Cannabis agreement boosts Roots on ASX

Sharon Dvir, Boaz Wachtel Photo: Jonathan Bloom

Israeli company Canndoc will test Roots' technology on cannabis crops.

Since holding its IPO on the Australian Securities Exchange (ASX), agrןtech company Roots Sustainable Agricultural Technologies Ltd. (ASX: ROO) has seen its share price triple, then dive over 55% in only seven months. The company's share price jumped 17% yesterday after the Israeli company reported an agreement to examine the feasibility of using its technology for cannabis crops. ASX investors seem just as enthusiastic about cannabis investments as Tel Aviv Stock Exchange (TASE) investors. The increase in Roots' share price boosted its market cap to A$22 million (NIS 62 million), 75% higher than the price in the company's IPO.

Roots has developed a unique environmentally friendly system making it possible to heat and cool crop roots with minimal energy use. The company recently announced its intention of entering the cannabis market, estimating the US cannabis market at $7 billion, projected to rise to $22 billion by 2021. As part of its entry into the cannabis market, Roots began a pilot in Washington.

Boaz Wachtel, who founded Roots together with CEO Dr. Sharon Devir, is no stranger to the cannabis market. He is a former political activist who led the Ale Yarok (Green Leaf) Party, which advocated the legalization of cannabis in Israel but failed to gain enough votes to enter the Knesset.

Wachtel has already led two cannabis companies to IPOs on the ASX: MMJ Phytotech (ASX: MMJ) and Creso Pharma (ASX: CPH). Roots was not identified with the cannabis market but is now expanding into it. Wachtel told "Globes" several months ago about Roots' plans to enter the cannabis market, saying, "I do have a little knowledge about the subject" and adding that he did not miss politics. "What I'm doing in agriculture and with cannabis is no less important than politics, which unfortunately no longer attracts good people. I live and work in Israel and our country leads in international research in this sphere. We founded an industry and managed to medicalize cannabis despite all the slanderers and against all the odds."

Optimization of temperature

The report by Roots concerns an agreement with Israeli company Canndoc in which Roots' technology will be examined for the purpose of cooling cannabis roots grown in greenhouses in northern Israel. The company says that this represents Roots' entry into the agritech sector supplying micro-climactic regulating equipment to cannabis growers for the medical market, which is projected to reach $31 billion in global sales within four years. The company also says that this is an extension of its current pilot taking place in the US.

Canndoc has been growing medical cannabis from different strains under license from the Ministry of Health since 2008. Under the agreement, Roots' technology will cool the cannabis this summer and be assessed on the basis of the size, quality, uniformity, growing time, composition, and cannabinoid content of the crop.

Devir says, "This feasibility test is the first time that our system is working in the medical cannabis field. It is designed to demonstrate the universality of our technology and how it can be applied to a wide range of crops. As with other plants, the purpose of our technology is to optimize the temperature in the area of the root - cooling or heating as needed - until the optimal temperature is reached, and to maintain it."

Devir added that the company expected its system to successfully cools the plants' roots and protect them against heat. It will also provide economic benefit by shortening the crop growing cycle. "The feasibility test is an opportunity for Roots to highlight the benefits of its technology."

Published by Globes [online], Israel business news - www.globes-online.com - on July 10, 2018

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Sharon Dvir, Boaz Wachtel Photo: Jonathan Bloom
Sharon Dvir, Boaz Wachtel Photo: Jonathan Bloom
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