IMC Accelerates its Israeli Retail Position through Acquisition of Leading Retailer and Distributor Pharm Yarok and Rosen High Way
- Strategically located, best in class retailer with approximately CAD$8 million in annualized revenue.
- Purchase price of CAD$4.6 million
Toronto, Canada, Glil Yam, and Natanya, Israel, July 28, 2021 – IM Cannabis Corp. (“IMC” or the “Company”) (CSE: IMCC, NASDAQ: IMCC), a multi-country operator (“MCO”) in the medical and adult-use recreational cannabis sector with operations in Israel, Germany, and Canada, is pleased to announce the acquisition of the outstanding ordinary shares of R.A. Yarok Pharm Ltd. (“Pharm Yarok”), Rosen High Way Ltd. (“Rosen High Way”) and High Way Shinua. Ltd. (“HW Shinua”) by IMC Holdings Ltd. (“IMC Holdings”), a wholly-owned Israeli subsidiary of the Company, accelerating IMC’s execution of its vertical integration strategy within the Israeli retail market.
On July 28, 2021, IMC Holdings concurrently executed definitive share purchase agreements to acquire all of the outstanding ordinary shares of each of (1) Pharm Yarok, a leading medical cannabis pharmacy located in central Israel; (2) Rosen High Way, a trade and distribution centre providing medical cannabis storage, distribution services and logistics solutions for cannabis companies and pharmacies in Israel; and (3) HW Shinua, an applicant for a medical cannabis transportation license (the “Transportation License”) from the Israeli Medical Cannabis Unit (“IMCU”), the receipt of which would permit HW Shinua to transport large quantities of medical cannabis to and from Pharm Yarok’s pharmacy and Rosen High Way’s distribution centre and to and from third parties in the medical cannabis sector, including medical cannabis growing facilities, pharmacies, manufacturers and distribution centres across Israel (the acquisitions of Pharm Yarok, Rosen High Way and HW Shinua are collectively referred to as the “Acquisition”). The aggregate consideration for the Acquisition is approximately $4.6 million in cash, of which $1.3 million shall be invested in IMC in consideration for IMC’s equity by the shareholders of Pharm Yarok, Rosen High Way, and HW Shinua. Closing the Acquisition (“Closing”) is conditional upon receipt of all requisite approvals, including from the IMCU. The collective current annual revenue run rate of Pharm Yarok, Rosen High Way, and HW Shinua is approximately $8 million with an expected positive EBITDA of approximately $1 million.
“The Israeli medical cannabis market continues to grow and evolve very rapidly. Pharm Yarok is one of the leading medical cannabis retailers in Israel, selling approximately 1,000 kg of medical cannabis per year and serving over 2,000 patients per month. The Acquisition significantly advances our retail expansion strategy, initiated earlier this year through the acquisition of Panaxia-to-the-Home’s distribution and in-house pharmacy activities,” said Oren Shuster, CEO of IMC. “We expect that the continuation of our vertical integration strategy will increase our purchasing power with suppliers, create potential synergies with our established call center and online operations and provide for additional margin on direct sales and up-sells across a growing range of products. We welcome the Pharm Yarok and Rosen High Way management teams and employees, along with their expertise in retailing and branding.”
Upon Closing, the Acquisition is expected to integrate assets that include a license to sell medical cannabis to patients (including the ability to sell online), a large customer service center, a virtual store, and online properties, intellectual property, a logistics, and warehousing center with specialized storage space for over 350 kg of medical cannabis as well as a large customer base. In addition, IMC expects to consolidate the financial results of Pharm Yarok, Rosen High Way, and HW Shinua (“Companies”) as of the date of executing the definitive share purchase agreements and before Closing.
About IM Cannabis Corp.
IMC is an MCO in the medical and adult-use recreational cannabis sector, headquartered in Israel and operations In Israel, Germany, and Canada. Over the past decade, the Company believes that the IMC brand has become synonymous with quality and consistency in the Israeli medical cannabis market. The Company has also expanded its business to offer intellectual property-related services to the medical cannabis industry.
In Europe, IMC operates through Adjupharm GmbH, a German-based subsidiary, and EU-GMP-certified medical cannabis distributor. IMC’s European presence is augmented by strategic alliances with various pan-European EU-GMP cultivators and distributors to capitalize on the increased demand for medical cannabis products in Europe and bring the IMC brand and its product portfolio to European patients.
In Canada, IMC operates through Trichome d/b/a JWC. JWC is a licensed producer located in Kitchener, Ontario, selling cannabis flower, pre-rolls, hash, and kief in the Canadian recreational cannabis market under the JWC and WAGNERS brands. JWC operates with high standards for providing clean, consistent, aeroponically-grown premium cannabis products to medical patients and the adult-use market throughout Canada and the world. IMC also operates MYM Nutraceuticals Inc. and its licensed producer subsidiary, Highland Grow Inc.
About Focus Medical Herbs Ltd.
Focus Medical Herbs Ltd. (“Focus Medical”) is one of eight original licensed producers of medical cannabis in Israel and has over 10 years of experience growing high-quality medical cannabis in the Israeli market. Focus Medical is an “investee” of the Company under IFRS (as defined below) due to the Company’s “de facto control” over Focus Medical despite not having any direct or indirect ownership of it. Focus Medical has an exclusive commercial agreement with IMC to distribute its production under the IMC brand. In addition to its own capacity, Focus Medical has supply agreements with six other cultivators for additional supply using its proprietary genetics and for sale under the IMC brand.
About R.A. Yarok Pharm Ltd. and Rosen High Way Ltd.
R.A. Yarok Pharm Ltd. (“Pharm Yarok”) is one of the leading pharmacies in Israel, specializing in serving medical cannabis patients. Pharm Yarok serves more than 2,000 medical cannabis patients per month. Pharm Yarok is located in Netanya, a city in central Israel, serving patients since June 2020. Pharm Yarok has a professional team of pharmacists, an extensive service center, national distribution operations, and an in-house courier service to deliver medical cannabis to patients across the country.
Rosen High Way Ltd. operates in logistics, storage, collection, and distribution of medical cannabis products and solutions for cannabis companies and pharmacies. Rosen High Way is located in Netanya and holds licenses that comply with Israeli good distribution practices and good security practices.
 All figures are in Canadian dollars.
 Annual revenue run rate is calculated based on annualizing the available results for the year-to-date period in 2021.
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