Global Logistics In Cannabis (Podcast Transcript)

Summary

• Logistics are an essential part of cannabis, but it's an area where people aren't looking.
• Yoram Eshel led supply chain and logistics at Teva and now runs Cannabilog, an Israeli company that closes the gap between growing, manufacturing and supply chain/logistics management.
• New and more elaborate regulations around ever evolving innovations in medical cannabis, but there's a big gap in managing this in cannabis industry.
• Pharma and cannabis will join worlds. Where regular pharma fails, cannabis steps in.
• Inter-state commerce, importing and exporting over global borders.

Editors' Note: This is the transcript version of the podcast we posted last Wednesday. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the podcast, embedded below, if you need any clarification. We hope you enjoy!

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Rena Sherbill: Welcome back to the show. It's great to have you listening with us, really excited about today's episode because we're talking about something slightly different than we're used to talking about. We're not covering a specific stock today. We are covering the global cannabis market with Yoram Eshel. Yoram is a great person to talk to about this. He managed supply chain and logistics for Teva Pharmaceuticals (TEVA). And after leaving Teva, he wondered what to do. And he thought the perfect space was our favorite industry and you know why, because it has exponential growth. Yoram agrees and he created Cannabilog, which does global supply chain and logistics management across the world, hence global.

And supply chain, inter-state commerce, it's something that's been talked about a lot on the podcast and in general, because what happens in the next phase of growth. This week has been really exciting. New Jersey signed into law their adult use program. And there's exciting developments weekly, monthly, certainly regularly in the cannabis world, but what does the next stage of growth look like?

So Yoram breaks down what it means to grow into this maturing industry from a supply chain logistics perspective, what it means for cannabis companies to be transporting, importing, exporting cannabis through state lines, through country lines. He specifically gets into our home market, our shared home market of Israel, and where he sees that market going. Israel, a region we've been talking about a lot recently, and there's a lot of forward movement there and he gets into it.

We also touch on South America, Brazil specifically, Europe, Germany specifically, but also the broader European markets and where he sees that. We touch on Africa and regional development and growth and how each region and country will have its own specific part to play in this growing cannabis industry. And just the complex procedure of governments putting more and more restrictions over the import and export of cannabis.

We've seen that in -- exemplified in different companies. They're announcing pausing of their deals with certain country. We saw that with Supreme Cannabis recently pausing their deal with Israel over the regulatory picture, over the kind of minutiae of the process of importing cannabis. So a great and timely topic. And tomorrow we have a special announcement, a newsworthy episode to bring you, don't miss that. It's going to be released at 8:30 Eastern. I will not divulge any details now, but it's an exciting episode. Don't miss it.

Before we begin a brief disclaimer, nothing on this podcast should be taken as investment advice of any sort. I am long Trulieve, Khiron, Isracann BioSciences, the parent company and Ayr Strategies. You can subscribe to us on Libsyn, Apple Podcast, Spotify, Google Play and Stitcher. Yoram welcome to The Cannabis Investing Podcast. Really happy to have you join us on the show. Thank you for joining us.

Yoram Eshel: Thank you so much for having me, and thank you for the opportunity.

RS: So I'd love to for you to catch listeners up on how you got to the cannabis industry, where you are today, your company now and how you've journeyed here.

YE: Okay. So I spent five years in the USA relocation, managing U.S. big forwarding company. And after five years, we were looking forward to come back to Israel and to join an Israeli company. So I ended up working as the global logistic manager, supply chain logistics manager for Teva Pharmaceuticals. I started in Teva back in 2004, where Teva was the Israeli plus company. And during the years, I want to say that it's kind of a lifetime opportunity where you're starting in an Israeli company and then after 14 years, with the largest generic company in the world.

So it was really, really a special opportunity to go through all those acquisitions and mergers and becoming a large Israeli company with a little bit of international activities to reach a global company with more than 100 markets, 85 production sites or pharma technologies, a big, big, big moment. So back in Teva this was one of the opportunities that they had.

