Cannabis 2.0 in Israel: “Elevating Everything”

December 3, 2019
David Hodes

A long history of cannabis discoveries and research has put Israel at the forefront of medical cannabis developments, worldwide collaborations, and investor activity.

A long history of cannabis discoveries and research has put Israel at the forefront of medical cannabis developments, worldwide collaborations, and investor activity.

Israel is the 154th largest country in the world, slightly larger than New Jersey, and home to about 9 million people (1). With about 24% agriculture land, it doesn’t have much available for building cultivation operations. But the country does have 320 days of sunshine a year, making it an ideal choice for outdoor grows.

According to The Times of Israel (2), 780 farmers received preliminary approval to begin preparations for growing cannabis; five farmers have been approved to cultivate 22 acres of cannabis; and 18 other farmers are in the final stages of the process.

A November 2018 survey by Globes, an Israeli business daily (3), found that there are now 12 cannabis-related companies trading on the Tel Aviv Stock Exchange, with more than 100 companies active in this area. Cannabis growing companies cited in the report include grower Tikun Olam; BOL (Breath of Life), which is distributing products it produces through a pharmaceutical company Rafa; Canndoc; Seach; Pharmacann; Better Cannabis; IMC; Teva Adir; and Cannabliss.

Israel’s power position in the medical cannabis industry has come as a surprise to some who believed that the U.S. led any and all developments. But the country has quickly become a giant player in medical cannabis, in part because of early government-backed research in the 1990s that led to a steady stream of intellectual property developments coming from the country’s cannabis scientists. Now Israel is seeking to lock in their lead by ramping up both production facilities and clinical operations as it garners more and more international recognition.

The Export Boost

Exporting cannabis is scheduled to begin by the end of 2019. Furthermore, cannabis is expected to be at the top of the list of the country’s leading exports that include cut diamonds and high-technology equipment.

The Israeli Finance and Health Ministries recommended exporting cannabis in August 2017, but Israeli Prime Minister Benjamin Netanyahu reportedly put the export project on hold in early 2018 (4) before finally approving it early this year (5).

At a one-day conference in Philadelphia, Pennsylvania about Israel and the U.S. collaborating on investment, research, and commercialization (6), Hayim Raclaw, the director of special projects for Israel-Cannabis (iCan), said that the mechanical framework for exporting medical cannabis is coming. “A law has passed and then bureaucracy has to do its thing,” he said. When finalized, exports could generate up to $300 million a year for the country, according to some projections (7).

Raclaw said that they are seeing an influx of foreign money as a result of the export move, causing a jump in the scale of the cultivation operations. Raclaw explained that the promise of cannabis exports are doing wonderful things for Israel’s reputation in the international markets. “Now that deals are being cut in advance of legal export, Isreal technology for agriculture for cannabis is getting recognition,” he said. “We are getting requests from Turkey to Colombia interested in understanding agriculture tech in Israel and what they can get their hands on.”

Finished product will be exported, not the wholesale flower. “High quality cannabis can be grown at something like 90 cents a gram in Israel, and the standards by which that is governed are being internationally recognized,” said Raclaw. “Some of our clients on the services side are governments in parts of the world that are going to drive modification. The public sector wants guidance and understanding as to how Israel has done what it’s done. I think there is going to be export of finished product that will be recognized for quality and consistency.”

Why Israel?

The cannabis industry in the Israel agricultural scene has been developing for more than 50 years as a result of one of the greatest breakout discoveries about cannabis that occurred in Israel: the isolation of the tetrahydrocannabinol (THC) molecule by scientist Dr. Raphael Mechoulam. Dr. Mechoulam is a Bulgarian Holocaust survivor who immigrated to Israel and is considered by many as a founding father and icon for the cannabis industry.

