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01 December 2021

Medical Kiwi Limited

Medicinal cannabis company Medical Kiwi Limited has admitted to breaching the fair dealing provisions of the Financial Markets Conduct Act (FMCA). In August 2020, Medical Kiwi launched an offer for shares on equity crowdfunding platform PledgeMe Ltd. The accompanying information memorandum and campaign page contained false and misleading statements in relation to Medical Kiwi’s medicinal cannabis licenses and its contractual arrangements.

Medical Kiwi has given an enforceable undertaking to The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko, which the the FMA has accepted. As part of the enforceable undertaking, Medical Kiwi will make a payment in lieu of a pecuniary penalty in the sum of $250,000, and will also offer to refund and exit shareholders who participated in the crowdfunding offer. The enforceable undertaking includes the admissions of various breaches and sets out the steps Medical Kiwi must take to improve its governance processes and disclosures.

The misleading statements included:

  • Medical Kiwi stated in various places in the information memorandum that it had a “cannabis licence”. Medical Kiwi had one licence to cultivate a prohibited plant for medical or scientific research. However, this licence was due to expire and did expire during the offer period. The offer period was from 17 to 28 August 2020, and the relevant licence expired on 22 August 2020. From 23 August, during the Offer, Medical Kiwi held no licences. The statements were also misleading in that they omitted any explanation of other licences required, but not yet obtained, in order to lawfully produce medicinal cannabis.
  • False or misleading references to contractual arrangements between Medical Kiwi and Hektares, a company Medical Kiwi describes as “a global player in the medicinal cannabis industry”. In particular, Medical Kiwi claimed to have a signed partnership agreement with Hektares for the pre-selling of its entire first two years of production, worth $90 million. However, Medical Kiwi’s contract with Hektares was only a ‘letter of supply intent’ which was non-binding and contained a clause which enabled Hektares to terminate immediately.

December 2021

Medical Kiwi has given an enforceable undertaking to the FMA, which the FMA has accepted. As part of the enforceable undertaking, Medical Kiwi will make a payment in lieu of a pecuniary penalty in the sum of $250,000 and will also offer to refund and exit shareholders who participated in the crowdfunding offer.