Forget the Startup Nation, Welcome to the Cannabis Nation

As the legal pot market flourishes worldwide, Israelis are getting in on the act – and they’re on a roll.

Hagai Amit
Hagai Amit
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A judge checks on a marijuana sample during a judging session at Uruguay's second 'Cannabis Cup'
A judge checks on a marijuana sample during a judging session at Uruguay's second 'Cannabis Cup' at a hotel in downtown Montevideo in this June 22, 2013.Credit: Reuters
Hagai Amit
Hagai Amit

For a conference on marijuana, the Cannatech convention was remarkably free of reggae and thick smoke. If the three-day event held in Tel Aviv and Jerusalem March 7-9 featured fantasies, they were about financing and economic opportunities for the medical cannabis industry. And yeah, that whiff arose two or three times.

The investment world is a trendy place, replacing fashions every couple of years: Commodities gave way to emerging markets and now some think the latest wrinkle is cannabis. Every stoner can tell you between puffs how marijuana is going to save the world economy and how dark economic interests caused it to be classified as a dangerous drug, but archaeological evidence indicates that it was cultivated as early as 12,000 years ago in Asia, its indigenous region, and that the Chinese used it medicinally thousands of years ago .

The cannabis stem and branches can be turned into hemp fiber, used in textiles, ropes, sails, oils, fuel and paper, and even as a component of cement. How did this useful plant become so demonized? Because big companies engaged in those areas feared the competition and swayed governments.

I always thought those claims derived mainly from stoners trying to fool themselves into believing that what they were smoking is super-healthy. Especially when they start raving about the system, the matrix and the American companies that persuade starving Africans to drink sodas in order to enrich Wall Street bankers.

A worker tends to cannabis plants at Tikun Olam, Safed.Credit: Reuters

I’m sorry to say that the first discovery at Cannatech 2016 is that the more the industry grows, the harder it will be to escape the talons of the very bankers who, according to that theory, had buried it all these years. Take for instance Zack Hutson, a director at the holding company Privateer Holdings, who came to the conference to check out investment possibilities. His specialty is branding. Before joining the world of cannabis, he was a communications manager at Starbucks.

“Cannabis is one of the few commodities that people buy that isn’t branded,” he says. His mission: to develop brands that shape the future of the legal cannabis industry – brands that give it legitimacy, earn the trust of patients and clients, and change the way people think about the plant. Brands can change the way people perceive a product, like Honda did for motorcycles in the 1960s, he points out.

Raising financing for cannabis-related business has been difficult, Hutson says, and although it’s becoming easier, the going is rough. Which is weird, if you consider that the global cannabis industry is estimated to be in the ballpark of $150 to $200 billion a year, Hutson estimates – including legal and illegal businesses.

Marijuana plants. 'Cannabis isn’t chametz,' says Israeli Rabbi Zalmanovich.

Right now Privateer is raising money for investment; it already has holdings in three companies – Tilray, which Hutson says is the biggest medical weed maker in Canada and exports to Australia and Europe; Leafly (“the world’s cannabis information resource”) and Marley Natural, named after guess-who (okay, it’s the “official Bob Marley cannabis brand”).

Among the charms of cannabis, its effect aside, is that there’s no market risk because people will buy it; no engineering or technological risk like in software; but there is a regulatory risk, explains Hutson – which is why startups in the field (so to speak) have difficulty raising capital. But do it right and the potential, he sums up, is fantastic.

Bob Marley would probably be turning in his grave at Hutson’s plans. Or maybe he’d take another toke and shrug. But in any case, as money starts to stream into the industry, trust Israelis to be there.

“We’re involved in 80 or 90 patents regarding cannabis,” says Joseph Wyse, an American who now heads the patent office at the Israeli law firm of Eyal Bressler & Co. The firm filed its first cannabis-related patent in 2004, now the pace is two-four a week, mainly in Israel and Colorado, he says – a pace that attests to cannabis going mainstream.

Leaving medical marijuana and its charms aside, industrial hemp is coming back into fashion, Wyse says, including for textiles and ropes. There too the number of patents is increasing.

