A bud­ding part­ner­ship

Canada and Israel are lead­ing a pot rev­o­lu­tion.

The Canadian Jewish News (Montreal) - - Front Page -

De­mand for med­i­cal cannabis in Canada is grow­ing quickly, with more than 100,000 reg­is­tered pa­tients, a “sig­nif­i­cant up­take” over the num­bers a few years ago. Can­na­cord be­lieves “pa­tients in Canada will con­sume more than 150,000 kg of cannabis per year by 2021, which could equate to $1.8 bil­lion in re­tail sales.”

Recre­ational use could be a game changer, with a vast il­le­gal mar­ket re­placed by le­gal sales worth as much as $6 bil­lion by 2021. Com­pa­nies with cur­rent li­censes are well po­si­tioned to take ad­van­tage of the change, Can­na­cord con­cludes.

Saul Kaye, founder and CEO of ican:israel-cannabis, an Is­raeli com­pany that iden­ti­fies, in­vests in and show­cases star­tups and in­no­va­tors in the med­i­cal mar­i­juana space, said cap­i­tal mar­kets are be­com­ing in­creas­ingly in­ter­ested in in­vest­ment op­por­tu­ni­ties.

Not only is there po­ten­tial for good re­turns, but there is an ex­pec­ta­tion that more and more ju­ris­dic­tions will per­mit recre­ational use of the drug.

“We’re all very early in this in­dus­try,” he said by phone from Israel. His firm has ac­cess to cap­i­tal and con­nec­tions world­wide, in­clud­ing Canada, putting it in a favourable place to ride the grow­ing wave of mar­i­juana use, he said.

Right now, he added, the fo­cus is on med­i­cal use, and the plant’s ac­tive ingredients have proven ben­e­fi­cial in treat­ing a wide va­ri­ety of mal­adies, in­clud­ing epilepsy, can­cer, Parkin­son’s, Crohn’s, glau­coma, rest­less leg syn­drome, and even tin­ni­tus (ring­ing in the ears).

Ev­ery year, ican hosts a con­fer­ence in Israel called Can­nat­ech, which brings to­gether sci­en­tists, busi­ness­peo­ple, re­searchers and in­vestors to dis­cuss de­vel­op­ments in the in­dus­try while seek­ing po­ten­tial col­lab­o­ra­tions.

Cana­di­ans fea­ture promi­nently in the event, both as speak­ers and guests, said Daniel Gold­stein, ican’s se­nior vice-pres­i­dent for strate­gic in­vest­ments.

“Last year, we had rep­re­sen­ta­tives from Cana­dian com­pa­nies at Can­nat­ech, in­clud­ing a cou­ple of li­censed pro­duc­ers,” he said.

“Some are look­ing at in­vest­ing and do­ing busi­ness re­la­tions with Israel be­cause of Israel’s po­si­tion as one of the lead­ers in the R& D of med­i­cal cannabis in the world,” he said.

Since it’s still a young in­dus­try, the op­por­tu­nity ex­ists for early en­trants to get in ahead of big pharma, Gold­stein added.

Of course, big pharma is not ex­actly asleep at the switch. In late 2016, Teva Phar­ma­ceu­ti­cal In­dus­tries an­nounced it had part­nered with Tel Aviv-based Syqe Med­i­cal to mar­ket med­i­cal cannabis in an in­haler.

Mean­while, in an­other de­vel­op­ment demon­strat­ing the growth in the med­i­cal ap­pli­ca­tion of mar­i­juana, Ka­lytera Ther­a­peu­tics, a com­pany listed on the TSX Ven­ture ex­change, an­nounced it had en­tered into a let­ter of in­tent to ac­quire Tal­ent Biotechs Ltd., a pri­vately held Is­raeli de­vel­oper of cannabid­iol (CBD) ther­a­peu­tics.

Tal­ent is cur­rently ad­vanc­ing a clin­i­cal pro­gram in­ves­ti­gat­ing the use of CBD to pre­vent and treat host dis­ease, which can arise af­ter stem-cell or bone-mar­row trans­plants.

For Gold­stein, th­ese de­vel­op­ments sug­gest that “Canada is a big player, but there is def­i­nitely more room for col­lab­o­ra­tion.” Israel, for its part, en­cour­ages re­search, and the gov­ern­ment even funds some of it.

The Is­raeli ap­proach, Gold­stein added, fo­cuses on med­i­cal, not recre­ational, use of mar­i­juana. That could mean the ex­port of the plant’s flow­ers, as well as fin­ished prod­ucts such as oils or cap­sules.

Shimmy Posen is in­ti­mately fa­mil­iar with the bud­ding in­dus­try and the Is­raeli scene. The Toronto lawyer has par­tic­i­pated in trade mis­sions to Israel and will ad­dress Can­nat­ech 2017 on tak­ing com­pa­nies pub­lic in Canada.

