Exclusive Interview with IM Cannabis Co-Founder and CEO Oren Shuster
IM Cannabis (CSE: IMCC) (OTC: IMCNF) is set to add Canada to its global footprint with the pending acquisition of Trichome Financial (CSE: TFC) (OTC: TRICF). IMC Co-Founder and CEO Oren Shuster spoke with New Cannabis Ventures about the company’s established operations in Israel and Germany and how the Trichome acquisition will help to drive the company forward. The audio of the entire conversation is available at the end of this written summary.
Shuster’s background is in healthcare technology and software. He started a business with a partner more than 20 years ago. He was first approached with the idea of medical cannabis in 2010, and he decided to pursue the opportunity.
The IM Cannabis team’s strength, across all of its major markets, is key to its success, according to Shuster. Marc Lustig, who successfully exited Origin House when Cresco Labs acquired it in 2020, brings years of experience in financial markets and strategy to his role as Executive Chairman. Richard Balla, CEO of IMC’s German operations, is another vital member of the team. With the acquisition of Trichome, Michael Ruscetta and Howard Steinberg will be joining IMC’s group of experienced global leaders.
IMC started in Israel about 10 years ago, giving it a depth of experience in that market. Initially, the company grew, processed and supplied directly to patients. Now, it distributes its products through the market’s pharmacies. IMC is a leading brand in the Israeli market, according to Shuster.
Israel is a unique market in that the illicit products are more expensive than products obtained through the legal medical market. The country is comparable in population size to Michigan, representing a large market opportunity, according to Shuster. He expects to see the country’s medical market grow by approximately 50 percent this year. In regard to adult-use legalization, he expects that the results of the March election will paint a clearer picture of the timeline. With a significant percentage of people using cannabis illegally, there is potential for the adult-use market.
In September 2020, IMC began selling its branded products in Germany. It mainly distributes and sells through pharmacies in that market.
Up to this point, IMC has grown in greenhouses. It has seen a marked demand for indoor-grown products in the Israel market. Israel actually became the top importer of cannabis last year, according to Shuster. It made sense for the company to do an acquisition that included an indoor facility.
Additionally, Trichome will bring strategic value in the form of its acquisition experience. The Trichome team knows how to evaluate companies and reorganize them to achieve profitability. With COVID making international travel difficult, this acquisition gives IMC a physical presence to help execute its strategic moves in the North American market.
The companies have signed a definitive agreement, and the all-stock deal is expected to close in March.
M&A will continue to be a vital part of IMC’s strategy. The company is looking for opportunities in Israel, Germany and Canada, as well as other markets outside of its current footprint.
IMC’s founders are significant investors in the company; Shuster is the company’s biggest shareholder. To date, the company has raised approximately C$30 million, and it still has approximately $10 million. The company has always taken a careful approach to managing its expenses, according to Shuster.
With the combined companies of IMC and Trichome expected to be EBITDA positive this year, there is no immediate need for cash. But, the company is moving to the NASDAQ, which gives it access to capital. When the company does decide to raise capital, it will be driven by a rational need.
The Year Ahead
The company is not providing guidance for 2021 revenue, but Shuster is optimistic about the company’s numbers and the growth in its key markets. Challenges like regulations and managing rapid growth are inevitable in a new industry, but IMC is prepared to navigate this environment. COVID-19 also remains a challenge, but the company has adapted. For example, the entire Trichome deal was conducted via Zoom. Shuster expects many more opportunities for M&A this year. With the Trichome acquisition set to close and more potential deals in the pipe, IMC will look considerably different by the end of the year.
To learn more, visit the IM Cannabis website. Listen to the entire interview: