Bloomberg News

Ehud Barak’s InterCure to Begin Cannabis Export in Late 2019

By Yaacov Benmeleh
(Bloomberg) -- InterCure Ltd., an Israeli pharmaceutical
holding company whose largest asset is a producer of medical
cannabis, will begin exporting medical-grade marijuana to
Germany in the third quarter of the year, according to Chairman
Ehud Barak. Shares rose.
The company is racing to be among the first to deliver its
products to developing cannabis markets such as Europe, which
would give InterCure a “big advantage” in a tightly regulated
industry, Barak, a former Israeli prime minister and military
chief of staff, said in an interview in Herzliya.
“It takes time to win over doctors and patients, a lot of
trial and error to find the right dosage,” he said. “Plus, all
the regulation makes this a difficult market to enter. But that
also makes the product sticky,” and harder for competitors to
take away market share, he said.
InterCure is in “very advanced discussions” with two groups
to form joint ventures that would allow the Israeli firm to
expand into northern and southern Europe, he said. He didn’t
elaborate on the identity of the groups.
The Israeli government approved medical cannabis export
last month, kicking off a weed arms race among companies and
investors looking to cash in on the opportunity. InterCure’s
stock has doubled since the start of this year, after
skyrocketing more than 1,200 percent in 2018.
InterCure gained as much as 5.8 percent on the news. The
shares were up 4.8 percent to 10.79 shekels at 4:21 p.m. in Tel
Aviv, giving the company a market value of 892 million shekels
($247 million).

European Route

While Canada is the world’s largest legal marijuana market,
Europe may provide an easier export route for now, according to
Yona Cymerman, co-founder of Can Innovation Finder, which
orchestrates partnerships between global cannabis firms and
Israeli startups. Marijuana use is legal in Canada, but import
regulations there are more cumbersome than in Germany and some
other European countries, she said.
In Germany, where there are few local cultivators with the
right qualifications, “they were more open to import from the
start, and will continue to rely on imports to maintain supply,”
Cymerman said. “Israel has a huge opportunity to become a key
supplier to Germany and other EU countries who are following
Germany’s lead.”
To keep up with the frenetic pace of development, InterCure
aims to raise $50 million in an initial public offering on
Nasdaq this year, Barak said. The company garnered some $18
million earlier this year from investors such as former Glencore
Plc executive Gary Fegel and WeWork Cos. Inc. Chief Executive
Officer Adam Neumann.
The proceeds would help expand a manufacturing facility in
northern Israel, build a new plant in the south and conduct seed
research and product development, Barak said. InterCure wants to
rapidly increase inventory in the next 18 months -- from 1.1
metric tons now to 100 metric tons -- to meet an expected surge
in international demand, he said.
“We’re in touch with five or six investment houses,” Barak
said. “There’s great interest.”

To contact the reporter on this story:
Yaacov Benmeleh in Tel Aviv at ybenmeleh@bloomberg.net
To contact the editors responsible for this story:
Stefania Bianchi at sbianchi10@bloomberg.net
Michael S. Arnold, Gwen Ackerman

Yona Cymerman