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Tikun Olam’s Israeli Cannabis Business Up for Sale for $100 Million

Tikun Olam’s Israeli Cannabis Business Up for Sale for $100 Million

In August, a Jerusalem court ruled that founder Tzahi Cohen will need to reduce his controlling stake to under 5% before the company’s medical cannabis growing license could be reinstated

Tzally Greenberg  :  2019-08-21T14:14:54..
Tikun Olam Ltd.’s Israeli cannabis business is up for sale, according to several people familiar with the matter who spoke to Calcalist on condition of anonymity. According to these people, Tzahi Cohen, the founder of the medical cannabis company, is negotiating the sale, asking for $100 million. The people added that some industry players think it too high a valuation for the offered assets.

In February, Tikun Olam—which until recently controlled half the Israeli medical cannabis market—notified patients of a supply shortage caused by delays to its planned farm relocation. Said relocation was mandated by a legal reform that imposed stricter regulation across the entire Israeli medical cannabis chain. In March, when the Ministry of Health did not reinstate the company’s growing license, the company turned to the court.

Tzahi Cohen. Photo: Tal Shachar Tzahi Cohen. Photo: Tal Shachar Tzahi Cohen. Photo: Tal Shachar

The ministry attributed its refusal to a recommendation by Israel Police, which stated it had compelling information about Cohen that made a case against his participation in the medical cannabis business. In early August, the Jerusalem district court ruled that Cohen must reduce his 70% stake in the company to under 5% before the license could be reinstated. A proposal that Cohen's shares be put in a blind trust and that he will rescind his role in the management or control of the company while continuing to profit from its operations was not accepted by the ministry.

Tikun Olam’s Israeli assets include a three-dunam (3,000 square meters) farm on land spanning 30 dunams (30,000 square meters), a manufacturing facility currently under construction, one nurse-led clinic, and the company’s headquarters in Tel Aviv. The company’s assets also include a customer list of 8,000 people who buy its CBD oil, plus a list of 8,000 past customers who bought buds from the company until February and could potentially return to the company if supply resumes.

Tikun Olam’s business outside of Israel is not for sale. It includes its growing, manufacturing, and distribution operations in the U.S., Canada, Australia, and Greece, and also partnership agreements with non-Israeli entities.

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Cohen started Tikun Olam in 2005 as a nonprofit, and the organization became a limited company in 2010. He was the first to receive a medical cannabis growing license in Israel.

“Tikun Olam is following court orders, and its top priority is that its patients will be able to resume the treatment they are waiting for with the company’s return to full operations—regardless of its ownership structure,” CEO Aharon Lutzky told Calcalist. He declined to comment on the price Tikun Olam is asking.

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