In 1964, while working as a faculty member at the Weizmann Institute of Science in Rehovot, Israel, Mechoulam and an associate, Yechiel Gaoni, isolated the THC molecule and established its structure. Now 88 years old, Mechoulam continues his work today as professor emeritus at the Hebrew University in Jerusalem, and works as an advisor about medical cannabis to the Israeli Ministry of Health. Mechoulam recently inked a deal with GW Pharmaceuticals, makers of Epidiolex (the first FDA-approved prescription cannabinoid medicine in the U.S.), for GW to acquire the rights to a slew of patents about cannabinoids that were invented by Mechoulam. The three year collaboration gives Mechoulam access to the resources of GW’s Cannabinoid Research Institute to continue his research on the pharmacology of phytocannabinoids and the cannabinoid system in humans.

As reported in Cerebrum (8), Mechoulam and Gaoni discovered that THC acts on the brain by muscling in on the intrinsic neuronal signaling system, mimicking a key natural player, and basically hijacking it for reasons best known to the plants. Mechoulam followed up on that discovery in the 1990s, when he and his colleagues unveiled the endocannabinoid system, which is a system of natural cannabis-like molecules produced by the body that maintains biological harmony between all vertebrates and their changing environment. Mechoulam also discovered how the endocannabinoid system interacts with THC, effectively unlocking the entourage effect.

That one man and his body of research is credited with jumpstarting an industry of science and research into the medicinal benefits of cannabis.

The Medical Cannabis Development

Israel has a government-sponsored medical cannabis program, similar to Canada and the Netherlands, which is now supporting about 40,000 patients using cannabis from eight authorized growers in the country. A committee within the country’s Ministry of Health meets four times a year to review research applications.

The Ministry of Health recognizes cannabis as treatment for patients with conditions in oncology, pain, gastroenterology (such as Crohn’s disease or colitis), infectious diseases (such as human immunodeficiency virus [HIV]), neurological disorders (such as multiple sclerosis, Parkinson’s disease, Tourette’s syndrome, and epilepsy), palliative care, and psychiatric issues (such as post-traumatic stress disorder) (9).

Researchers in Israel have been given broad leeway by the government to expand their work, and that expansion includes more collaborations with colleagues in the U.S. Israel is already conducting research in cannabis plant science, agrotechnology, life sciences, chemistry, and medicine.

“We had a massive lead and we need to pick up our game to retain our lead,” said Saul Kaye, CEO and founder of iCan. Kaye’s company, iCan, is dedicated to building a cannabis business ecosystem, and offers incubator services to cannabis entrepreneurs.

“What I see is that we are picking up our game. It is research-based, it is clinician-based, and not a recreational cannabis focused arena. That is driving a ton of researchers into this industry here,” said Kaye.

For now, the legal medical program in the country is still a bit restrictive. In fact 61% of complaints filed with the Ministry of Health in 2018 about the government being too restrictive were found to be valid. David Meiri, PhD, the principal investigator at the Israel Institute of Technology Laboratory of Cancer Biology and Cannabinoid Research (10) explained that there are two paths to getting medical cannabis in Israel. “If you have cancer, you can get cannabis on the spot. The oncologist can prescribe cannabis and you can take it directly,” said Meiri. “For other patients, the physician recommends cannabis and then it goes to the Minister of Health and there is a committee that decides if you can get it.”

Meiri gave us the specific example of an epileptic patient: “You need to first try five different epileptic medicines and if those don’t work then they can try cannabis.”

Meiri said the same was true for pain patients. “If you’re a pain patient, you need to be treated for a whole year with other drugs before you can get cannabis.”

Although this process is somewhat restricted, Meiri said that is has helped change the mind set of cannabis use in Israel. When a patient gets cannabis, there is almost no doubt that they should get it.

The Innovation Nation

At the Philadelphia Israel-U.S. conference, Raclaw said that Israel is a small country in a “rather strange geo-political neighborhood” that is not a place where things are built but where intellectual property is developed.