The other opportunity was, again, lifetime if you want to call it this way, is where I started in Teva, logistics was actually -- bring me this, bring me that, a little bit of export or import. And over time, actually, the logistics and the distribution of pharmaceuticals becomes something that is part of the GMP. In other words, more and more regulations and regulatory agencies, especially in the U.S. and in Europe understood that it's not enough to check and to inspect how you produce your product. It's also very important to understand how you distribute it.

So instead of just checking the end of their production line, all of a sudden regulatory agencies were looking of how you get into the pharmacy or actually how you're getting to the patient. This is where the whole quality logistics issue became a major part of every pharmaceutical company. And in other words, you have to prove how you control your supply chain and how you control your medicines, all along the supply chain, in terms of their conditions, especially temperature, humidity. You go to a pharmacy, you got Tylenol, you want to make sure that it was not just produced in the right way, you also want to know that it didn't reach the pharmacy with 70 degrees in the summertime.

So bottom line is I was there where logistics became very important part of every pharmaceutical company in the quality of pharmaceuticals. So it took a big organization, a global organization with many production sites and took them through the regulatory requirements, which were not that obvious and not that simple. So that's another thing is that I was there, making sure that the logistics side is also adhering to the regulatory quality requirements.

RS: How did you get to Cannabilog?

YE: So about three years ago, I decided to take advantage of a very -- frankly, if I would say, retirement plan from Teva. So I decided to retire from Teva. And started to look around, what will be the next career and very, very fast I understood, that we're facing now a magnificent, what should I say, lifetime again, opportunity, which is actually the cannabis industry. That is a new industry. How many time in your life, you actually notice that there is a new industry in the neighborhood, industry that -- actually based on science. We all know that the cannabis plant, marijuana, cannabis hemp, can help a lot of people, can help patients in many medical conditions, where the pharmaceutical industry cannot support or limited to support. And we can see that these products are really helping patients.

So I notice that there's a new industry in the area, not just in Israel globally, which actually started to move ahead, in one hand, in terms of cultivation production and so on. But on the other hand, when you attach the world, medical to cannabis, you get medical cannabis and medical cannabis is the medicine. And this is the medicine, then all regulatory agencies around the world require the same pharmaceutical standards to be adopted by the cannabis industry. And this is where the challenge started, because when I started to talk with people, they were growing cannabis, they were distributing cannabis. More or less in half formal way, medical cannabis.

And along the time, it started to be under GMP regulations under GDPR regulations. So there was a big gap in the cannabis industry by the way around the world to understand not just how you grow your products, not just how you produce them, and pack them, also how you move them and distribute them.

And I recognize that there is a gap there in the understanding. It's like coming to agriculture, or to cultivators that are really dealing with growing plants or taking the flowers and bring them to a different -- a completely different language and say guys, this is quality, you have to maintain, you have to adhere to the regulations for pharmaceuticals. And this is where I definitely add a lot of value to their supply chain and to their value chain, in terms of bringing their knowledge, their understanding, their connections, we even should say the education that they got in Teva into this a new industry. And make sure that they adhere to the regulations, because it's medical -- it's medicines, it's not flowers.

RS: It's interesting, hearing you talk about your time at Teva and also why you got into the cannabis industry. And of course, so many people I talked to, since I've started this podcast, in the cannabis industry, how exciting it is. It's a once in a generation opportunity. All these great things, and also maybe blockchain, you could say the same thing about. But I would never think that about the pharma industry, but hearing you talk about your time at Teva, it's almost like you ushered in, or you helped to usher in a new era there. And I'm wondering if that's what made -- what you think help to make Teva so successful was its adherence to these kind of many different global regulations that it had to navigate. Do you think that's what kind of put it on the map there?

YE: So I think that for every -- every pharmaceutical company, whether Teva or others -- and by the way, never mind if a generic company or innovative company, I think that the whole pharma industry is basically based on two things. The first one is innovation, is the ability to develop new products, is the scientific ability to bring new cure to patients. And this is something that -- this is what the industry is all about.

