Marijuana gummy bears? Pot cola?
It sounds like something you would see in a 1960s film, but it is becoming the reality in many places around the world, and Israel is one of them. The Israeli government recently approved the export of medical cannabis. Experts say cannabis is a huge and nuanced market in which the Jewish state has the potential to take the lead.
“The new cannabis export law was approved because the Israeli government saw the big financial potential of this booming industry,” said Shay Arad, the founder of Media Ventures, which handles fund-raising, scouting and public relations for start-up companies, including many in the cannabis arena.
The law passed in January allows companies that have been approved by the Health and Public Security ministries to export medical cannabis to countries that permit its use. Exports could start in as little as six months, said Arad.
Next week, more than 1,000 cannabis industry titans, change agents and thought leaders from 30 countries will converge on Tel Aviv for CannaTech, a full-spectrum event showcasing the best in science and technology, finance, regulatory policy and entrepreneurship in the medical cannabis industry.
Arad explained that it makes sense for Israel to take a leading role when it comes to cannabis today, because it is one of the only countries with a deep history with the green plant. For decades, Israel has been researching medical cannabis and methods for administering it to patients in need.
The man known as the “father of marijuana research,” Dr. Raphael Mechoulam, is an Israeli who started his first marijuana project in the 1960s. He was the first to discover THC (tetrahydrocannabinol, marijuana’s psychoactive ingredient) and then the structure of CBD (cannabinol or marijuana’s non-psychoactive ingredient, often used for medicinal purposes).
Since then, Mechoulam and teams of Israeli researchers have examined the effects of cannabis on epilepsy, nausea, anxiety, schizophrenia and even cancer. The Agricultural Research Organization, Volcani Center in Rishon Lezion is among the world leaders in this research.
“In the last several years, many countries, from Canada to Denmark, have sent delegations to Israel to come and learn from us and understand,” said Arad, noting that cannabis is one of the most complicated drugs. It contains more than 100 naturally occurring ingredients, including at least 65 unique chemical structures called cannabinoids, in the actual plant. “Our main advantage is this research.”
But there are other advantages, too, like Israel’s warm and sunny climate, which makes the Holy Land a favorable location for cultivating the plant.
Until now, there were only eight legal cannabis farms in Israel, producing around 10 tons of cannabis that were being administered to the country’s roughly 35,000 to 40,000 users. Of those, only three farms currently meet the new “Good Agricultural Practice” standards for cannabis cultivation. And only two cannabis plants are Good Manufacturing Practice certified for the extraction and manufacturing of cannabis products. These standards are required for the export of cannabis.
Arad said around 300 entrepreneurs have filed for the establishment of farms for growing cannabis. However, “only if they invest several million shekels to set up a farm that meets the new Israeli/European standards will they be able to export abroad,” Arad said. “It is estimated that only 30 entrepreneurs will complete the long procedure for establishing farms for growing and exporting medical cannabis.”
Still, he said, over time he expects the new export law to lead to the establishment of dozens of greenhouses, which will create hundreds of new jobs in agriculture, technology, research and management.
To where will Israel export all this cannabis?
Germany, the Czech Republic, Denmark and Australia, said Arad, with the expectation that in the coming years, more countries, such as France and England or even the United States will open to cannabis and get involved.
“They are now at a standstill, but there are more potentially big markets,” he said.
But to be clear, Arad does not believe that Israel will make its cannabis money from farming. Rather, it will come from pharmaceutical companies and the edible-cannabis market.
“Israel is already known as Start-Up Nation in hi-tech and biotech,” said Arad. “The new export law will encourage more entrepreneurs to initiate start-up companies in medical cannabis. Pharma companies will develop oils, ointments and tablets.”
By his estimation, there are already some 70 cannabis start-ups in Israel, focused on research ranging from species improvement and body absorption to medicine development. Private investors and venture capitalists from abroad in the cannabis sector are already looking for investments opportunities in Israeli cannabis start-ups.
