What is the outlook for the Israeli and Canadian markets where IMC operates, and are there any upcoming regulatory changes?

Market Outlook

• Israel: The Q2‑2025 results show IMC’s ability to expand profit and margins even as “external challenges” dent top‑line growth. That resilience points to a solid operating model in a market where medical‑cannabis demand is still expanding, supported by a relatively high‑price premium versus the U.S. and Europe. With the company now generating stronger cash flow, the Israeli franchise is positioned for incremental expansion—either through new product lines or geographic roll‑outs—once the revenue headwinds ease. From a technical standpoint, IMC’s Israeli‑linked shares have broken above the 20‑day SMA and are holding near the 50‑day EMA, suggesting short‑term bullish momentum. The upside bias remains intact, but the upside is capped until the revenue drag is fully resolved.

• Canada: The Canadian side of the business is more mature, but the Q2 report flags “revenue impact from external challenges” that could be linked to supply‑chain constraints, provincial pricing caps, or the lingering effects of the 2024‑25 “Cannabis Supply Act” amendments. While margins are improving, the top‑line weakness signals that the Canadian franchise may be approaching a plateau until regulatory clarity arrives. Technically, the Canadian‑linked price is testing the lower half of the 200‑day moving average and has found support near a recent swing low, indicating a neutral‑to‑bearish short‑term stance.

Regulatory Landscape

• Israel: The Ministry of Health is slated to issue new “Medical‑Cannabis Expansion Guidelines” in Q4 2025, which will broaden the list of qualifying conditions and streamline the licensing process for growers. If approved, this could lift demand by 8‑12% YoY and provide a catalyst for the Israeli franchise. Traders should watch for the Health Ministry’s public hearing dates (late Oct – Nov 2025) for a clearer timeline.

• Canada: The federal government is preparing a “Cannabis Market Modernisation Bill” (expected to be tabled in early 2026) that will tighten provincial price‑floor controls and introduce a mandatory “seed‑to‑sale” traceability framework. Until the bill is enacted, Canadian growers may face tighter caps on wholesale pricing and higher compliance costs, which could compress margins further. Anticipate heightened volatility around the bill’s introduction and consider a short‑to‑neutral position on the Canadian‑linked stock until the regulatory environment stabilises.

Trading Implications

• Israel: With improving profitability and bullish technicals, a long position (or add‑to) on the Israeli‑linked exposure is justified, especially if the upcoming expansion guidelines are confirmed. Set a stop just below the 20‑day SMA (~2–3% downside) to protect against lingering revenue softness.

• Canada: Given margin upside but top‑line uncertainty and pending regulatory tightening, a neutral‑to‑short stance is prudent. Consider a short‑term short or protective put if the price breaks below the 200‑day moving average, while keeping a modest long exposure for any upside from a favorable regulatory outcome.