On the other hand, once you have this innovation, once you have those new molecules or those new biological products, so just -- a lot of new technologies in the pharma industry, like cell therapy and others. On the other hand, as long as you're developing more unique and more specialized products, you have to adhere to that. You have to do regulation, you have to go through the FDA, or the MHRA, or ANVISA, or any other regulatory agency in the world, anywhere in Europe, in the U.S. or other places. And you have to adhere to their quality standards, and to the GMP standards.

So it's not just being innovation and coming up with new solutions, is also very hard work of making sure that your production lines are okay, and your raw materials are okay. And that the products that you deliver to your patients are according to the whole regulations. So it's always the balance between the new stuff, the new technologies, by the way, which are more complicated from a logistic point-of-view as well, look at the vaccines, right? Minus 70, how you move minus 70 products around the world.

But on the other hand, you have to make sure that you are adhering to their kind, I'm telling -- I'm saying it, they're all stuff right, their regulatory, their all building standards and all the laboratory tests and everything that you have to adhere. And the cannabis is the same exact thing. In one hand, this is a wide area of new products of new -- everybody thinks about THC and CBD, but then you have CBG, you have other components, other molecules from the cannabis plant in one hand. But yet again, if you are a medical cannabis, not just recreation, if you want to call yourself a medical cannabis producer, you have to adhere to the same exact regulation, kind of all regulations. And this is the gap. And this is exactly the gap.

So I think that as we go along, both the pharmaceutical industry and the cannabis industry will develop more and more products. And yes, Rena, one day, they will do it together. Today, we don't see that many pharmaceutical companies in the cannabis area, right? It's more -- it's a bit different, it's not exactly the same. But I'm sure that the day will come, and I don't think it's far where we will see the big pharma guys are putting THC, CBD or other molecules in their products, because we know that the cannabis cure people, cure diseases, cure situations, medical situations where the regular pharma either doesn't have products or the products like the opiates and others are not that great.

So I think we have a very long way to go. But I am sure that we will be there.

RS: So let me ask you something, coming from the pharma world, coming from Teva. Do you think that the pharma industry has done work to stop the cannabis industry from growing in the way that it is, until kind of the pharma industry can get in further? Do you think that's happened?

YE: I don't know. Well, I would say this way. First of all, I cannot recognize such activities. Maybe there are things that under the rather that are happening, I'm reading more and more companies that are signing agreements to develop or to research, run the cannabis and trying to find a way to bring it into the -- let's call it the traditional pharmaceutical product. I think that there will be two -- I think that we have to go through two things. One is the psychology. By the way, you see it all over the world. There are many, many people that think still, that cannabis is illegal, cannabis is kind of, to be a pusher of marijuana industry, which is psychology, because a lot of people -- more and more people do understand that it's a medicine.

And on the other hand, everybody understand that the pharma companies kind of has concerns -- have concerns over cannibalization of the regular products, because if the cannabis is doing the work, I don't know for autism or for a pain or cancer situation, or other situations, then it may might cannibalize their regular product. So psychology in one hand, business opportunity on the other hand, eventually it will work. I'm sure it will, even if it will take a little bit more time.

RS: So you mentioned vaccines a little bit and we were talking a little bit about the vaccine before we started recording. And we're both sitting here in Israel and Israel is making headlines across the world, as having done a really cannabis outstanding job in terms of getting the vaccine to more people than most countries have been able to do. And I'm curious, you're working as an expert in the supply chain, specifically in Israel. How much do you think Israel has a handle on the logistic side? How much do you think it has a handle on the regulatory side? And do you feel like Israeli companies or companies doing business here are able to meet those regulations?

In other words, do you think it works well given how this country works? Or can you speak a little bit about that?

YE: So frankly, I'm not -- I don't think that the vaccine by themselves had any issue with regulation because the government was pushing to get that. And once Pfizer (PFE) and Moderna (MRNA) were approved by the FDA and by some European agencies, then the Israeli Ministry of Health approved that very quick relatively. Then it was the -- I mean, I would think, magnificent, a really, really inspiring way, how the logistic works. I mean, every day we have a full aircraft landing here in Israel, bringing more and more vaccines. And I also think that the Israeli health system helped a lot here.

