Robert Lakin, Author at Green Market Report

Recent Stories by Robert Lakin

Israeli medical cannabis producer Breath of Life International Ltd. (BOL) cut its valuation for a pending Toronto Stock Exchange initial public offering by about 17%. According to a Canadian regulatory filing on June 14, the company is seeking to list 14% of its shares at a fully allotted valuation of CAD 1.02 billion (USD 827 million), compared to a previous valuation estimate of about $1.19 billion, following its May 23, 2019 prospectus.

Breath of Life produces medical cannabis and cannabis products — including 99%-pure cannabinoids — distributed primarily through pharmacies. The company currently supplies 48 pharmacies from its single facility in the southern Israel kibbutz of Revadim. It is targeting export markets in the E.U., Canada and Australia.

According to the prospectus, BOL showed revenue of $3.5 million in 2018, up from $3 million in 2017, and posted a net loss of $29.3 million, compared with a $6.4 million loss a year earlier. The IPO proceeds will be used to expand operations to Portugal resulting in an annual manufacturing capacity of more than 870,000 kilograms of dried cannabis in Israel and Portugal combined by the end of 2020, the prospectus said.

BOL set a price range of CAD 27-32 per share (USD 20-USD 23.80). Underwriters are BMO Nesbitt Burns Inc., Cowen and Company LLC, and Scotia Capital Inc.

BOL expects to take advantage of recent changes in Israel’s medical cannabis regulatory framework, which went into effect in late April. Under the changes to the country’s long-established medical cannabis program, there is no longer a fixed limit on the number of patients who can be prescribed medical cannabis; the number of physicians allowed to prescribe medical cannabis has been expanded; and, all pharmacies can be certified to distribute medical cannabis.

As a result of the framework changes, BOL forecasts that the number of approved medical cannabis patients in Israel will quadruple to 120,000 by 2022, from 30,000 last year. Earlier in the year, the government approved the export of processed and finished medical cannabis product.

The Israeli government sees a significant economic opportunity in medical cannabis. Various published forecasts peg the sector to be worth from $260 million to as much as $1.1 billion by 2022. In the last year the government committed the equivalent of more than USD $3 million to more than a dozen studies on boosting medical cannabis growing and cultivation.

The future of Israel’s $1 billion-plus medical cannabis export industry has been tossed back to Prime Minister Benjamin Netanyahu for a decision after consideration by the parliamentary committee overseeing marijuana policy.

Cannabis is classified as a drug according to Israeli law and any export plan requires the prime minister’s approval.

Earlier this month, in what was seen as deference to the Trump administration’s opposition to legalized marijuana, Netanyahu sent the plan back to advisers for reassessment, bringing export planning to a halt. The prime minister is currently embroiled in multiple investigations, including an influence-peddling scandal that threatens to bring down his ruling coalition that has been otherwise supportive of medical cannabis reform.

The Agriculture, Finance, and Justice ministries are strong supporters of reform legislation as marijuana is considered to be one of the country’s “crops of the future,” according to the Agriculture minister. He denied media reports that the Trump administration was influencing Israeli marijuana export policy. A decision by Netanyahu is expected within a month.

“There are tens of millions of people in the world for whom this is the last resort,” said Israel’s Minister of Agriculture and Rural Development Uri Ariel during the Knesset (parliament) committee meeting on Monday. “We’re not talking about any kind of narcotic, but about medicine. Israel shouldn’t export any raw material, rather medicine created following studies, like any other kind of pharmaceutical,” he said, according to Israeli business daily Calcalist.

Europe Seeks Israel Exports

Several countries have expressed interest in purchasing medical cannabis from Israel, including European countries where medical cannabis usage is growing, according to Israeli marijuana industry accelerator iCann. “Some nations, like Germany, currently rely solely on foreign producers,” vice president Sari Klaff wrote on the company’s blog earlier this month. After Netanyahu initially sent the policy back for review, iCann said the delay in a decision on Israel’s export of medical cannabis set the stage for a “staggering” potential financial loss.

However, if your horizon is “long-term growth and sustainability, then it doesn’t matter if the export is approved today, in a month, or in three months time,” Saul Kaye, the company’s CEO, said. “Export will happen from Israel.” The firm’s annual CannaTech event, spotlighting Israeli and global cannabis innovation, is scheduled over a three-day period mid-March in Tel Aviv.

Challenges to Nascent Industry

The policy would go a long way to addressing concerns about the quality of crops grown for export. In December, the director of the Health Ministry’s medical cannabis unit told the parliamentary committee that “most of what’s currently grown in Israel either does not meet the standards or is based on strains that have been smuggled into the country illegally.” Until that is remedied, according to director Yuval Landschaft, “we cannot establish an export industry based on strains that were smuggled in because we cannot export stolen goods.”

