Hagai Hillman is an unusual marijuana millionaire by national standards. His controlling stake in the medical cannabis company Breath of Life is worth at least $75 million, even before the export market for Israeli companies like his opens up and before his company goes public.
What makes him different from the other cannabis tycoons who have made paper fortunes, with the shares of their companies ballooning on the Tel Aviv Stock Exchange, is that Hillman is a long-time marijuana entrepreneur and a third-generation farmer.
BOL’s long-time presence in the market has given it at edge over rivals, because it has been licensed by the Health Ministry for the entire spectrum from cultivation to finished products in compliance with global GAP and GMP regulatory standards. It even has its own research and development facilities where it conducted Phase II trials to test the effects of cannabis oil on children with autism.
Meanwhile, anxious patients reaching the call center these days at Tikkun Olam, Israel’s largest provider of medical cannabis, are likely to be disappointed: The company cannot supply its product until July because it has yet to meet the government’s new GAP standard.
Before Hillman founded BOL in 2008 and switched his farm over to growing medical cannabis, he and his family had been growing apricots, avocados, vegetables and turkeys at Moshav Ein Iron for three generations.
As founder and chairman of the Israeli Licensed Medical Cannabis Growers Association, he has lobbied for years to improve the regulation of the nation’s marijuana industry. He’s conscious of the danger of drug abuse, volunteering at a center for people who have become mentally ill due to drug use.
But he also thinks medical cannabis has a great future in Israel. In an interview with Yedioth Ahronoth, he made the case for newly demobilized soldiers to join the industry.
“You come in the morning. There are hothouses to take care of, there are plants that need to be harvested and sorted. Most of the work begins at 6:00 A.M., as in all agriculture,” he said. “You finish the day after eight or nine hours of work, so that most of the day you’re still free. You work in a very supportive and fun environment. We also give you meals and clothing.”
For all that, BOL is still a tiny company. According to figures released last October – offering a rare glance into the handful of operational medical cannabis companies in Israel – BOL had revenues of just 108 million shekels ($3 million) in 2017 and ran up a loss of 17 million shekels.
The year before, when it was operating in a different framework, sales were just 8.7 million but it earned a profit of 100,000 shekels.
That Hillman’s stake is worth $75 million is a function of the marijuana craze that took over the stock exchange last year and saw share prices of a handful of companies, many of them with little more than plans to enter the industry, soar.
Amid the craze last October, closely-held BOL reached an agreement with publicly traded Amir Marketing and Leon Koffler, the founder and controlling shareholders of the Super Pharm chain.
Under the terms of the deal, Amir and Koffler agreed to invest $20 million and $10 million, respectively, in BOL, with an option to put in as much as another $8 million. The money comes in a loan that has to be repaid within five-and-a-half years or it converts into a 24.5% stake in BOL, in the event of an initial public offering in the company.
The deal assigns BOL a $120 million valuation after the money. Since Hillman owns 84% of BOL International, BOL’s parent company, the value of his stake in about $75 million – and that’s before the new medical marijuana regime in Israel is to go into effect.
At home, BOL is probably enjoying rising sales at the expense of Tikkun Olam. The reforms that go into effect next month hold out the prospect of even bigger revenues.
Until now, growers had to sell their product directly to users, which entailed high costs, and at a single monthly fee of 360 shekels for unlimited amounts. The reforms allow them to sell via retail outlets, like Super Pharm, and set a price of 120-250 shekels for 10 grams of cannabis. That will almost certainly increase usage, along with the number of doctors prescribing it while enhancing its social acceptance.
Even then, the Israeli market is tiny compared to the global market that exports now open up to local companies like BOL. State officials estimate the world market at 100 billion shekels annually and believe Israeli exports can capture 4 billion shekels of that.
BOL says it wants to focus on Western Europe, but Canada has emerged as a world marijuana center. Cannabis is legal there not just for medical purposes but for recreational use as well. The Toronto Stock Exchange and its TSXC Venture Exchange for smaller publicly-traded companies are already home to many publicly traded marijuana companies.
BOL may conduct an IPO there, as a handful of other Israeli medical marijuana companies are doing. Among them are InterCure, which is chaired by former prime minister Ehud Barak, has already said it is eying a North American IPO and IMC, and is exploring a $75 million offering.
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