We have our healthcare provider, four big healthcare provider that can approach millions of Israeli citizens in two days. My wife is working for one of those healthcare providers. Saturday night this Saturday night, three days ago, they asked her to call about 50 teachers in the special education area. She called them in one and a half hours 50 of them to get vaccinated next morning. And people were jumping from happiness and whatever and they went to get the vaccine next morning.

So I think that the Israeli -- if you look at it as a chain of approving the products, bring them into Israel and distribute them into those -- I think we have more than 200 stations that vaccinate the people and calling the people in. I was there this morning, I got my second vaccine today. I was standing in line with 50 people, 8 o'clock in the morning, 8:30 I was out together with another 50 people that got the vaccine, that was amazing.

RS: That is amazing. So tell me a country that can do that, why can't we get cannabis legalization together?

YE: I think it's a good -- very good question. First of all, I think that Israel is quite advanced in the cannabis area as well, because we have hundreds of doctors that are approved to write a prescription for cannabis. We can get the cannabis in pharmacies. So there is a good system where you can be prescribed and get your products relatively in a very organized way.

When it comes to legalization, I believe that it's a matter of two things. First of all, I believe, again, it's the psychology side of it. Again, not everybody wants -- looks cannabis as the cure, or as a legitimate product. There still a lot of people believe that, it still has a narcotic and psychological effect. And on the other hand, I think that it also require some protection on the young guys.

So, I believe that along these lines, we must find a way to regulate. Cannabis to make sure that it will get into the right people and will not harm people. And again, legalization is not medical, right, legalization is for everybody. So I think that a little bit Israel is a bit conservative not as in other countries, but a bit. But I also think that, it will come. And one more thing to remember is that when you're talking about cannabis, the seven areas of cannabis, there is a medical cannabis, there is a pharmaceutical cannabis, there is a recreational cannabis, but there's also a big, big section that we don't see yet in Israel, but we already see it in the U.S. and in Europe, is the CBD product doesn't have the psycho stuff, and still help people in many ways. So, yeah, so it's many areas that still need to be developed.

RS: And where do you think -- do you think like America, how kind of -- it seems that if not across America, it's going to be legal, certainly every month or something brings another state online. Do you think that affects other countries at all, like in terms of their regulations? Or do you think each country is kind of going according to the culture of the place?

YE: So right now, there are two countries in the world besides Israel, by the way, Israel is really leading the science in many other areas and kind of this. There are two countries in the world that actually, behind the scenes are leading the cannabis industry. One is Canada, when it was a -- cannabis was legalized I think it was end of 2017. And the other one is Germany, which is leading Europe in the medical cannabis area. Europe is okay with the CBD products but not in the medical area. So Germany is kind of setting the standard, UK a little bit and Canada and North America. I'm not talking about other areas in the world.

Now in the U.S., the situation is very, very tricky. I'm not sure that there is one person who really, really understand what's going on over there. So what we can see there is, I think today is about 15 states, which cannot be sourced legalized. Some states where cannabis was decriminalized. More states, I think 35 states that approved medical cannabis, but that is a very good system to distribute it. And federally, the law does not prohibit any import and export of cannabis.

And even though Nevada and California, both of them cannabis is legal, you cannot cross the state line. I mean, if you want to -- if you have a dispensary in Nevada, you have to grow, to distribute it, to dispense in Nevada. You cannot send it over to California, although it's just over the so-called border. So the regulations in the U.S. are really, I would say, confusing sometimes. You can export CBD, but not CBD products and some products and sometimes it's by the state.

So I believe in two things. First of all, I believe if the new government in the U.S. will legalize cannabis at a certain point, lot of people are hoping for that, it will revolutionize the whole industry, because U.S. is a huge market and it will be completely a game changer for everybody in the cannabis industry around the world, if they will legalize it federally, not just state by state.