The Israeli government sees a significant economic opportunity in medical cannabis. Various published forecasts peg the sector to be worth from $260 million to as much as $1.1 billion by 2022. Earlier this year the government allocated the equivalent of $2.8 million for more than a dozen studies on boosting medical cannabis growing.

Eight growers have previously been licensed by the government to grow crops for export; Almost 400 Israeli farmers have applied for cannabis growing permits. The eight approved producers combined are permitted to grow as much as 25 tons of marijuana a year. Current demand is estimated at 10 tons, implying that an additional 15 tons could be grown without additional permits.

Israeli farmers are fast becoming cannabis converts as 383 farmers have recently applied for growing licenses, officials from the country’s Health Ministry told a parliamentary committee meeting in Jerusalem on Monday.

The health agency has received a further 250 applications from nurseries seeking to distribute marijuana plants, along with 95 requests from pharmacies to sell cannabis products, and more than 60 applications to open cannabis processing facilities. Regulators are reviewing the requests and have already provided preliminary approval to a majority of applicants, the officials said.

Early next year, the list of doctors permitted to prescribe medical marijuana will be expanded by the Health Ministry, according to testimony to the Knesset (parliament) Special Committee on Drug and Alcohol Abuse.

The Israeli Ministry of Agriculture estimates the number of active farmers to be less than 10,000. The interest in cannabis farming comes as the country’s agricultural sector is beginning to feel the impact of deregulation, with the lifting of tariffs and custom duties on foreign-grown and raised food products. Seeking alternative cash crops, many of these farmers see growing high-value, custom cannabis strains as a way to offset negative trends in other field and hothouse-grown plants, fruits and vegetables.

The Health Ministry has been under fire from politicians to eliminate roadblocks holding back the expansion of the Startup Nation’s medical cannabis sector. Citing the health and economic benefits of the industry, Committee Chairperson Tamar Zandberg of the center-left Meretz party told officials “ we are paying dearly for every moment wasted.”

The Israeli government sees a significant economic opportunity in medical cannabis. Various published forecasts peg the sector to be worth from $260 million to as much as $1.1 billion by 2022. Earlier this year the government allocated the equivalent of $2.8 million for more than a dozen studies on boosting medical cannabis growing.

Agriculture Minister Uri Ariel in August announced that Israel would begin exporting medical marijuana. Over the summer, the government approved measures to make medical cannabis more easily accessible to the more-than-23,000 patients already approved for MMJ use.

While Health Ministry officials said they are making every effort to expand the industry and encourage growing of export-quality cannabis, they are facing a problem of illegally grown marijuana slipping into the growing ecosystem.

“Most of what’s currently grown in Israel either does not meet the standards or is based on strains that have been smuggled into the country illegally,” Yuval Landschaft, director of the Health Ministry’s medical cannabis unit, told the committee. “We cannot establish an export industry based on strains that were smuggled in because we cannot export stolen goods.”

The medical cannabis unit issues permits to patients to use cannabis for medical purposes, in addition to appropriate permits to investigators and various research bodies that study cannabis and cannabinoids.

As more farmers are licensed to grow cannabis, strains will become better standardized and controlled, Landschaft said on the sidelines of the meeting. “Serious farmers have the incentive and the knowledge to maintain tight quality control on their crops, and marijuana is no different.”

Amsterdam-based cannabis breeder Barney’s Farm has invested $2.1 million in Tel Aviv-listed Medivie Therapeutic Ltd. (MDVI-M, TLV). The deal gives the Dutch company about 244,000 of Medivie’s ordinary shares, based on a valuation of $14.2 million, according to reports.

Medivie also will have rights to use Barney’s branding for its future products. Barney’s has been developing cannabis strains since the mid-1980s. Its awarding-winning varieties include G13 Haze, Liberty Haze, Willie Nelson, and Cookies Kush.

With shares trading on the Tel-Aviv Stock Exchange, Medivie recently pivoted from a manufacturer of oral medical devices for pain and migraine relief to a company growing medical cannabis on a kibbutz in northern Israel. The Ra’anana, Israel-based company recently agreed to pay $4 million in milestones for a 51% stake in the unidentified kibbutz’s growing operation.

As part of the deal, Medivie will have use of 2.5 acres of the kibbutz’s land for up to three years, with an option to use 47 more acres in the future. Medivie also has around 2 acres of land that will be used for manufacturing cannabis products.

Long a mainstay of Israel’s early socialist economy, some of these agricultural communes are now shifting to cultivating and growing medical cannabis as the country seeks to become a global marijuana exporter. The kibbutz venture is expected to speed Medivie’s entry into developing, manufacturing and distributing its cannabis seeds and products in international markets. Prior to the Barney’s investment, Medivie estimated that it would be capable of selling products within a year.

