Image credit: Alyson Martin

Israel: Cannabis R&D May Pay Off

An election has placed cannabis in the spotlight. While government support and a tradition of research bodes well for the “new gold,” companies face challenges on the global market.

Apr 4, 2019 6:55AM EDT Israel

Caroline Hroncich

Caroline Hroncich is a journalist based in New Jersey.

Cannabis research in Israel is ambitious and seems to be laying the groundwork for solid growth.

The government has done its part to boost the industry. In January, Israel approved the export of medical cannabis products. The Israeli government estimates the exports could raise annual tax revenue by 1 billion shekels (approximately $273 million).

Meanwhile, Israel has for decades been a hub for cannabis research and development, and is where researchers first discovered THC. As the global industry booms in tandem with loosening laws, that R&D tradition is drawing interest from governments and researchers in countries including Russia, China, Canada, Thailand, Belarus, Kazakhstan, Georgia, Jamaica, Australia, and the U.S., Israeli industry sources told Cannabis Wire.

The country has also seen a growing number of new Israeli biopharma companies and entrepreneurs looking to invest in cannabis. Saul Kaye, founder and CEO of Israel Cannabis, says Israel is ahead of many other countries in medical R&D and currently has more than 100 ongoing clinical trials. Researchers are investigating cannabis in clinical trials for a variety of diseases including cancer, ringing in the ears, high cholesterol, and restless leg syndrome, Kaye said.

Not every trial is successful, of course. “Just because we’ve been trialing it doesn’t mean we’re getting a positive result at the end of the day,” Kaye added. “But it’s good, because it shows that the research is getting done.”

David Bassa, an Israeli entrepreneur in the cannabis and high-tech industries, agreed that there is much research being done on Israeli cannabis, but added that it’s important to cut through the noise to determine which biotechs are doing meaningful work and which ones may be inflating the value of their research. “You see many companies claim for potential that is not going to be reached,” Bassa said. “You need to investigate with good doctors every idea that is coming, to see if it’s valid or not.”

Bassa has a partnership with MOR Research Applications, the commercial arm of Clalit Health Services, the largest health maintenance organization in Israel, and holds a portfolio of Israeli biotech companies that includes Talent, STERO, CannaLean, and CannaMore. Talent, which was sold to Kalytera Therapeutics in 2017, is advancing towards Phase III trials with a CBD treatment for graft-versus-host disease, a medical complication following a transplant in which the donor cells attack the recipient.

Prominent government officials have been in favor of cannabis research. For instance, former Israeli Prime Minister Ehud Barak has been a vocal supporter of cannabis R&D. Last year, Barak was appointed chairman of the board of the Israeli medical cannabis company InterCure, which announced earlier this year it planned to increase medical cannabis production.

Prominent researchers have also signed up with commercial cannabis companies. Dr. Raphael Mechoulam, a professor of medical chemistry at the Hebrew University of Jerusalem and a pioneer in cannabis research, was recently appointed chairman of cannabis producer Cannbit’s scientific advisory committee. In the early 1960s, Mechoulam was the first researcher to identify and synthesize THC, the cannabinoid in the plant responsible for the “high,” catalyzing a global boom in cannabinoid research. “I believe that we should try to expand both basic and industrial research in Israel in order to stay amongst the leading science countries in many areas.”

“This is the main reason I work with Canada-Israel and other companies,” Mechoulam wrote in an email to Cannabis Wire. “I try to get them to invest in research. And they do.”

But cannabis research in Israel is not without challenges when it comes to exporting the resulting products. Regulations vary so greatly between countries it can be difficult and expensive for medical cannabis companies to move product and grow their brands internationally, Kaye said. These companies often have to create distribution centers wherever they want to sell, in order to comply with import, export, and local laws.

“The cost of globalizing a brand in cannabis is a lot more, because you have to have infrastructure in every single place,” Kaye said. There is also still some stigma globally about the use of cannabis, he added, which companies and advocates are actively working to combat.

The legalization of non-medical cannabis use, meanwhile, has become an issue in Israel’s upcoming election. Zehut, a far-right party that favors full legalization may be pulling voters away from Prime Minister Benjamin Netanyahu, Reuters reported. In March, Netanyahu said Israel has increased the use of medical cannabis “to one of the highest levels in the world” and added that he would consider recreational cannabis legalization, a departure from his more conservative approach to cannabis in the past. Polls indicate that Zehut could take at least four legislative seats in Israel’s April 9 election.

Yona Levy, CEO of the medical cannabis company Alvit Pharma, said the increased focus on cannabis during the election is interesting, as voters are typically focused on issues like security, peace, and economics. Levy said the legalization of cannabis in Israel would be good for his business and would provide more opportunities for growth. Alvit Pharma is focused on developing medical cannabis products with delivery methods including suppositories, sprays, and tablets. The company is also constructing a 5,000-square-meter cultivation and production facility in Malta, Levy said.

Bassa is optimistic about the future of cannabis in Israel, and the position of Israeli companies across the globe. “Everybody that is touching cannabis is now very happy,” Bassa said. “It’s like the new gold.”