Chinese healthcare firm Thalys Medical Technology Inc. (SHA: 603716) has turned to Israel for help as it bids to accelerate the development of China’s medical hemp industry.

The Wuhan-based company has signed a memorandum of understanding with iCAN Israel-Cannabis, a leading medical cannabis incubator. Thalys will help the early stage companies in iCAN’s portfolio develop their businesses and then enter the world’s most populous consumer market.

“By pairing with a leading medical, agricultural, and technology incubator from Israel, known by many as the start-up nation, Thalys advances its mission to serve the Chinese domestic healthcare market through innovation,” said Yicheng Wen, a board member at Thalys. He added that the deal is designed to strengthen the relationship between the Chinese healthcare industry and the Israeli cannabis trade, and “to accelerate the development of China’s new medical hemp industry”.

Thalys has 834 employees and a market cap of 5.2 billion yuan ($770 million). It bills itself as a pioneer in integrated medical distribution and technology services.

Cannabis has been illegal in China since 1985, but hemp grows across the country and it accounts for almost half of the world’s production. The stalks are used for textile fibre, but there is now increasing demand for the CBD that can be extracted from the leaves and flowers.

CBD is one of the biggest wellness crazes in North America and Europe, and Thalys aims to turn medical hemp into a booming industry in China, which would be a significant development. It is interesting to see a large, established Chinese firm getting in bed with the most prominent figure in the Israeli cannabis industry, iCAN chief executive Saul Kaye, who hosts cannabis technology conferences all over the world.

China has a very conservative approach to marijuana and traffickers can be sentenced to death. Yet opinions are shifting in Asia, with South Korea and Thailand permitting cannabis for medicinal purposes.

It will be interesting to see how the situation develops in China, but Kaye is thrilled to be making inroads. He said he is “honoured, humbled and proud” to team up with one of its “leading medical companies” and spoke of how excited he is about Israeli startups breaking into the Chinese market.

Thalys will co-invest in iCAN’s portfolio investments that address Chinese market needs; it will have exclusive cooperation rights on iCAN’s incubated startups for the Chinese market and the two firms will have matching stakes in new investments.

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