Kanabo’s new subsidiary secures first MoU for major production facility
The medicinal cannabis company has formed an Israeli subsidiary company, Agritec, in which Kanabo Research Ltd - one of Kanabo’s wholly owned subsidiaries - holds a 40% shareholding, together with certain additional control rights over the strategic direction of the new subsidiary.
Agritec's aim will be to enter into deals with third parties at minimal cost to leverage Kanabo’s Intellectual Property for the cultivation, processing, and production of its cannabis products.
Kanabo explained that the strategic rationale for the business is twofold: firstly, Agritec will provide Kanabo with complementary near-term revenue opportunities; and secondly, Agritec will offer Kanabo improved security of cannabis supply through a diverse range of suppliers.
The range of suppliers are expected to adopt Kanabo's high-quality manufacturing standards without Kanabo having to fund or become directly involved in cannabis cultivation, it stated.
Today, Kanabo Group informed investors that Agritec has now signed its first MoU for the design, build and operation of a 4,000kg per annum indoor cultivation and processing facility in Madrid, Spain. The proposed facility is to be focused exclusively on medical cannabis.
As per the terms of today’s agreement, Kanabo detailed that Agritec may elect to receive up to 20% ownership of the Spanish Project based on the achievement of agreed milestones.
Beyond Kanabo Group, Agritec is also held by three other shareholders - co-founders Ophir Shimshi and Eilon Bdil, experts in cannabis regulation and cultivation, and R. P. Growing Technologies Ltd., who each hold 20% of the issued share capital in Agritec.
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Alongside today's announcement on accelerated monetisation of its IP, Kanabo is also focused on expanding its patient access to medicinal cannabis in the UK - these plans have already come into fruition with its recent £13.5m acquisition of the primary care telemedicine provider The GP Service.
In addition, following the period-end, Kanabo signed a MoU with Forbe, thereby taking the Company into the nascent CBD market in Israel.
Kanabo expects this to position it as a leader in this market, where the regulatory landscape for the sale of CBD products is on an increasingly positive trajectory; at the current rate of growth, Israel’s deregulated market is estimated to be worth up to US$475 million by 2025.
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