“What Israeli startups and Israeli established cannabis companies are seeking in North America is finance, licensing opportunities for intellectual property, and partnerships in a rather rambunctious market like California,” Raclaw said. “We see a lot of Israeli companies coming to our incubator with technology as disparate as ocular therapeutic indications. The partnerships that they want to establish in North America are to do the work of formulation. They know they want to market in California and are looking for partnerships to actually do the formulation based on the intellectual property developed in Israel,” he said.

“Israel is repeating what it has done before in agricultural technology, defense technology, in medical technology of all sorts. In the cannabis space that same pattern is repeating. Now, however, it is turbocharged because of the rapid ascendance of this market,” said Raclaw.

Investors and Entrepreneurs Lining Up

The most recent funding information for cannabis-related Israeli startups shows that only $76 million was raised from 2013 to 2017, according to an article in Forbes (11). International investments in Israeli cannabis companies hit $100 million in 2016 (12).

Our Crowd (13), a Jerusalem-based equity crowd-funding platform and an active investor in Israel, announced in January that it will partner with Colorado-based 7thirty to create a new $30 million fund focused on emerging cannabis technology companies in Israel, Canada, and the U.S.

A more recent article in the LA Times (14) reported that the medical cannabis sector is one of the fastest growing on the Tel Aviv Stock Exchange, with 26 companies listed with a combined value equivalent to $952 million.

Since the passing of the recent medical cannabis legislation in Israel there are more than 300 applicants for cultivating and more than 1000 license applicants for new research and development. “It is unfettered research compared to the U.S.,” Raclaw said. “I think Canada is going to ascend due to the quality of the universities and research institutions there, but Israel has a clear 15-20 year head start as far as that is concerned.”

He said that, over the last 24 months, iCan has seen an increase in Israeli-based applicants to their incubators, with Israeli startups looking for services and support to help navigate the cannabis space. “But most interestingly, we have also seen a dramatic increase in investors looking for a home for their cannabis investments in Israel.”

Kaye is seeing about the same thing. “We just reviewed 40 applications for medical cannabis research, whether it was for a device or a trial or an innovative method or which cannabinoid for which disease,” he said. “It’s really all across the board. It’s pretty robust.”

That is a good sign for the future, Kaye says. “We are an innovation nation and now cannabis is a goal of the government. In the past, they pushed cyber and high tech and biotech. And now they are pushing cannabis.”

History-Making Research Continues

Even the research and acacemic side of the cannabis industry is not immume to the fast-pace of change and discovery related to cannabis. Dr. Meiri likes to joke that it’s like dog years: every one year is really equal to seven. “For example, we just realized how many cannabinoids there are, how THC and cannabidiol (CBD) are not the major ones, and that other cannabinoids are extremely important,” he said.

One of the major problems Meiri initially faced when studying cannabis was understanding the many chemovars of the plant, which contain many active compounds. “There are active compounds in cannabis and the cannabinoids that people usually look at, such as THC, CBD, and cannabigerol (CBG), but actually there are more than 100,” he said.

When he was doing experiments, Meiri couldn’t repeat the experiment or dose it, without knowing what cultivar he was using. To solve that problem, he and his fellow researchers created a method in the laboratory that could analyze all the active compounds in the cannabis cultivar. “Today we can analyze 144 cannabinoids, 120 terpenes, and 20 flavonoids,” said Meiri. 

Meiri’s group has a hand in a lot of research today: he has 45 people in his lab working on five different broad areas. “My lab has a few departments,” said Meiri. “I have a neural department doing epilepsy, Alzheimer’s, and sleep disorders. I have an immune department where they’re doing things related to blood, such as hematology, autoimmune disease, multiple sclerosis, and how they affect the immune system. I have a database group that is collecting data from the patients. The biggest group is still cancer biology.”

Meiri’s research group on cancer biology is looking at the anti-cancer properties of cannabis. “They are looking at how cannabis is blocking migration, how it’s blocking proliferation, and whether it can kill specific cells,” he said. “We’re working on many types of cancer-prostate cancer, liver cancer, breast cancer, glioblastoma, and leukemia.”