Plant geneticist Dr. Noam Chehanovsky of the Volcani Agricultural Research Institute deals with cannabis too, and not necessarily the medical stuff. He spent 12 years creating a better tomato, and corn and rice. “A year and a half ago, I started learning about the genetic aspects of cannabis and set up a company engaged in bettering cannabis to treat specific diseases,” he says. “We developed a platform enabling growers to tell me, ‘make me a variant that has so much and so much cannabinoids, that is resistant to this or that disease, and will yield a crop of so much per square meter.’” (He also handles bettering recreational cannabis, which is not legal in Israel but is in Colorado and some other parts of the United States. )

What was wrong with rice or tomatoes?

“In rice, giant companies are involved,” Chehanovsky answers, and adds that in the timing of cannabis research, Israel is considered very advanced: “We have technologies and developments that other countries don’t have. It’s a virginal field.”

Chehanovsky names two main differences between working with rice and cannabis: “One is regulation. I can’t just decide to grow a few acres of cannabis. The second is the complexity of the plant itself, which is unique in that it has male and female [as plants do] but we grow only the female plant.”

He personally hasn’t encountered stigma in his new line of work, Chehanovsky says – and adds that the industry in Israel doesn’t deal with recreational cannabis, though he does that too, for foreign consumption. “The recreational market is growing fast. By 2020 people expect most of the market to focus on that, rather than cultivation of medical cannabis.”

I wonder if behind his words lies a sentence like “Bro, we just grew some unbelievable stuff,” but his face discloses nothing of the sort, so I wander over to John Green, a Brit who came to Cannatech representing a website devoted to that very thing. I interrupt him in the middle of a joint he’s sharing with other people at his table. Clearly he thinks I just want a toke. He tells me he’s met more important people at the convention than ever before in his life – scientists, researchers. It’s a great conference, he says.

When will cannabis be legal in Britain?

“Forget it,” he says. Britain has exactly one company licensed to market cannabis which has been a monopoly since 1998, and brushes me off to return to the summit before the j is gone.

Grandfather of cannabis

The meeting of Startup Nation with pot seems to have fired everybody’s imagination. “[Israel] is the spearhead of the developing cannabis industry,” Lauren Silberman of Oregon tells me, saying that for research, it’s happening in Israel – testing, agriculture and technology. Half a year ago she set up a consultancy on the topic.

Raphael Mechoulam of the Hebrew University of Jerusalem, an organic chemist and professor of medicinal chemistry, has been studying the cannabis plant for 50 years. The conference visitors crown him the “world grandfather of cannabis.”

Catherine Jacobson, a neurologist, is here for personal and professional reasons. She tells me that her son suffers from severe epilepsy and is among the 30 percent of sufferers who do not respond to regular treatments. Some years ago she heard of treatment with cannabis and set out to research the subject. She found papers in the literature by Mechoulam about the effect of cannabinoids on adult epileptics who do not respond to ordinary treatment. But that research ended in 1980 and no work at all had been done on children. She doesn’t understand how Israel could have had this research in its hands for 30 or 40 years and done nothing further, she says.

Cannabis to the Arava’s rescue?

The first to take cannabis seriously as a business could win big-time. “Enough already,” announces Noa Barel. “Cannabis is a medicinal plant. Quit treating it like it’s such a dangerous drug.”

Barel and her partner, Danna Meltzer, residents of moshav Hatzeva, arrived as representatives of agriculture in the Arava. “Farming in the Arava has been in a state of crisis for years,” Meltzer says. “People are constantly looking for new things to develop. This looks like a promising area ... Right now its cultivation is limited to a number of farmers, but the moment it opens up we can grow it. Then the second barrier will be export.”

“There’s nothing funny about cannabis,” Barel joins the conversation. “The only humor in this story is that it isn’t legal and the fact that Israel has bureaucracy and export barriers. Countries like Germany and the Czech Republic went to the Israeli government and said, ‘We don’t want to deal with cultivation. Cultivation gets us into difficulties. You grow the raw material,’ and were turned away. Holland exports to them today but charges high prices and the quality isn’t good. It’s cheaper to grow it in Israel.”

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