Cannbit Wins Race for Tikun Olam's Israeli Business

Israeli cannabis company Cannbit Ltd. will be acquiring the Israeli business of Israeli cannabis grower Tikun Olam Ltd. for NIS 140 million (approximately $40 million), according to several people familiar with the matter who spoke to Calcalist on condition of anonymity. Cannbit won over two rival offers, from Ehud Barak-chaired medical cannabis company InterCure Ltd. and Bazelet Group, who made offers ranging from NIS 80 million to NIS 100 million (approximately $22.7 million to $28.3 million), the people said.

All offers were much lower than the initial $100 million founder Tzahi Cohen asked for.

Medical cannabis. Photo: Getty Images

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who buy its CBD oil, as well as a list of 8,000 past customers who bought buds from the company until its license was rescinded in February, and could potentially return to the company if supply resumes.

Tikun Olam’s business outside of Israel includes its growing, manufacturing, and distribution operations in the U.S., Canada, Australia, and Greece, as well as partnership agreements with non-Israeli entities. While it is not for sale, Cannbit's acquisition might also include some of Tikun Olam's operation in an undisclosed country in the middle of Europe, the people familiar with the matter said.

Estimates are that Cannbit will pay international Tikun Olam annual royalties of 5%-10% for their use of the brand and the company's cannabis strains. The acquisition will give Cannbit control of the entire medical cannabis supply chain.