“Israel is the Start-Up Nation, and you can expect innovative cannabis start-ups coming out of Israel,” Arad said.
He noted that some companies, in addition to raising funds from private investors or venture capital companies, choose to go public on either the Tel Aviv or Toronto stock exchange.
STERO Biotechs, for example, is a clinical-stage company committed to the research and development of novel and improved CBD-based treatment solutions that will potentially benefit millions of patients by reducing the side effects of chemotherapy and the need for steroid therapy.
The company is run by David Bassa, who told The Jerusalem Post that STERO was established in partnership with the tech transfer company of Clalit, Israel’s largest HMO, which enables all the company’s cannabis-based solutions to be tested by the network’s physicians.
He said CBD has been shown to possess potent immunomodulatory and anti-inflammatory properties, and the company’s business concept and development plan are based on promising preliminary data from a phase II clinical trial that showed the use of CBD significantly reduced the need of steroid treatment for certain conditions.
Bassa also works with CannaLean, a company committed to researching a novel proprietary formulation of CBD and chitosan that will potentially benefit millions of patients suffering from dyslipidemia, a condition in which one or more of the serum lipids (LDL cholesterol and triglycerides) levels are abnormal.
CannaLean has completed various in vivo studies that demonstrated the potential positive clinical effect of the novel patent-protected formulation.
Bassa said these Israeli pharma companies are on the cutting edge and more advanced than most other cannabis pharma companies worldwide. He believes there are a few hundred CBD pharmaceutical trials running in the world, but less than two dozen that are in phase II or II clinical trials. To his knowledge, only two cannabis drug companies – Israel’s Therapix Biosciences and Canada’s Cannabix Technologies – have had initial public offering exits.
Alvit Pharma’s Yona Levy expressed similar sentiments. He is the CEO of the international, vertically integrated medical cannabis R&D company that specializes in pharmaceutical-grade cannabis product development and drug-delivery technologies.
So far, Alvit has made 11M, for example, a line of fixed-dose products that combine the synergistic elements of medicinal mushrooms and cannabinoids. It also offers “Moods & Bears,” a CBD-infused gummy bear line that utilizes Alvit’s nano-delivery technology for increased CBD absorption into the body.
Levy said the cannabis market is in its early stages, but is moving fast. He has many more products and is working on even more.
“The train has left the station,” he said, “and it’s running like crazy.”
Eating pot becomes hot
Marijuana edibles are an area where rapid growth is anticipated. There have been different estimates, but one research company estimated it at a $4.1 billion industry by 2022, just for the United States and Canada. Israeli startups are already developing products that will contribute to this growing line of functional and beverage food products, Arad noted. The edibles market includes ideas like cannabis infused cola. The company is looking into making CBD-infused drinks that would help ease inflammation, pain and cramping.
Various reports show different numbers, but on average it looks like edibles could capture as much as 14% of the total cannabis market by 2022. Worldwide sales of cannabis-based products are expected to reach $32 billion by 2022. Sales were already $9.5 billion in 2017.
“There has been a generational shift,” said Itay Hecht, CEO of Hi Pharma Ltd., which focuses on cannabis from nearly all perspectives, ranging from growing to manufacturing products. His company is the only one in Israel with four out of the five possible quality assurance licenses: Good Manufacturing Practice, Good Agricultural Practice, Good Security Practice, and Good Distribution Practice. It is still working on receiving a Good Clinical Practice certification.
Hecht said that at the end of the 1950s, a stigma developed around cannabis, and it has taken more than 20 years for this stigma to begin to turn around. Now, rather than solely associating the marijuana plant with recreational use, people are starting to realize the difference between medical and recreational cannabis.
“They are getting it,” he said.
Levy agrees. He said the future is beer without alcohol, but with cannabis instead, and dog food infused with cannabis because “we will find out how great it will be for dogs.”
“CBD is in almost everything now,” Levy said.
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