Same with Europe, if more and more state -- countries in Europe will legalize cannabis, either medical cannabis or recreational, then again, it will change the whole industry.

RS: Do you think that it -- Yeah.

YE: So this is where I see the big change coming in.

RS: And do you think that is going to be the thing that changes the industry or you think -- you don't spend that much time thinking on how it's going to happen, you just know what's going to happen.

YE: If I'm looking a little bit back in the cannabis industry, I think there's one very nice thing about this industry. Many industries that we can see over history were top down. Someone invented the cell phone and sell it to the market, someone invented the -- I don't know, the iPhone, or I don't know, the fax machine, whatever, right, it was top down, someone did something and it went down to the market and to the people. Cannabis is the other way around. It's bottom up. It's coming from the people. It's coming from a father that has, God forbidden, a kid with epilepsy or with other conditions, and nothing else helped them then cannabis, or people with very bad cancers and nothing else helped them.

So it's big, the government are being pushed from the bottom, to bring it to the people. Leave aside of course, the recreational stuff. But from the medical point-of-view, it's being pushed from the bottom. And this is why I believe that governments at the end of the day will not have any other way or chance, but to change it. Because the people are requiring it, people don't have other products to cure their illnesses. This is why they are pushing it.

RS: And I'm curious if you have thoughts and I was talking to somebody from Khiron (OTCQB:KHRNF) yesterday, and they were talking about how they view Brazil as being the next like up and coming medical cannabis market. Right now Israel is the number one medical cannabis market, as far as I know. Do you see Brazil as being the up and coming? Do you see another market coming to the forefront? I know you mentioned Germany and a lot of people are high on Germany coming online. What are your thoughts there?

YE: So I do think that -- again, overtime, we will see more and more countries. Right now. Germany is already there. Just that you know, okay. In Germany, Germany, the population of -- Germany is around 70 million people. And in Germany there are 80,000 prescription for cannabis. Israel is a country with 9 million people. We've the same number of prescribed patients around 80,000. So, we all believe that Germany is just the beginning. If you take the same ratio it would be 10 times as much.

So again, France is having a pilot now, UK is making a little bit progress, Denmark is progressing, Austria, Belgium, Italy, and we will see more and more with it. So this is one opportunity is definitely Europe. U.S. I already said. Regarding LATAM, what we see in LATAM actually is both one, we see LATAM -- Brazil leaving LATAM in this respect is growing more and more as markets for products. And Mexico, same thing.

By the way Uruguay was even before legalized cannabis was the first in the world, even before Canada. Not a lot of people know that. But still small markets, not Brazil. Brazil will be a big one. The issue in Brazil is right now is that they allow importation of medical cannabis products, but on a person-by-person licenses, so it means that if someone in Brazil got a prescription on his -- in his or her name, they can input cannabis products.

So we all understand that if it goes one-by-one, it will never become like a big market. But it seems that they are changing their regulations as well. So I definitely see Latin America is very progressing as a market, but also as a supplier. There are many, many cannabis cultivation sites and production sites in Uruguay in Colombia. So we see more and more. So they will provide products, probably to Europe and other places, but also consume cannabis products coming from other places. So it will be there definitely.

RS: And do you think -- you spoke about psychology preventing a lot of countries and states going online? Do you think that part of changing that psychology is the research that's involved? Or the medical aspects of it? Do you think the more people understand that, the more they change their mind?

YE: So the question was, basically what is the role of science, when you go to the cannabis industry? So there are two areas, where we can see a scientific science comes in. The first and more important, is the ability to research the cannabis plant, because we know that there are more than 100 or 115 molecules down there, which just 15 of them were researched as of now. So we do understand from a scientific point-of-view, there is more potential to find more and more molecules and to understand whether they can help patients with some illnesses.

So first and foremost is the science where they develop new medicines, or new molecules that can support illnesses. The second main point, where we see the science, is to develop more and more sophisticated genetics of the cannabis, because the end of the day cannabis is a plant. And we want this plant to be clean, and adhere to regulations, but also have more and more precise amounts of CBD and THC.

