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Shay Arad

Challenges in Medical Cannabis Technologies

 Sergiy Gaydaenko | Dreamstime.com

Almost 1,000 entrepreneurs, companies, and investors took part at the beginning of April in CannaTech Tel Aviv, the International Medical Cannabis Conference that was on the subject of investments and technologies in the field. The conference participants came to Israel from many countries in Europe, USA and Canada. Without a doubt the worldwide race today to develop and produce medical cannabis is reminiscent of the California gold rush of the 19th century. The current forecast is that the global market for cannabis products is expected to be $32 billion in 2022.

Startup Nation also in Medical Cannabis

The State of Israel is currently focusing the most attention on research and development of the cannabis plant for medical purposes. Research into the cannabis plant began in Israel back in the 1960s, when Prof. Rafael Meshulam first discovered the main components of the cannabis plant, a discovery that was a world breakthrough in the study of the plant at the time.

Research into the cannabis plant in Israel has continued ever since, in academic and research institutions such as the Volcani Center, gaining momentum over the last decade when Israel discovered the advantages of medical research into the cannabis plant. This came in parallel to the establishment of eight farms that are permitted by law to grow medical cannabis in Israel, with the aim of serving 40,000 patients treated with medical cannabis.

Commercial potentials in Medical Cannabis research

By comparison with the advanced state of research in Israel, the cannabis plant is still not permitted for research in the USA because of federal law, and is hardly studied in European countries. As a result, Israel has an advantage in the field  relative to the rest of the world, and academic knowledge on the medical potential of the cannabis plant in treating diseases such as cancer, epilepsy, and childhood autism.

There are currently dozens of medical studies in Israel looking at the capabilities of the cannabis plant, many of them focusing on cancer. The main challenge facing researchers is to solve the problem of reproducibility of the active components of the plant, and to match different strains for healing different types of cancer. There is already initial evidence that the cannabis plant retards the development of various kinds of cancer cells.

The world’s major drug companies have already begun to express an interest in the Israeli research, alongside the big challenge involved in registering patents and intellectual property for drugs using the cannabis plant, which is a complex plant with hundreds of active ingredients.  Around 100 start-ups in the field of the cannabis plants are currently operating in Israel. It is a matter of a few years until the foreign drug companies buy up Israeli start-ups in the field of medical cannabis for large sums of money.

Olegmalyshev | Dreamstime.com

Lack of investments

Israel is known as the “startup nation” in the field of high-tech, and there are thousands of Israeli start-ups raising money from private investors and investment funds, most of which are from the USA. The relatively quick development time of many products in the high-tech field attracts many investors, expecting a return on their investment in the form of an exit. However the situation is different in the field of developing drugs from the cannabis plant, where the time involved in research and development of the drug could be many years. This deters investment funds from investing in medical research companies studying the cannabis plant.

Budgets and Support is needed

Canada is a world leader in investing in the field of medical cannabis, including the capital markets.  However this is not the case in Israel, and young development companies in the field of cannabis have difficulty raising private funding. Some are considering joining a public company skeleton, but this is not appropriate for many young companies that are just starting out. Therefore, the state must direct budgets to investing in research and development companies in the field of cannabis, and setting up a technology incubator in this field. Increased support for research institutions and academia engaged in studying the cannabis plant is also needed.

These actions will maintain the relative advantage that Israel has achieved in knowledge and medical study of the cannabis plant. This will translate in the future to business activities and the creation of revenues for Israeli companies that become leaders in the field.

About the Author
Shay Arad is the founder of Media Ventures that provides fundraising and scouting services for technology companies. He has twenty years of experience in Israel, USA and China in HiTech, Medical and Energy companies.
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