During a Reddit AMA recently Cronos CEO Michael Gorenstein answered a couple questions regarding Israel:
- Can you discuss your thoughts on PM Netanyahu’s recent halt on the export of cannabis from Israel pending Health Ministry and NEC review?
- If Israel halts export on a longer term basis, how does Cronos plan on fulfilling its commitments in the EU markets?
” I’ll try to answer most of the questions on Israel exports/Netanyahu in this post. – Implementing a historic regulatory framework is not an overnight process. The responsible thing for any government to do is ask questions, dot all the I’s and cross all the T’s. Just like Canadian regulators have done, it is important to make sure that there are measures in place to ensure that cannabis is not leaking into the black market. With exports, it is important to make sure that cannabis is only going to federally legal and medicinal markets. At Cronos we have strong procedures that provide those assurances, including a flawless export track record and institutional distribution partners that provide comfort to government officials.
We are not concerned by what is actually going on in Israel – which is different than what you might think based on reading the Trump/Netanyahu article linked below. Cronos has very strong ties to Israel, great partners and our views and confidence in Cronos Israel have not changed. We didn’t expect exports to begin this early. I think later this year is a more realistic target and is the relevant date for us given facility construction.
– Media coverage can be misleading – especially if you only read the headline and not all of the text. I have a lot of respect for Privateer and the folks at Leafly – so this isn’t a critique aimed at them – this is a global issue with younger online news sources versus institutional media outlets like the New York Times, Wall Street Journal, USA Today, etc. You probably wouldn’t get a lot of clicks from a headline like ‘Israel commissioning study to ensure that exports of medicinal cannabis are executed responsibly.’
We don’t expect to have any issues with Israel halting exports, but we expect that phase 1 of Cronos Israel (5,000KG) would still be less than the domestic demand we project in Israel. So the production is fungible. Regarding fulfilling EU commitments, our general approach to publicly announcing capacity expansion is to wait until material milestones have been achieved. For example, we began planning and designing our Peace expansion in 2016, but only announced it the day we broke ground in May. Among other things, we wanted to make sure we had the power we needed from Hydro (Ontario electricity provider), contractors locked up, town permits, etc. before publicizing it. In Australia, we’ve been working on the project for over a year. We made the announcement once we actually had the licenses. While I realize this is not the norm in this industry, we still prefer being conservative and playing strategic corporate initiatives close to the vest. Measure twice, cut one. Yes, construction has started and we are on track. – Michael Gorenstein, CEO Cronos