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

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.

Robert Lakin

Robert Lakin

Robert Lakin is a Tel Aviv, Israel-based contributor to Green Market Report. He is formerly an emerging markets editor with Bloomberg News in Tel Aviv. A veteran financial writer and editor, he is also a frequent contributor to Investopedia and InvestorPlace.com.


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