Special report: Creso Pharma is set to grow as much as 2500 kilograms of medicinal cannabis annually under a joint venture to establish a growing facility in Israel.

Creso (ASX:CPH) is teaming up with Cohen Propagation Nurseries, which will give it a foothold in the lucrative and reputable Israeli cannabis market.

New partner Cohen has applied for the Israel Medical Cannabis Good Agricultural Practice licence (or IMC-GAP) in which Creso will gain majority ownership of 74 per cent as part of the joint venture.

That gives the joint venture the capacity to develop a cultivation facility out of Cohen’s existing 15.7 hectares of greenhouses as well as the agricultural and managerial teams to operate it.

Once complete, the pair estimates annual production of up to 2500 kilograms of high-quality cannabis per year. That has the potential to be sold to the domestic market in Israel, as well as for export (subject to government approval).

The Cohen Group brings the growing experience, as one of the most experienced agriculture companies in Israel with operational know-how and proven capabilities in establishing high scale production greenhouses to international standards. Creso provides the pharmaceutical expertise, methodological rigour, as well as strengths of commercialising medical cannabis and global distribution channels.  

“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,” chief executive officer Dr Miri Halperin Wernli said.

“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.”

Creso estimates that the joint venture with Coen will save it at least eight months of establishment and construction time along with associated costs.

The terms of the agreement will see Creso issue $US2 million worth of its options over three tranches, and a loan agreement of $US1.5 million for the joint venture to fund the development of its growing facility.

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

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Israel is a world leader in medical cannabis, agricultural and research.

Israel’s medical cannabis industry has provided medical cannabis products to Israeli patients for over a decade. There are currently 30,000 Israeli 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 substantial knowledge in developing cannabis strains, breeding methods and extraction, as well as maintaining quality control.

Israeli Government Resolution number 1587 dated June 26, 2016 laid down an outline for the “medicalization” of cannabis products. Following this Government Resolution,

the Israeli Ministry of Health has published five new directives for the medical cannabis value chain, including Directive 151/2016 – IMC – GAP- Growing Cannabis for Medical Purposes.

This directive sets the standards for growing medical cannabis and requires that each person growing medical cannabis will need to be licensed by entities approved by the Ministry of Health. The directive sets forth the process for the approval of such entities.

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. The ruling provides a significant opportunity for the Joint Venture to use the country as an export base.

Creso has developed and is already commercialising its range of CBD-based innovative nutraceutical products for human health and animal health , and is preparing its functional skin care and lifestyle products to be launched out of its Swiss facility.

 

This special report is brought to you by Creso Pharma.

This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice.

If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a Product Disclosure Statement (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.

 

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