There are other areas and companies in Israel conducting cannabis research as well. One of the pioneering medical cannabis companies in Israel is BOL (Breath of Life) Pharma, founded in 2008 (15). BOL has 65,000 square feet of production and one million square feet of cultivation facilities. It is now involved in 32 phase 2 clinical trials. “What we have to give to the cannabis market is the ability to use Israel as a lab,” Tamir Gedo, CEO of BOL, said during a panel presentation at the Philadelphia conference.

Another leading Israeli medical cannabis company, Tikun Olam, reportedly developed a cannabis plant in early 2012 that is high in CBD with no THC. That strain, Avidekel, has 15.8% CBD and less than 1% THC (16).

And Finally...

Kaye said that research today is missing an important point. “I was at a cannabis tech conference recently which really focused on a binary industry, just THC and CBD, or a single molecule for a single indication. And it’s very much missing the fact that cannabis has 300 active compounds, of which we have only identified half of them right now. Each of them have a theoretical therapeutic value,” he said.

“Our unique model is built for this post-cultivation era for cannabis, which is actually cannabis 2.0,” said Kaye. “It’s not how many grams need how many lights anymore. That era is over. What is next is research, delivery methods, precision dosing and precision agriculture, artificial intelligence, and all of those buzzwords everyone is using,” he said. “I am hearing those every day from companies who are doing work in machine learning, and  revolutionizing how we are doing this. We are building to a new standard. Cannabis has the ability to elevate  everything.”

Kaye also said that the one thing he has learned in last five years is that the competition in the cannabis industry is not “Big Pharma” and “Big Alcohol.” “Our competition is the black market,” he said. “And there are two things you have to sort out: quality and transparency. Once you have those done, the market adjusts itself.”

“We are not allowing that to happen in Israel, which is kind of frustrating,” said Kaye. “But then on the regulated research side, we are excelling. So you have to balance everything, and that is the balance we have struck.”

References:

  1. https://www.cia.gov/library/publications/the-world-factbook/geos/is.html

  1. https://www.timesofisrael.com/ministers-approve-exports-of-medical-marijuana/

  1. https://en.globes.co.il/en/article-the-state-of-medical-cannabis-1001261295

  1. https://www.jpost.com/Israel-News/Benjamin-Netanyahu/Report-Netanyahu-nixes-medical-marijuana-export-because-of-Trump-540996

  1. https://www.jpost.com/Israel-News/Israel-gives-green-light-to-medical-cannabis-exports-578815

  1. https://greenhouseventures.regfox.com/innovation-in-cannabis

  1. https://www.bizisrael.com/business/israel-to-legalize-med-cannabis/

  1. https://www.dana.org/Cerebrum/2013/Getting_High_on_the_Endocannabinoid_System/

  1. https://www.tikunolam.com/article.php?id=1038

  1. https://www.technion.ac.il/en/technion-israel-institute-of-technology/

  1. https://www.forbes.com/sites/gilpress/2019/04/29/bol-pharma-grows-in-a-favorable-climate-that-made-israel-leader-of-100b-medical-cannabis-market/#3982e30c1390

  1. https://www.reuters.com/article/us-israel-marijuana/israel-takes-step-toward-allowing-export-of-medical-marijuana-idUSKBN15K0IR

  1. https://cdn2.hubspot.net/hubfs/353882/OurCrowd%20Report%20on%20Cannabis%20Sector%202019.pdf

  1. https://www.latimes.com/nation/la-fg-israel-cannabis-medical-marijuana-20190529-story.html

  1. https://www.bolpharma.com/about-us/

About the Author

David Hodes is the former managing editor of Cannabis Science and Technology. He has written for many cannabis publications, and organized or moderated sessions at national and international cannabis trade shows. He was voted the 2018 Journalist of the Year by Americans for Safe Access, the world’s largest medical cannabis advocacy organization. Direct correspondecen to: dhodes11@gmail.com