Israel’s “start-up nation” brand ex­tends to agri-tech, where it has a sub­stan­tial head start on other coun­tries in re­search­ing and ap­ply­ing cannabis for med­i­cal pur­poses, he said.

“I would sug­gest that since Canada is at the fore­front of fi­nanc­ing th­ese deals, I would ex­pect that com­pa­nies in Israel would look to Canada to take them to the next level,” Posen said.

“There are some com­pa­nies out there try­ing to po­si­tion them­selves as the Star­bucks of mar­i­juana once it be­comes le­gal,” he said.

There are some com­pa­nies out there try­ing to po­si­tion them­selves as the Star­bucks of mar­i­juana once it be­comes le­gal. Shim­mey Posen Lawyer

What’s more, Posen sug­gests, there are Israel-based com­pa­nies in­ter­ested in list­ing on the TSX Ven­ture Ex­change or the Cana­dian Se­cu­ri­ties Ex­change to raise cap­i­tal to fund their growth. Sid­ney Him­mel, an in­de­pen­dent fi­nan­cial ad­viser with a spe­cialty in sci­ence-based in­dus­tries, said Canada is one of the world’s most ad­vanced coun­tries when it comes to de­liv­er­ing the medic­i­nal ben­e­fits of mar­i­juana on a con­trolled, stan­dard­ized ba­sis and in terms of fi­nanc­ing, re­search and dis­tri­bu­tion.

He cred­its Canada’s ad­vanced state of le­gal­iza­tion and des­tigima­ti­za­tion, mak­ing the in­dus­try more ac­cept­able for stock­bro­kers and banks.

Mean­while, Is­raeli com­pa­nies are look­ing at mar­i­juana “in terms of clas­sic drug de­vel­op­ment.”

Such ap­proaches and the abil­ity to pro­vide medicine in ac­cu­rate doses and strengths is nec­es­sary be­fore most doc­tors will be com­fort­able pre­scrib­ing med­i­ca­tion de­rived from botan­i­cals such as cannabis, Him­mel said. All that should lead to more col­lab­o­ra­tion. “I be­lieve there will be more ties be­tween Cana­dian and Is­raeli com­pa­nies,” Him­mel said. “Canada has the cap­i­tal mar­kets to fund such de­vel­op­ments and Israel is do­ing the re­search, which costs a lot of money, so we’ll see more in­vest­ments.”

Those links will likely be mag­ni­fied as more and more Cana­dian in­vestors see the po­ten­tial for ex­pand­ing med­i­cal mar­i­juana into the broader recre­ational sphere, he added.

Over at Me­dreleaf, ties be­tween Canada and Israel are well es­tab­lished. The pri­vately held com­pany has more than a dozen prod­ucts in its lineup, with more than one-third based on “Is­raeli ge­net­ics” whose seeds orig­i­nated in Israel, said CEO Neil Clos­ner.

Some even bear their Is­raeli names, which in turn were based on their orig­i­nal pa­tients. Eran Al­mog is one. Avi Dekel is an­other strain, which pro­vides anti-in­flam­ma­tory ben­e­fits with­out side ef­fects associated with mar­i­juana, like get­ting high.

Clos­ner said one of the chal­lenges for com­pa­nies like his is con­vinc­ing doc­tors that mar­i­juana is a le­git­i­mate treat­ment op­tion. More and more physi­cians are choos­ing it, and for some, the fact the meds orig­i­nate in Israel adds a layer of cred­i­bil­ity.

“Is­raelis are known as in­no­va­tors and thought-lead­ers, so doc­tors are amenable to ac­cept­ing that it’s a good in­no­va­tion,” Clos­ner said.

Like other new med­i­cal mar­i­juana pro­duc­ers, Me­dreleaf “started at zero,” Clos­ner said. To­day, he reck­ons it’s Canada’s largest com­pany in the sec­tor, based on rev­enue.

Growth prospects are ap­par­ent. In ad­di­tion to the com­pany’s 55,000-square- foot head­quar­ters, of which 30,000 square feet are re­served for plants, a 210,000-square­foot plant-grow­ing fa­cil­ity is cur­rently un­der con­struc­tion.

Clos­ner cred­its Me­dreleafs’ ties with Tikun Olam for help­ing spur growth, which he said is run­ning at 10 per cent per month.

In­ter­na­tional expansion is on Clos­ner’s radar.

“Canada has the op­por­tu­nity to be­come the leader of med­i­cal re­search into med­i­cal mar­i­juana,” he said.

With its know-how and fi­nan­cial re­sources, the po­ten­tial is sky-high.

“If we do it prop­erly, we have the op­por­tu­nity to be global lead­ers,” Clos­ner said.


Neil Clos­ner

Sid­ney Him­mel

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