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The Israelis who accompanied the Danish Minister of Health at the end of 2017 during her visit to the local medical marijuana industry did not believe it.
For three days, they provided a detailed study of the local situation in the hope of impressing the Danes and transforming them into heavy users of Israeli cannabis. But at the closing dinner at the King David Hotel in Jerusalem, the minister announced that her country was now planning to "do exactly the same thing".
Denmark has "a lot of money" and wants to build an identical marijuana industry for medical purposes, she told shocked organizers. Yuval Landschaft, director of the "Medical Cannabis" unit at the Ministry of Health (known by his Hebrew acronym, Yakar), could not control himself: "fly us?
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While the minister was wondering how to respond to the words he had spoken, Landschaft got up, gathered his things and said, "Madam, I am very glad you came, and I am even happier when you leave. tomorrow "and came out encouraging the rest of the Israelis present at the event to follow him.
The vast amount of professional knowledge accumulated in Israel on marijuana for medical purposes in recent years has attracted not only the Danish minister. While many European countries and the United States have moved away from marijuana because it was a "dangerous drug", Israel has played a major role in field research.
The pioneer was Professor Raphael Mechoulam, an organic chemist from the Hebrew University of Jerusalem. Fifty years ago, he began studying cannabinoids, the active components of the marijuana plant and their effects on humans.
Professor Hinanit Koltai of the Agriculture Research Center of the Volcani Center has led the genetic mapping of different strains of cannabis in recent years, as well as the Plant Gene Library of Israel, with the aim of characterizing them by qualifying them of "Israeli strains".
She has also founded a national collection to enable the cultivation and enhancement of marijuana for medical purposes according to the high standards that characterize the pharmaceutical industry.
Science and industry cooperate
Scientists cooperate in Israel with entrepreneurs in areas such as genetic engineering, plant breeding, studying the active ingredients of the plant and their effects on the body, extracting molecules from plants and putting at the point of formulations.
The people involved hope that cannabis will be approved as a pharmaceutical for the treatment of conditions such as Alzheimer's disease, cancer, autism and epilepsy in the not-too-distant future.
"Elsewhere in the world, they grow marijuana for recreational purposes. In Israel, we are creating a world revolution, "Landschaft said. "Regular cannabis is an agricultural crop judged by its weight and price. We are talking about medical grade marijuana. There is nothing like it in the world. "
Last month's Cabinet Resolution, which will allow Israeli companies to start exporting marijuana for medical purposes, makes Israel one of the first countries in the world to set clear rules on how companies in the marketplace must operate. It divides the supply chain into four parts and badigns labels to different varieties of cannabis. Israel Standard Cannabis Standard is supposed to guarantee a high quality, comparable to that of other pharmaceutical products.
Under the new rules, for example, an operating license is only awarded to those who prove that they can meet these very strict requirements. Producers are required to grow strains with a fixed percentage of active ingredients as they would for any pharmaceutical plant.
Even the requirements for cleanliness, or more precisely sterility, are very high – it is no longer just what is present, but a new attempt to copy the pharmaceutical industry. , where the focus is on specialization.
Medical marijuana licenses (Yakar) are divided into four sections: Standard of Good Agricultural Practice (GAP) for the cultivation of the product; GMP (good manufacturing process) for the production and extraction of active ingredients in an appropriate production facility; GDP (good distribution process); and good safety processes (GSPs) to prevent marijuana from reaching the wrong hands.
As of April 1, only companies with appropriate licenses can operate in any of the relevant segments of the industry.
The reforms should put an end to the current situation, in which "local producers" sell directly to the 35,000 Israelis qualified to obtain and use marijuana for medical purposes.
After April 1, marijuana plants will no longer come from imported seeds in a coat pocket or hidden in the body of a person, plus small capsules containing trimmed cannabis leaves or farmers who provide this patient-specific plant because it's what they have in their inventory. .
Due to the new regulations, some actors who have been active in the industry so far, and even who have led it, have found themselves without a license to continue growing crops. Others have invested a lot of money and got a license to grow and distribute marijuana for medical purposes, but they are now forced to focus on just one segment of the supply chain. . Indeed, meeting one of the standards equivalent to those of an international pharmaceutical standard is not an easy task. At present, companies can realistically operate in only one segment of the sector.
Landschaft said that what interested Israel in the reform of the industry, it was the interest of patients, but he knew very well that the entire industry was stuck in waiting of the government's decision on the issue, so that we can start exporting cannabis products and take the lead. one of the most fashionable companies in the world. Landschaft calls this "high-tech agro-medical," citing Anya Eldan of the Ministry of Economy and Industry's Innovation Authority.
The global market for cannabis, both medical and recreational, has risen sharply in recent years. In 2015, the only market for medical marijuana was estimated at $ 11.4 billion. According to Bank of America forecasts, the US cannabis market alone is expected to exceed $ 20 billion per year by 2020. Israelis in the sector hope that Israel will repeat the success of Startup Nation for cannabis and that it will become the headquarters of billion-dollar companies.
Landschaft says that the government provides its services free of charge to the industry and expects to recover its investment through the taxes that companies pay, a figure it hopes to reach between 1 and 4 billion shekels ( between $ 280 and $ 1.1 billion). one year.
High technology on the farm
A visit to Israeli farms and manufacturing facilities reveals and establishes a high-tech enterprise. Peasants in white coats working side by side with scientists, pharmaceutical experts, leaders and financiers – who swore to smoke their crops and waited a long time for cabinet resolution.
