Creso plants seeds for entry into budding Israeli medicinal cannabis market

By Zoe Gross. Published at May 16, 2018, in ASX Biotechs

ASX pot-stock, Creso Pharma (ASX:CPH), has revealed it is entering the thriving Israeli medical cannabis market via a strategic deal with Cohen Propagation Nurseries.

Under the agreement, CPH and Cohen will establish a JV to operate a high quality medical cannabis growing facility in Israel.

Cohen has already applied for an IMC-GAP (Israel Medical Cannabis – Good Agricultural Practice) licence to grow cannabis for medical purposes. Subject to confirmation by local lawyers and regulators, the licence application will be transferred to the JV company, in which CPH has a 74 per cent stake.

Cohen is one of the most experienced agriculture companies in Israel, with considerable operational know-how and proven capabilities in establishing high-scale production greenhouses to international standards. Founded in 1958, Cohen owns and operates farms across south and central Israel, with a greenhouse capacity spanning 15.7 hectares.

The JV will develop an IMC-GAP cultivation facility operating out of Cohen’s existing greenhouses. Along with the facility, Cohen will provide qualified and experienced agricultural and managerial teams.

Once the facility is complete, CPH estimates annual production of up to 2,500 kilograms of high-quality cannabis per year. Cannabis grown at the facility will be available for sale in the Israeli domestic market and potentially for export, subject to Israeli government approval.

This pivotal partnership will expand CPH’s already hefty international footprint, and provides it with a direct pathway to the lucrative Israeli pot market. The JV subsequently gives CPH critical exposure to world-leading medical cannabis research, development and innovation.

The JV will leverage Cohen’s growing experience, alongside CPH’s own pharmaceutical expertise, methodological rigor, and medical cannabis commercialisation clout, not to mention its global distribution channels.

CPH also estimates that the JV will save itself at least eight months of establishment and construction time, along with associated costs.

Amit Edri, CPH’s International Business Development Executive, will lead the JV team through the development and licensing of the project.

It’s worth noting here that CPH is an early stage play and investors should seek professional financial advice if considering this company for their portfolio.

CPH CEO, Dr. Miri Halperin Wernli, said: “This is an important milestone for Creso as it provides us with a strategic foothold and frontline exposure to one of the world’s most developed medical cannabis countries. Israel's medical cannabis industry is considered a world leader. Because Israel has been providing medical cannabis products to Israeli patients for over a decade, its researchers have accumulated vast clinical experience along with substantial knowledge in developing strains, breeding methods and extraction, as well as maintaining quality control.

“The Joint Venture with Cohen will expose Creso to leading cannabis research and innovation and will allow us to cultivate a high-quality crop at a very competitive cost. It’s a key step for Creso's further vertical integration within our own ecosystem,” Halperin Wernli added.

A bit more about the Israeli medical cannabis space

Israel is a leading force in the global medical cannabis ecosystem, especially in relation to agriculture and research.

The Israeli industry has provided medical cannabis products to patients within the country for over a decade, and there are currently 30,000 such patients receiving medical cannabis treatments.

A medical cannabis program was first introduced in the mid-1990s, followed by the establishment of a National Medical Cannabis Agency in 2007.

Israeli researchers have vast clinical experience and expansive knowledge in developing cannabis strains, breeding methods and extraction, as well as maintaining quality control.

The export of medical cannabis from Israel, under certain restrictions and to countries where there is legal approval, was approved by an inter-ministerial committee of the Israeli Finance and Health Ministries in August 2017.

A final governmental decision on exports is pending and expected soon. The ruling provides a significant opportunity for this newly clinched JV to use the country as an export base.

Directives published by the Israeli Ministry of Health set standards for growing medical cannabis, requiring that each person growing the drug will need to be licensed by entities approved by the Ministry.

A buzzing week for Creso

This promising update comes mere days since the last piece of news in CPH’s court. On Monday, CPH informed the market of its commitment to expand the commercialisation and distribution of anibidiol®, its CBD-based complementary animal feed product.

CPH launched the new product range in Switzerland last November with animal pharmaceutical giant, Virbac. Encouragingly, CPH has already generated early revenue.

After strong feedback from customers and vets, CPH is now looking to take anibidiol to the $12.9 billion global companion animal market.

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