Today, if you have a plant, the flower at the top, and the flower at the bottom of the same plant are different in the content of the different tech -- different materials. So it one big same CBD and THC on the top and the bottom. And more and more genetics is coming through research to be better and more, I would say better quality, better with the healthier plants, less pesticides, whatever. So it's like other vegetables or like other plants, right, cucumbers and whatever. So genetics in one hand. Sorry?

RS: A living organism?

YE: Yes, exactly. So genetics of the plants themselves were scientists doing a big job. And on the health area where they wish to bring more and more molecules that support the medical area with illnesses and medicines. Now Israel is leaving there, not the only country. So, what I would -- I think will happen is that you will see some countries very, very strong in their science, whereas other countries like in Africa, in LATAM are doing the growing and then manufacturing because of the low cost, because of the more opportunities to produce there. And to bring the science into their area. I can see every cultivation site or production site is investing so much money in the research area. So like in other pharmaceutical areas, say research will be here, production will be here.

RS: And talk to us about -- talk to listeners about what you -- what Cannabilog does in the industry?

YE: Okay. So, again, thank you for asking, Rena. So, as I said, when I retired from Teva, I recognized that there is a big gap because people can grow and manufacture, but need yet to go-to-market. And when it comes to supply chain management and logistic management, you're coming into a very, very complex area, because you need to make sure that you do understand three major areas of this industry.

The first one is more important is the regulations, what is legal and what is not legal to export, to import? What are the required licenses around that? Who you have to ask for a license? How you get the license to import or to export? How long it takes, leave aside how much it costs. So just did you know?

If I want to bring cannabis flowers from Canada into Israel just for the sake of the example, but it doesn't really matter it works. Every country is the same thing. Then I need to obtain first of all an import permit here in Israel. Then I have to send my input permit into the Canadian supplier and he has to go to Health Canada to ask for an export permit.

In Israel, this process of getting this permit will take two, three weeks and in Canada, it will take six to eight weeks to get an export license. And just when you have this export license, this is where you can really pick-up the flowers and our boxes in there, whatever the bags and move it on.

So it's a long procedure and very, very complicated procedure just to get those permits. It's very close, or it's similar to the narcotic, logistics. But I call it narcotic close. Why close, because it's not just like narcotics, governments are putting more and more restrictions over import and export cannabis. I can tell you that the export procedure in Israel is much more complicated than exporting other pharmaceutical companies when it comes to cannabis.

So you have to really understand what is the regulatory requirements, and sometimes are really unclear. It might be legal here, not legal there. It might be considered narcotics here, but not there. There is a lot of issues. So this is their regulatory area.

The second area is quality. As I said before, it's a medicine. When you move medicines around the world, we're just talking about the vaccines. You have to make sure that you are maintaining the products in the right temperature regime, which is usually 15 to 25 degrees. You have to make sure that there are other right conditions. You have to use just temperature control traps, with farmer grade services to storage at the airport in special areas.

So the logistic of pharmaceuticals and cannabis on top of it is quite complicated and by the way costly. So it's not shipping, excuse me to say. It's not shipping t-shirts from Turkey, it's medicines, it's flowers that can be damaged, can be wet, or whatever the case is. So the quality is extremely important.

And the last thing is security. Different countries has different requirements for security instance, here in Israel, if I move cannabis above 25 kilos, I need to have armed guards and a company vehicle and a lot of arrangements. I've to coordinate it with the police and so on. Each country is different, in Canada is different, in other places in the world is different. So the security, again, psychology, remember. People are afraid that cannabis will go into the black market, whatever you want to call it. This is why governments heads, police, security organizations are putting a lot of restrictions around the movement of cannabis. And you really have to understand it.

And by the way, there are some countries, I will not give you the list. But there are some countries that I will not -- that we already import and export cannabis. And we will never move it unless we have armed guys, armed guards in the cabin and in two cars in front and in the back of the truck. Why? Because it's cannabis and it can be stolen. So this is the case.