In greenhouses and factories, you can see how much the difference between agriculture, high technology and the pharmaceutical industry is reduced. Companies such as Ilan Bio are now specializing in tissue culture technology to create commercial quantities of uniform seedlings.
"The Israeli cannabis industry can reach the field of the pharmaceutical industry in Israel," said Tamir Gedo, CEO and co-owner of Breath of Life Pharma. Israel can hold 15 to 20 percent of the international market, he said. Breath of Life is the only Israeli company to hold all necessary permits from the Ministry of Health.
Mr. Gedo is confident that, even though his company only provided services to about 10% of marijuana patients for medical purposes in Israel, in accordance with the old provisions, it will soon become one of the most important the world industry.
The company recently raised more than $ 100 million, partly to finance the purchase of state-of-the-art equipment capable of producing all of Israel's current annual production – about 20 tons – in a single day. Gedo refuses to reveal his sales agreements with foreign companies, but he quotes the company's 100 dunams (25 acres), located near Kibbutz Revadim, in southern Israel.
Gedo does not hide his criticism of the new market players, especially former Prime Minister Ehud Barak and his company, InterCure, which he believes is based on the new regulation.
"They only have three dunams to grow up. Barak said [everyone] they have a permit to make cannabis and extract the active ingredients from it – but they do not have a factory. They do not manufacture anything. Anyone with a pulse can receive a temporary culture or manufacturing license. This boasting is fictitious. A permanent license is a different story. It is no coincidence that a number of participants try to receive it but are refused, "says Gedo.
50% dreamers, 50% liars, 50% potholes
With a smile, he recounts the knowledge gained early in his career in marijuana. "In this industry, 50% are dreamers, 50% are liars and 50% are pots – and there is overlap between groups." He refuses to say which group he belongs to.
InterCure said he was ready to be a serious player in the industry. Canndoc, a medical cannabis developer acquired in September, has all the tools, abilities and knowledge needed to carry out its strategic plan. It is rapidly employing to reach its goal of producing 100 tons per year and launching operations in 10 different regions in the world. .
In addition, says InterCure, it is the first and only publicly traded company in Israel to meet all stringent regulatory requirements and was ready to export. The company even announced that it was considering creating a dual list and raising funds on the Nasdaq.
Seach Medical Cannabis, a company founded by brothers Yogev Sarid and Shay Avraham Sarid, has also obtained all required Yakar approvals. The Sarids entered the industry in 2002, when their father was diagnosed with cancer and they learned the benefits of marijuana for medical purposes. Three years later, they get a planting permit and give up the family's greenhouses used for growing cannabis.
"Until 2010, it was really philanthropy. We were not allowed to get paid, "recalls Shay Avraham Sarid, who said three years ago they were losing money from their marijuana business.
"In the last three years, the market has become more open. There are more patients with prescriptions and anyone who operates effectively can make money, "says Yogev Sarid.
"But it's still not a boon. The market here does not look like Canada or the United States. If you plan to enter the market today and build something from scratch, you will only succeed if you have very deep pockets, "he warns.
Yogev Sarid estimates that the brothers invested 17 million shekels in the company over the years and that the profits they made were reinvested. "Like every sector of agriculture, you have difficulties. A producer who is not efficient can not survive, "adds Shay Avraham Sarid.
The smaller players in the market are struggling to make a profit. The economies of scale make it a different story for the larger producers. Oren Shuster, CEO of IMC, one of the top eight producers to get all Yakar approvals, sees great potential for the sector now that exports can begin, although this will also result in increased competition. IMC operates 16 dunums in cultivation and plans to expand its area now that exports are allowed.
"Right now, there is a lot of hype in the industry. Many people invest money. It will take a long time to get established – it took us three years. All the while, you spend money and nothing happens, "he says. "The market is taking shape and those who succeed will succeed big. There will also be a big competition and finally a bloodbath, "says Shuster.
Seach has obtained licenses for two of the four segments of the supply chain – culture and processing – but has lost its distribution license. "Until now, the producer was selling it to the end user. The reform has added links to the chain and erected a wall between different segments, "said Yogev Sarid.
"There is no doubt that the arrival of more producers in the industry will bring more professionalism, but we must be careful not to create an excess supply likely to cause bankruptcy . This will hurt the profits of the producers and will eventually drive up prices for the consumer. "
Landschaft insists on the opposite. "We have examined it. Prices will not increase and will stay between 100 and 120 shekels for 10 grams, "he predicts.
Israel's advantage lies in R & D
Yogev Sarid is also cautious about Israel's prospects for export markets. Israel's competitive advantage lies less in growth than in research and development.
"When Eastern and African countries begin to grow, world prices will fall and the attractiveness of marijuana exports for medical purposes from Israel will increase. will decrease, "he warns. The cultivation of marijuana requires a relatively large workforce, which benefits low-cost countries.
Breath of Life CEO Gedo thinks otherwise. Following meetings with representatives of the Ministry of Health around the world, he concluded that regulators would not allow the importation of products such as marijuana for medical use from developing countries.
Eran Tor, CEO and owner of ICD Pharma, which develops cannabis-based medicines, also questions the future of marijuana for medical purposes, even with the approval of its exports.
"The market here is small. There is a lot of noise and a lot of names going on, but the big market is in the United States and Canada. Israel has an impressive knowledge base, but the market itself is not interesting. We do clinical trials here, but we do not sell or grow here, "he says.
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