Israel's growing cannabis industry may soon become a prominent export sector
By FRANZISKA KNUPPERCulture de marijuana près de Safed(photo credit: REUTERS)
It is six o’clock in the evening and the sun is low in the backyard of the Shmulewitz family in Tel Aviv. Sitting by the swimming pool, Dr. Ascher Shmulewitz and his son, Omri, are tired from a long work week, with meetings in Los Angeles, New York City and Toronto.The Israeli cannabis industry has deep roots in the North American market. In fact, the Republican election victory might benefit the cannabis-growing industry here; indications are that the administration of US President Donald Trump will move cautiously when it comes to the plant with recreational and medicinal qualities, so many US companies are looking abroad – with their gaze naturally falling on their trusted trading partner, Israel.“The marijuana market will be divided: Pills for medicine, joints for pleasure,” says Ascher. The entrepreneur, who holds a medical degree with a specialization in cardiology and a PhD in electrical engineering, both from Haifa’s Technion-Israel Institute of Technology, divided his life between Israel and the US for many years. His business, Therapix Biosciences, also moves back and forth between worlds and markets.Three months ago, it raised $12 million on the Nasdaq stock exchange. Therapix has enhanced tetrahydrocannabinol (THC) with a chemical compound and the medicine is now being used with treatments for Alzheimer’s and Tourette syndrome.Medical research and pharmaceutics will increasingly focus on marijuana, Ascher Shmulewitz predicts.“That’s the main reason why Israel is a pioneer in this field, as it has been since the 1960s. Medical research on cannabis started here, although now other nations are catching up.”Indeed, Israel is where “scientific marijuana enlightenment” began. In 1964, Prof. Raphael Mechoulam, from the Weizmann Institute of Science, was the first to successfully isolate the compound THC – the psychoactive element of the plant responsible for the “high.” Now 86 and still active in studying cannabis, with his own research lab at the Hebrew University of Jerusalem, Mechoulam forecasts a century of breakthroughs with numerous effects of the plant yet to be discovered. Of the up to 400 key natural compounds in the plant, only 66 have been identified.The cooperative effects of THC and other active constituents of cannabis was first observed by Mechoulam and dubbed the “entourage effect.” Thousands of different chemical compounds work together and regulate each other; change the recipe and you change the effect.This research is the basis of Omri Shmulewitz’s startup, Entou, which develops daily supplements for regular cannabis users.“Many people who consume cannabis on a daily basis complain about developing a tolerance to the substance.They need to take larger amounts in order to experience the same pain relief or the high effect,” he says.Entou has developed a compound to enhance the natural performance of THC or the lesser-known cannabinoid, CBD (cannabidiol), to protect users from harmful over-usage side effects.In the past few years, science’s interest in cannabis has shifted from THC to CBD. Responsible for the socalled “body high” (whereas THC causes the “mind high”), CBD also helps treat nausea, and is believed to have anti-inflammatory, anxiolytic and anti-convulsant value.Ascher Shmulewitz notes that cannabis is beginning to be treated like any other substance, opening the door to greater scientific understanding of how the plant works.“Science is changing its attitude. People are dissecting the substance carefully, making no moral distinction anymore between a cannabis plant and, say, a carrot.” THERAPIX AND Entou are two of the many players in the Israeli cannabis market. In addition to the plant itself, oils, pills, vaporizers and other accessories for healthy consumption are also in high demand.Around 25,000 Israelis currently receive medical marijuana issued by the Health Ministry for conditions such as epilepsy, Tourette syndrome, nausea, chronic pain and post-traumatic stress disorder. In 2012, only 10,000 patients held such a license. In addition, there are eight mandated farms.The government is aware of the herb’s economic potential. According to New Frontier Data from Washington, global gross is expected to jump from $5.8 billion to $11b. by 2020.Saul Kaye, CEO of iCan Israel-Cannabis, believes that the green buds will become as important to the Israeli economy as hi-tech and IT, which now account for 40% of the country’s industrial export revenues.“It’s a relatively safe business in the sense that it’s not going to go away,” says the Australian, who immigrated to Israel some 20 years ago.iCan functions as a medical cannabis startup accelerator and will take eight small-scale companies under its wing this year. Additionally, the company runs a private lab and recently organized CannaTech, an international medical cannabis convention, in Tel Aviv, which featured 800 field experts from 35 countries.Israel has always been a nation that was characterized by innovation and science, stresses Kaye.The search for knowledge seems to be part of Jewish culture and tradition. On top of that, research in Israel is currently easier to undertake than in the United States, attracting many promising scientists to the promised land. Access to private labs and obtaining a license for medical trials is simpler here.Even the US National Institutes of Health has been supporting Mechoulam’s work for years.“We created very strict protocols on how everything is done from seed and cutting till the final product,” explains Ami Cohen, head of sales and distribution at Better/Cann Pharmaceuticals. “It all starts with stable consistent genetics and breeding, and we have been continuously breeding for the last 10 years.”After the Tikun Olam growers, Better/Cann is the biggest and most veteran producer of legal cannabis in Israel. The company currently operates one facility comprising 1.2 hectares in Israel, and a second one is under construction to meet the growing demand.Despite ideal climatic conditions, Better/Cann cultivates exclusively inside greenhouses in order to achieve consistent results and attributes with every specific strain, keeping the levels of THC and CBD stable.“Our facility has deployed advanced devices, sensors and other technological solutions to achieve precise levels every time,” says Cohen.Cohen points to Israel’s agricultural expertise as another reason for its success in the cannabis-growing arena.At the beginning of the year, Agriculture Minister Uri Ariel announced that the government will subsidize the export and production of hemp plants. In addition, the Health Ministry increased the number of medical licenses for the distribution of cannabis products that are given to doctors, patients and growers.“Up until now there were only eight licensed cultivators,” says Cohen. “But recently the government approved some 60 more.” Among them are several kibbutzim.A major industry hurdle will likely be overcome in the next few months, as a governmental committee unanimously approved the export of medical cannabis from Israel in the first of three legal stages.And on the horizon are partnerships with the US and Canada. “It is striking how many Israelis are connected with the North American cannabis industry,” says Omri Shmulewitz.But is it kosher? Religious tolerance in Judaism toward marijuana might also be spurring the growing success, Shmulewitz speculates. In 2013, Rabbi Efraim Zalmanovich of Mazkeret Batya, a village south of Tel Aviv, classified cannabis as kosher. Moreover, in 2016, the Orthodox Union published a list of kosher cannabis products.Although there has been much discussion about the degree to which cannabis consumption is endorsed by the Bible, apart from the mention of hemp in textile production, no clear consensus has yet been reached.Despite some uneasiness that many people still feel about the subject of marijuana, it seems that there is a degree of cultural acceptance here, plus ideal conditions for growth, says Better/Cann’s Cohen.“An environment like this is the perfect ecosystem for a company like ours,” he says – and a possible new bright spot in Israel’s future."