Observers are closely watching the Barney’s-Medivie deal as a harbinger of investments coming into Israel’s cannabis industry. While the broader startup landscape is rich with deals — in the first nine months of 2017, Israeli high-tech companies raised a record $3.8 billion — the cannabis industry has not attracted a sizable investment in almost two years.

Cigarette giant Philip Morris International announced in January 2016 that it would invest about $20 million in Tel Aviv-based Syqe Medical, an Israeli start-up that developed a metered-dose vaporizer of raw plants for medical use. About a year ago, Israel’s Teva Pharmaceutical Industries Ltd. and Syqe signed a distribution and cooperation agreement to market medical cannabis in an inhaler.

While there is no official count of the number of businesses involved directly in the cannabis industry in Israel, Start Up Nation Central, a Tel Aviv think tank and innovation center, lists nearly 40 cannabis-tagged companies among the 5,659 startups that it tracks.

The Israeli government sees a significant economic opportunity in medical cannabis. Various published forecasts peg the sector to be worth from $260 million to as much as $1.1 billion by 2022. Earlier this year the government allocated the equivalent of $2.8 million for more than a dozen studies on boosting medical cannabis growing.

Israel has now made medical cannabis farming a recognized agricultural sector, opening the way for an expanding number of growers to receive government grants, training, and other support, as well as breaks on water quotas.

Eight growers have been licensed by the government, including Tikun Olam, Israel’s oldest medical cannabis clinic and production, and Breath of Life Pharma, according to ICan: Israel-Cannabis, a venture fund and technology incubator for start-ups in the medical marijuana business.

A third licensed grower, Cannabliss, specializes in growing cannabis as a product ingredient, not for smoking. The company’s edibles are used in epilepsy treatment.

Bazelet Group processes the cannabis grown by four out of the eight legal farms in Israel, including its own license holder CannDoc, Better and Siach. (see list below)

The Israeli government sees a significant economic opportunity in medical cannabis. Various published forecasts peg the sector to be worth from $260 million to as much as $1.1 billion by 2022. Earlier this year the government allocated the equivalent of $2.8 million for more than a dozen studies on boosting medical cannabis growing.

PRELIMINARY PERMITS

An additional 37 farmers received preliminary permits earlier this year to build facilities to cultivate medical cannabis. According to the Ministry of Health, those permits are only for the “planning and construction of the farm and preparation for quality checks, without authorization for [having possession of] the drug,” Farmers who are given further approval will need to obtain a special license to handle cannabis through the country’s Dangerous Drugs Ordinance.

Those preliminary permits were only issued after farmers petitioned an Israeli court in January push government officials to conduct required site inspections after the government okayed expanding the number of approved medical cannabis growers in June 2016. The Ministry of Health said delays were caused by a lack of resources for the Israeli Police to perform the checks.

LARGER IS PROFITABLE

Scale is critical for Israel’s MMJ farmers, according to government analysts. Their economic models show that growing cannabis — at a wholesale price of about $2.85 a gram — is only profitable when planting and harvesting a one-acre or larger plot. They estimate It costs about $430,000 to establish and manage a quarter-acre cannabis farm in the first 18 months or operation.

Those patients receive prescribed product through the Health Ministry, which runs its own medical cannabis department. That ministry also administers the licensing process and is expanding the number of permits issued to growers, doctors, and patients.

List of Licensed Growers (source: iCAN)

Tikun Olam
Breath of Life
Siach (Hebrew website only)
Better
Agrocan Teva Adir (Hebrew website only)
Cannabliss
Canndoc
Pharmacan

Lykos Therapeutics Secures $100M in Series A Funding, Rebrands from MAPS PBC

Functional Mushrooms Move Into Mainstream as Wellness Trend Grows

In other news

The Daily Hit: January 4, 2024

Connecticut Attorney General Tells Unlicensed Cannabis Events Company to Stop

Testing Concerns Lead to Quarantine for 70% of Mississippi MMJ Goods

Author: Robert Lakin

Recent Stories by Robert Lakin

Israeli Medical Cannabis Producer BOL Cuts Valuation By 17% Ahead of Toronto IPO

Israel Cannabis Export Decision Sent Back to Beleaguered Prime Minister

Europe Seeks Israel Exports

Challenges to Nascent Industry

Israel Sees Increasing Demand for Growing and Distribution Licenses

Barney’s Farm Buys $2.1M Strategic Stake in Israel’s Medivie

Israel Cannabis Market Could Be Worth $1.1 Billion By 2022

The Daily Hit - TEST TEST TEST

Lykos Therapeutics Secures $100M in Series A Funding, Rebrands from MAPS PBC

Functional Mushrooms Move Into Mainstream as Wellness Trend Grows

Recent Stories by Robert Lakin

Europe Seeks Israel Exports

Challenges to Nascent Industry

Get the latest cannabis news delivered right to your inbox

Get the latest cannabis news delivered right to your inbox