RS: Interesting. So how do you see it going forward, as the laws and the regulations keep developing? A, how hard is it to run a global logistics company when the logistics are always changing globally? And also kind of where do you see Cannabilog's space within that future? And where do you see the future of that picture?

YE: So first of all, since we're talking, as I said before, we came from the pharma industry that then in my vision, my plan is to have a certified cannabis agent in every -- I don't want to say every country in the world. I would say every relevant country, because where import and export of cannabis is allowed. There are two areas here, one is the domestic distribution and the other one is the international. And my specialty is in the international's area how to move cannabis between countries. This is where Cannabilog is very strong, low digit shipments to and from Canada. Import to Columbia and Lesotho and Uganda and Germany and Holland and Australia, in many other countries. So we do have a lot of experience working with different regulatory agencies around the world.

But the idea is that you must have on ground, a logistic provider, which is specialized in pharma, understand the pharma regulations, adhere to the pharma regulations, and then gain experience in the cannabis area. And this is what we are establishing in every country, such a logistics service provider, and we build it as a global network.

So whether it's import or export from Israel, or it's an export from Uruguay to Australia, still we will have those specialty, a logistics service provider, they do understand the requirements, the regulations, have relationships with the regulator -- regulatory agencies, and understand the cannabis requirements.

Going forward, I can see more and more countries coming into the playground, Poland, Czech, Macedonia, Greece, Malta and others. By the way some of them are there, so it will be more and more -- there will be more and more activities in the cannabis the international arena. But again, I think that as more and more countries are joining the game, it will become more complex, because each country will have its own regulation. So we still need to work on the country base.

Remember, in pharma, you go to Europe, you register your product, same point -- at the same unit, you register them in 28 countries. In cannabis, it doesn't work this way. There's nothing like Europe, they are countries. So you have to register it in Germany and in Belgium and in UK and others, but UK is not part of the Union. But you know what I mean. So it will take years until we will have kind of a global regulatory -- a kind of coordinated the regulatory policy.

So it will still require a country specific activity. And this is where Cannabilog is specializing. We already moved tons, we already move more than 15 tons, which is by the way, three times. Well, maybe twice, the whole consumption of Germany in one year. So we already moved it around the world from different countries to different countries. And as I said before, it requires a lot of understanding both in the regulatory area, and also in the logistic area.

And by the way, just that you know, I'm negotiating with many airlines, not a lot of airlines wants to carry cannabis. So I'm negotiating dating with airlines, with the airports, with the logistics service provider. So again, remember psychology, airlines doesn't want to be conceived as moving drugs. So there's still a way to go to convince them that it's a medical product, and they should carry that. So there's a long way to go.

RS: Not to mention, I would think that airlines and airports are looking for kind of profits any way they can these days. It would -- I would imagine it would benefit them so greatly. It's crazy to me that they can't like open their minds. And I mean, I think across the world, like most people at this point view cannabis at least more than a nefarious drug. It's crazy that airlines wouldn't take you up on that.

YE: I could tell you more than that. We were during the bad corona days, where the pandemic -- most of them and stop flying it all. We were still moving cannabis. So we are -- I mean we -- the industry is a great opportunity for the airlines and for the logistics service providers, because we need those medicines and these materials whether good days or bad days. So and I think that again, slowly, but they recognize the opportunity. And I'm happy that more and more companies are willing to carry it or willing to handle it or willing to deal with it, but still limited. So you really need to understand the logistic arena in order to make sure that you can move in.

Pharmacy in Israel advertising medical cannabis. Photo: Rena Sherbill

RS: And you mentioned about Israel's regulations around importing and exporting and how it differs from a regular pharmaceutical product. Where do you see Israel's place within this ecosystem? You say it's going to be a while before global borders are wide open. Where do you see Israel? And what's their part in this ecosystem?

