Tikun Olam Headquarters in Tel Aviv

Low Times: Israel's First Medical Marijuana Company Closing Its Doors

Details
The Judean Staff
Israel Culture

The first medical cannabis company in Israel, Tikun Olam, which had been growing cannabis since the beginning of the 21st century, decided to reduce corporate losses and become a sort of marketing brand only, producing and marketing goods grown on third party farms, virtually shutting down all their plants and farms.

As part of the attempt to "reduce loss-making activity", Tikun Olam will lay off dozens of the company's employees, including of course the farm workers, but also management and lower level employees, including veteran employees who have been with the company from its early days. The closing of the cannabis company, which has become an icon in the Israeli fight for the legalization of Marijuana, is likely caused by the approval of licenses for large chain pharmacies to fill medical marijuana prescriptions. Israel also recently decriminalized Marijuana for personal use; which has made the vast majority of Israelis who use marijuana far more comfortable in simply dealing with illegal dealers rather than going through the burden of retrieving a medical license.

The company will continue, at least for the time being, to operate its pharmacy in Tel Aviv and its packaging plant in the Tziporit industrial area in the north of the country, but there will likely be cuts in these facilities as well in order to try and stop further losses. This decision joins the company's announcement of its intention to merge with another veteran cannabis company, Ball Pharma, which also recently announced the cessation of cultivation activities and even more recently also its intention to sell or close the factory.

It should also be noted that the company reported losses of around 35 million NIS in 2022, after the previous year in which it lost about 33.2 million NIS. In total, the company's stock on the Tel Aviv stock exchange fell by about 84% within a year.

Despite these huge sums, some of which were wasted on excessive salaries for the company's managers, including Avinoam Sapir, the former CEO of Teva Israel, the company could not regain their profitablility and was forced to shut its doors. The intention to close the cultivation activity has been known in the industry for about three months or more, but the company's managers denied it in response to various inquiries and even claimed that these were lies. 

To the company's credit, it is not the only one that failed. In fact, the absolute majority of the annual reports of the cannabis companies on the Israeli stock exchange were not good, to say the least, and none reported any substantial net profit.  The loss of these once highly successful companies is in line with the global marijuana market's trend.  Since many democracies have relaxed marijuana laws or legalized the product altogether, a new generation of companies have sprouted up to serve the increasing demand and have been experiencing massive growth. 

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