient prescribed a T4 class of cannabis flower can purchase any variety of T4 or T3 strains. The categories correspond to prescribed THC levels formulated for specific patient indications. The apparent benefit is patients’ choice to find the cultivar that works for them instead of the European Union model, which requires a doctor to prescribe the specific strain. This system resembles the early U.S. model wherein a medical card gave access to the dispensary, and the patient chose their products.

The ability to choose your strains brings not only more choice but better marketing and branding than the traditional medical markets of the EU and earlier markets of Canada that had boring medical names and packaging common to conventional pharmaceutical products. The 10g boxes are colorful, with the strain’s name proudly displayed on the packaging. Flower dominates the Israel market currently with a 90-95% market share, and the only extracted products are basic CBD and THC distillate drops. Although it’s unclear how the future of other extracted products will unfold if Israel follows the largest market examples of Canada and the U.S., there will likely be a plethora of products that can reach a minimum of 50% of the market share. EU GMP manufacturers like Somai Pharmaceuticals are positioned accordingly to make registered herbal medicines with multiple delivery methods for testing in medical markets like Israel.

Israel is a costly country, with Tel Aviv being one of the most expensive cities in the world. So too, cannabis is not cheap to make in Israel, with higher energy, materials, and labor costs compared to other close emerging markets like Portugal and South Africa. This higher cost has pushed Israel and changing market tastes to create superior genetics to any legal cannabis industries around them. Additionally, Israel has an aggressive ag-tech industry with excellent infrastructure to support the cultivation and the pharmaceutical industry to promote the advancement of products. The cultivators of Israel are highly skilled and dedicated growers, such as Intelicanna, pushing the Israeli genetics limits onward and upward. Canada is the largest exporter to Israel because of the diversity of cultivars, but also, there is an existing margin to cushion the extra costs of importing bulk flower. Companies like Bazelet Group specialize in taking bulk flower and repackaging the flower to the legal 10g boxes.

The diversity and entrepreneurship to create a robust experience of vertically integrated groups, cultivators, extractors, and import distributors have built a complete cannabis marketplace. Israel has roughly 110,000 medical cannabis patients, consumed 43 metric tons of cannabis in 2021, and reached $264 million in sales. By comparison, the European market did approximately the same amount in revenues and had roughly three times the number of patients.

One might conclude that Israeli patients consume more cannabis. In 2019, there was a large boom due to the addition of chronic pain, PTSD, epilepsy, and other conditions added to the indications lists for cannabis prescriptions. However, doctors are still reluctant, and regulations are too restrictive, which has driven people who cannot get medications to seek the same legally made products in a gray market venue.

Israel’s cannabis market improves access to high-quality products for more patients and will only strengthen further with the help of great entrepreneurs and enterprising companies forging ahead. An improved regulatory environment will significantly help the cultivators and distributors to achieve higher profitability and growth. Many groups are already looking to expand their footprint to the EU market with varieties of much-needed genetics. Expect to see Israel expand product availability over the next few years and participate as an exporter of genetics to neighbors in the EU.

SOURCE: Technical 420