YE: So after a long time, eventually export of cannabis out of Israel was approved about, I think it was five weeks ago. Up until then we could have export just samples, in laboratories and the R&D projects. Right now they approve a commercial cannabis. It started already slowly, but the export out of Israel started. Relatively the regulations are okay. Still looking for involvement of the regulatory agency in Israel, because they occur, the Israeli Cannabis Agency. But I'm sure that as we will go along the regulator will feel comfortable that the process is in place, and it's secured and it's adhering to the regulations, then we will be okay.

On the other hand, when it comes to the import, as I said, before, Israel during 2020, Israel became the largest importing country in the world of cannabis, huge amount of cannabis that we brought in. Cannabilog, who was managing, I believe, 70% or 80% of that. But at the end of the day, there were -- the published new regulations, which are limiting the importation into Israel, putting more restrictions on importation into Israel.

Personally, I believe that it's coming from two places. One is to protect a little bit the local industry, like in Canada is doing. Canada by allows import. In fact, there's no import into Canada, because they want to protect the local industry. But also, I believe, that the regulator is looking for -- to make sure that the important product or flowers or biomass, whatever comes in, is with the highest standards of quality and certifications.

So right now, the importation into Israel is quite limited. But I would say it's still -- how should I say under construction or under discussion, exactly what is the right point to allow import comes in, under the regulatory requirements, under the laboratory tests, and so on. So again, when you deal with cannabis, you need to have a big breath -- to take a deep breath and to understand that, it's not an easy place to be and the regulatory agencies are struggling to put it in the right place, and it takes time.

RS: So the last question I want to ask you is about just the nature of Cannabilog? Do you guys want to stay a private company? Is that the plan?

YE: Well, the plan is the right now, we took -- in 2020 we invested quite an amount of money, and we decided the 2020 for us will be the year for getting global. There is a situation right now, where the big logistic companies, I will not mention names, but if you know them by colors, the blues and the yellows, and the big logistic companies are not dealing too much with cannabis.

Again, from the same thing of reputation psychology, because of the U.S. regulated -- federal regulation. So the industry requires at the highest level of services in the logistics area. And this is where Cannabilog want to grow into the global area. So this year 2020, we already took some investment, and we will move on.

By the end of the year, I believe that if we're succeeding, and if we are a fulfilling our plans, and I don't see a reason why we will not, then I'm sure that we will be able to look at for investors, and maybe an IPO and so on. So we have a plan there. But we believe that first of all, we have to grow internally, I mean, to grow the company in the activities, and then to go to the next stage in this respect.

RS: And if you would go on the public markets, would that be in Tel Aviv or would that be elsewhere?

YE: It's a really good question. I believe that we can go to Tel Aviv, but I believe that we should look very carefully, because as I said before, I believe that again, I don't know what will happen to U.S., but definitely Canada is the leading in the world in this respect many companies that went into IPO over there. But also think that the European will play a big game there. So we will see what will be the right thing to Cannabilog the two. But we're definitely building now a global logistics network that we'll provide the best ever service to the industry in the highest standard. This is what we will invest our time to do. And then we will see.

RS: That's awesome. Yoram, this has been a really, really interesting conversation. I'm so happy that we had you on the show. And I'm so happy that I know you got the vaccine today, but you came on anyways, I really appreciate you sharing your knowledge and expertise and your insight. Do you want to tell listeners how they can find Cannabilog?

YE: Well, yes. First of all, thank you for the opportunity. Thank you for having me. As we spoke before this conversation, I said the areas of the cannabis industry that people are not looking at. And I believe that Cannabilog is exactly where the black spot in and this is where we can add a lot of light and a lot of value to this industry. Cannabilog is www.cannabilog.com. We're in the beginning, so there is a website there, there is a connection numbers there, and you can always send me an e-mail at [e-mail]. And I will be more than happy to provide any information along as we move along. And thank you very much again.

RS: Well, thank you and we'll leave links to those on the Seeking Alpha article. When this is live, and Yoram anybody who's heard this conversation will search out this area of the industry and certainly know that you've had a lot to offer us. So thanks again, Yoram and feel good.

YE: Thank you so much. Thank you and good luck to everybody. Thank you.

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