Israel-based Medivie Therapeutic announced that it entered into a $110-million agreement with a European financial investor to grow, produce, and export medical cannabis. This is the biggest deal of its kind yet for an Israeli company.
In its announcement, however, Medivie did not identify the international investor.
Under the deal, Medivie Therapeutic, together with its subsidiary High Pharma, is going to earmark around 25 acres of land to cultivate and produce up to 50 tons of medical cannabis then export it to the buyer each year over a period of five years. Medivie said that this 25-acre cannabis farm and facility will either be in Israel of in a different country.
In return, the unnamed investor will pay Medivie $30 million within the first year. This will go to the completion of due diligence investigations and to the rental and preparation of the lot. Medivie said that by then, it will reveal the identity of its secret investor.
Medivie will receive $20 million a year for the second to fourth year.
Israel’s cannabis export plan
The deal is dependent on whether Israel will allow the exportation of medical cannabis. It can be recalled that Israeli Prime Minister Benjamin Netanyahu had decided to freeze Israel’s cannabis export program in an effort to appease United States President Donald Trump.
(You can read our blog article about it here.)
Israel is a pioneer in the field of cannabis research and biotechnology. And in February last year, the country’s ministers endorsed a proposed bill to legalize medical cannabis export. Under this planned cannabis export program, Israel planned to export cannabis for approved medical purposes to other countries, including the U.S.
The said export program is projected to generate $1.14 billion annually for the country’s economy.
“Medivie won’t hesitate to transfer its knowledge and activity to other countries if the Israeli government fails to legalize the exportation of medical cannabis soon.” – Medivie CEO Menachem Cohen
Last month, after Netanyahu announced the freeze on the export plan, Knesset Economics Committee Head Eitan Cabel held a special meeting on the matter. Government, industry and agriculture representatives had expressed worry about an Israeli medical cannabis collapse if they do not take immediate steps to open the country’s gates for export.
Cabel assured that he would call on Netanyahu to give an explanation about the freeze if the export issue is not resolved soon.
Medivie threatens to transfer knowledge if export is not allowed soon
Medivie warns that if the Israeli government continues to put its export plans on hold, the company would just sell its expertise and knowledge with regard to its cannabis operations.
According to Medivie CEO Menachem Cohen, the company won’t hesitate to transfer its knowledge and activity to other countries if the Israeli government fails to legalize the exportation of medical cannabis soon.
A clause in the contract states that the deal can be cancelled if the country does not approve exports or if Medivie is unable to grow cannabis crops in another country as an alternative.
More investors needed
The company said that it currently holds the rights to 50 acres in agricultural land in Israel for the next two decades or so and it is seeking additional investors. Medivie said it is in talks with other companies who might be willing to enter into similar deals on the remaining acreage.
Midivie said that it is also in talks to cultivate cannabis in Europe.
Medivie Therapeutic Ltd develops and markets dental support devices for various medical uses. It currently markets a DSD that is designed to help women deal with childbirth pain and to reduce the amount of time they spend in labor. Medivie also actively develops a DSD solution for pain associated with migraine and for improved cognitive activity and concentration.