/ Global Cannabis News

By Ash Stringer, July 10th, 2019 —

When it comes to cannabis, Israel proves that big things can come in small packages. While recreational marijuana remains illegal in Israel, a country about the size of New Hampshire, the government has been proactive in supporting cannabis research for decades while other countries stagnated in the darkness of cannabis prohibition.

In the U.S., cannabis remains a Schedule I drug alongside heroin, making research verboten (or at least difficult), which has underpinned the classification as a drug with no medical benefits. While the U.S. stumbles its way through cobbling together policy and procedure, Israel remains far ahead of the rest of the world in cannabis research. Fact is, it’s not even close.

The High Priest of Medical Marijuana

Sometimes being a small country has its benefits. Raphael Mechoulam, an organic chemist, researcher at Hebrew University and the Godfather of cannabis research, got his supply of premium product for his five decades of studies from the Israel Ministry of Health without difficulties.

Raphael Mechoulam

That supply made Mechoulam, hands down, the world’s foremost expert on cannabis. He co-discovered the body’s endocannabinoid system and discovered that the human brain produces its own cannabinoids. The brain’s cannabinoids stimulate receptors in the body to act in certain ways, which is the backbone of research under the hypothesis that these compounds can treat some of today’s most troubling diseases, like schizophrenia, multiple sclerosis, and cancer, to name a few. The discovery also lent a great deal of credibility to the potential for cannabis (which had basically none at the time) to be integral in concocting new medicines where traditional therapies have been woefully lacking.

He was the first to ever isolate tetrahydrocannabinol (THC), the active cannabinoid in marijuana that gets a person “high.” He and his research team successfully synthesized the major cannabinoids in marijuana, including THC, cannabidiol (CBD), cannabigerol (CBG) and more. In 2017, Hebrew University’s School of Pharmacy founded its Multidisciplinary Center for Cannabinoid Research with Mechoulam’s work as its pillars. At the center today, more than two dozen scientists work exclusively on cannabis applications from drug delivery to plant science to unexplored therapeutic areas and everywhere in between.

It is for good reason that U.S. News & World Report called the country “The Holy Land of Medical Marijuana” and Dr. Sanjay Gupta, chief medical correspondent for the Health, Medical & Wellness unit at CNN, last year declared, “Israel is the marijuana research capital of the world.”

The government is highly accommodative and supportive of the research, while providing plenty of oversight through divisions like the Medical Cannabis Unit at Israel’s Ministry of Health. In fact, the country topped a list for highest percentage of financial resources devoted to cannabis research. Apropos, if the U.S. doesn’t start to be a little more proactive and incorporate similar policies, it truly faces a threat of falling further behind despite have a population that is 40x larger with boundless resources.

It Didn’t Happen Overnight, but Tailwinds are Now Blowing

As aforementioned, 88-year old Mechoulam has been at it for half a century. He started back in the 1960’s when things were much different before Israel started embracing the medical potential, ultimately allowing medical research and cannabis cultivation in 2007. Since then, momentum has slowly been building, particularly recently.

As of April 1, 2019, the country decriminalized cannabis. Before then, production was legal only for pharmacological purposes and smoking it in public could mean a trip to jail. The new law means that possession of small amounts of homegrown marijuana in public is no longer punishable with criminal proceedings, only a fine.

In January, Israeli lawmakers approved the legal export of medical marijuana, a move that the government estimates could generate US$273 million in annual tax revenue.  In addition to its leading expertise in the plant, Israel has favorable climate for growing cannabis (300+ days of sun, ideal UV rays, temperature and humidity), which positions the country to be a top producer of medical cannabis. Israel, Canada and the Netherlands are the only three countries with export framework for cannabis.

Cannabis Hands

The location of Israel makes it an ideal hub for export into the burgeoning European markets as well. With over 740 million people, Europe’s market is more than twice that of the U.S. and Canada, the two biggest markets today. Estimates are for the EU medical cannabis market to reach US$64 billion by 2028.

Add in that more than 10,000 patients in Israel are currently on waitlist for medical marijuana, with an estimated 50,000 anticipated by later this year, which creates a largely underserved domestic market along with the export potential.

Support from Leadership

Unlike the U.S., the support for cannabis is bi-partisan in Israel. Two former Israeli Prime Ministers, Ehud Barak and Ehud Olmert, have even taken positions with cannabis companies headquartered in their country. Barak, who recently announced leaving retirement to run for Prime Minister again, said that he will continue to hold his job as chairman of the cannabis companies Intercure Ltd. (OTCPK: IRCLF) (TASE: INCR) and its cultivator Canndoc, which is expected to soon join the Nasdaq exchange.

In April, Olmert joined vertically integrated cannabis company Univo Pharmaceuticals (TASE: UNVO) as an investor and business advisor.

Former Israeli Police Chief, Yohanan Danino, is also in the country’s cannabis business, serving as chairman of Together Pharma Ltd. (TASE: TGTR).

Israeli Companies Look to Canada (and Vice Versa)

Canada, which legalized medical marijuana in 2001 and recreational use in 2017, has become a hot spot for cannabis companies, including those operating in Israel. For starters, it’s a means to access capital, not to mention shoulder up with some of the world’s biggest cannabis companies or others that are looking to the cannabis research capital of the world for growth opportunities.

For instance, Vancouver’s Nabis Holdings Inc. (CSE: NAB) (OTC: NABIF) this month took a 49% stake in Cannova Medical Ltd., an Israel-based company specializing in sublingual strips that can contain cannabinoids.

Citing sources close to the matter, CTech reported in November that Ilan Bioculture Production of Cannabis Ltd. and IMC Ltd., two private Israeli companies involved with cannabis, are eyeing the Toronto markets for initial public offerings into the mid-double digits of millions of dollars. Breath of Life, or BOL Pharma, Israel’s biggest medical cannabis producer, last month filed a preliminary prospectus for an IPO on the Toronto Stock Exchange.

Isracann Biosciences, which is aligned to become Israel’s first pure-play cannabis firm to list in Canada, is currently working its way through the listing process to trade under the ticker (IPOT-Pending) on the Canadian Securities Exchange.

The company is constructing a formidable operation, with 232,900 square feet of cultivation capacity fully funded and scalable to 580,000 square feet in the future that will serve as a cornerstone for its business model involving cultivation, distribution, research and branding. The initial capacity will be capable of producing 23,500 kilograms (~26 tons) of cannabis annually.

Hold That Spot

More than half-a-century of evidence supports Israel as the undeniable leader in cannabis research. Government dedicated to support research and now become just the third country in the world to allow for exports suggest that the country is counting on maintaining a first mover status in a market that Grand View Research forecasts to hit $146.4 billion worldwide by the end of 2025.

The U.S. is mired in political rhetoric that somewhat limits opportunities due to the federal classification that punishes interstate transit and hamstrings banking.  No changes looks immediate on that front, which gives smaller countries like Israel a chance to maintain their leadership position and actively complete for share in a very lucrative global market.