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The smoke is dissipating: the bad season of the cannabis companies

The cannabis reform approved in a preliminary reading in the Knesset is an example of the uncertainty that surrounds the field and leads to an average decline of about 30% in the shares of companies traded in Tel Aviv, since the beginning of the year.

The total write-offs of the aggregate value experienced by the prominent companies in the industry stand at about NIS 468 million since the beginning of the year

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• Medical Cannabis

• Cannabis

• stock

• Stock Exchange

Roast Greenberg

Wednesday, 13 October 2021, 17:27 Updated: Thursday, 14 October 2021, 10:10

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The battle between the coalition and the opposition that took place in the Knesset has slightly diverted the view from the recent performance of the medical cannabis companies. The field, which is considered the great green hope of investors in Israel and has attracted many celebrities to cannabis companies, suffers from regulatory uncertainty that affects the performance of the shares of companies active in the field.

The aspirations of the medical cannabis companies continue to be exaggerated, and the smoke emitted from their activities is mainly from the burning of the cash of their investors, who also this year experienced a loss on their investment, which stands at an average of 30% among the prominent companies surveyed by Walla! Money 'from the beginning of the year.

The last frustration of investors amounts to a write-off of about NIS 468 million from the value of companies since the beginning of last January, exceeding the increase in value experienced by Intercure, which is added to the billions of shekels that companies have written off from France since reaching peak value in mid-2019.

The non-incrimination law along with a bill for legalization were a holiday for the industry, and were supposed to give a warm breeze to the rise of the companies' shares upwards by presenting data on the industry's growth seven times to a local market of about NIS 7 billion a year.

But it seems that investors 'disappointment at the companies' failure to meet their own forecasts, along with the volatility of local regulation, even clouded the Israeli market into the largest medical cannabis market in the world with about 100,000 patients, and estimated sales of up to NIS 900 million a year.

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(Photo: Walla !, no)

The last blow to the market, as well as its shares, was given in the form of a bill to reform medical cannabis, about two and a half years after it had already been implemented by the Ministry of Health, which also changed the way companies conduct themselves from end to end.

The bill proposes, among other things, to eliminate the need for medical cannabis factories and pharmacies for the production and issuance (sale) of medical cannabis products.

The publication of the offer further lowered the shares of medical cannabis companies, against the background of investors' understanding that the industry will enter uncertainty again.

Ehud Barak, Chairman of Intercure: an increase of almost 43% since the beginning of the year (Photo: PR)

The only immigrant

The company that still managed to show increases up to the day of their examination (see table) is Intercure, headed by Prime Minister and former Defense Minister Ehud Barak, which on the last trading day examined increased by 6% after reporting that Alex Rabinovich, the company's CEO and controlling shareholder In it (22.96%), it purchased the company's shares for NIS 9.6 million,

despite the fact that the company boasts of purchasing pharmacies, which constitute a significant part of its revenues and profits, which are likely to become less profitable under the new bill. of 42.54% in the year to last trading day tested, mainly resulting from the entry also traded company on NASDAQ, which led to the same value ranging around $ 1 billion.

because it is the only medical cannabis company is also traded on Nasdaq, And the jump of more than half of its value today compared to its value at the beginning of the year, is beyond the deletion of the aggregate value of the companies examined by Walla!Money 'and' Maariv Business'.

Yohanan Danino, former police commissioner. Togdar Pharma, led by him, fell by almost 58% (Photo: Noam Moskowitz)

Those that go down

In contrast, the three companies that experienced the sharpest declines for the period under

review are Togder

Canomed, and Kanshor.

Togdr Parma, led by former Police Commissioner Yohanan Danino, showing a decrease of 57.88% in the share price since the beginning of the year, and traded at a value of 71.6 million.

The company recently reported that the investment of real estate developer Igal Damari it fails, after it last not approved by Hik"r (only medical cannabis Ministry of health) to become an interested party, apparently in light of the competition authority on an indictment against his girlfriend in respect of price fixing, pending a hearing.

share of

, Controlled by the brothers Kfir and Manor Gindi (17.17% each), decreased by 57% for the period under review, mainly in light of the difficulties it experienced in raising and selling the farm's products it owns, which led the Gindi brothers to focus on future online activities. The company is currently traded at a value of NIS 47.5 million, in response to investors' recent company announcements.

The third after them is

, whose shares fell 54.2% from the beginning of the year to the end of the trading day last Tuesday, which led the company's value to scratch the 40 million shekels from below. The resignation of the company's chairman, Air Force Commander Ido Nehushtan, did not contribute to the company's stock, now would also have to cope with a new bill of mind - which raises the question of the relevance of the company in the domestic market.

More and more companies cannabis find themselves falling below the value NIS 100 million, and find it difficult to present value to the investing public, even the

- The only profitable companies whose shares are traded on the local stock exchange, fail to retain the investing public.

The two fell 46.06% and 46.62%, respectively, and led Pharmokan below the NIS 100 million value line.

It is evident that the medical cannabis industry needs stability that will restore certainty to the activities of the local industry and prevent the company from going through upheavals due to regulatory requirements and political whims.

And that a fundamental change in the form of industry activity is needed so that the companies operating in it can flood value for their investors.

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