Organigram Holdings, a cannabis producer, based in New Brunswick, has signed a multi-year supply agreement with Israeli cannabis company Canndoc.
The agreement will lead to a significant increase in the amount of cannabis shipped from Canada to Israel in the next few years before obtaining regulatory approval from Health Canada and Health Israel.
Last year, only 1 kilogram (2.2 pounds) of dried cannabis was shipped from Canada to Israel for medical or scientific research purposes. Another 1 kilogram was approved that year but not dispatched.
According to the terms of the agreement, the Canadian company will provide Canndoc with "guarantee 3000 kg of high-quality indoor planted dried flower products" by December 31, 2021.
Cannabis will be processed and distributed in the Israeli medical market.
Canndoc can also choose to obtain another 3000 kg during the same period.
"The Agreement also contemplates, among other things, an opportunity for Organigram to launch branded medical products with Canndoc in the Israeli and EU markets, and grants exclusivity and related rights to Canndoc within the Israel market for approximately 7.5 years," the release notes.
Jefferies analyst Owen Bennett said in a report to investors that the transaction is consistent with Organigram's prudent approach in cost and capital allocation.
"(The deal) gives Organigram international exposure without significant spending needed in terms of acquisitions, capex, or other investments," he said.
Although the report mentioned, "a huge export market," the actual global market for medical marijuana was small last year, but it increased.
The Netherlands and Canada, the two biggest exporters, exported 4,370 kg and 3,740 kg of medical marijuana in 2019.
This article is issued by Mjbiz Daily.