The Israel cannabis industry reviewed

April 2023

Israel has been at the forefront of cannabis research and innovation for several decades. With a rich history of cannabis use for medicinal purposes and a progressive approach towards cannabis legislation, Israel has emerged as a global leader in the cannabis industry. In this review, we will provide an in-depth analysis of the cannabis industry and legislation in Israel, including the legislative framework, market size, major players, research advancements, and challenges facing the industry.

Legislative Framework

In Israel, the use of cannabis for medicinal purposes has been legal since the 1990s, making it one of the early adopters of medical cannabis legalization. The medical use of cannabis in Israel is regulated by the Ministry of Health, which oversees the entire process, from cultivation and production to distribution and patient access. The legislation allows patients with certain medical conditions to access medical cannabis with the recommendation of a qualified physician.

In recent years, there have been significant developments in cannabis legislation in Israel. In 2020, the Israeli government approved the export of medical cannabis, allowing Israeli cannabis companies to export their products to other countries. This decision has been seen as a major milestone for the Israeli cannabis industry, as it opens up new opportunities for international trade and investment.

Moreover, there have been discussions and proposals for the potential legalization of recreational cannabis in Israel. While recreational cannabis remains illegal in Israel, there is growing public support and momentum for its legalization, with some lawmakers and policymakers advocating for a regulated adult-use cannabis market.

Market Size and Major Players

The Israeli cannabis market is still in its early stages, but it has been rapidly growing in recent years. According to estimates, the medical cannabis market in Israel was valued at around $90 million in 2020, and it is projected to reach $1 billion by 2024. The market is driven by the increasing number of patients using medical cannabis and the growing demand for cannabis-based products.

One of the key factors that have contributed to the growth of the cannabis industry in Israel is the presence of several major players who have been at the forefront of cannabis research and innovation. These companies have invested heavily in research and development, leading to the development of cutting-edge cannabis-based products and technologies. Some of the major players in the Israeli cannabis industry include:

1. Tikun Olam: Tikun Olam is one of the oldest and most well-known cannabis companies in Israel. It was the first company to receive a license to cultivate and produce medical cannabis in Israel, and it has been at the forefront of cannabis research and development. Tikun Olam is known for its proprietary cannabis strains and has developed a wide range of cannabis-based products, including oils, capsules, vaporizers, and topical creams.

2. Panaxia: Panaxia is a leading Israeli pharmaceutical company that specializes in the production of medical cannabis products. The company produces a wide range of cannabis-based products, including oils, capsules, tablets, and inhalers. Panaxia has been a pioneer in cannabis research and development and has developed several innovative technologies for cannabis extraction and formulation.

3. Breath of Life International (BOL Pharma): BOL Pharma is one of the largest cannabis companies in Israel and is known for its state-of-the-art cannabis cultivation and production facilities. The company produces a wide range of medical cannabis products, including oils, capsules, and inhalers. BOL Pharma has established partnerships with international companies for research and development and has been involved in several clinical trials studying the efficacy of medical cannabis for various medical conditions.

4. Cannbit: Cannbit is a leading cannabis cultivation and production company in Israel. The company operates a large-scale cannabis cultivation facility and produces a wide range of cannabis-based products, including flowers, oils, and extracts. Cannbit has been focused on developing sustainable and environmentally friendly cultivation practices and has received several certifications for organic and environmentally friendly cannabis cultivation.

5. Seach Medical Group: Seach Medical Group is a leading Israeli cannabis company that specialises in the production of medical cannabis products for patients with chronic pain and other medical conditions. The company has developed unique cannabis strains and has a strong focus on research and development to create innovative cannabis-based products.

6. Cannabics Pharmaceuticals: Cannabics Pharmaceuticals is a global biotechnology company headquartered in Israel that focuses on the development of cannabinoid-based therapies for cancer patients. The company conducts extensive research on the anti-cancer properties of cannabinoids and has developed several proprietary technologies for cannabis-based drug delivery systems.

7. iCAN: Israel-Cannabis: iCAN: Israel-Cannabis is a leading cannabis innovation and investment firm based in Israel. The company supports cannabis startups and entrepreneurs by providing funding, mentorship, and strategic guidance. iCAN: Israel-Cannabis also organizes industry events and conferences to promote innovation and collaboration within the cannabis industry.

8. Together Pharma: Together Pharma is a vertically integrated cannabis company in Israel that specializes in the cultivation, production, and distribution of medical cannabis. The company has a large-scale cannabis cultivation facility and produces a wide range of cannabis-based products, including oils, capsules, and extracts. Together Pharma has established international partnerships for research and development and has been actively involved in international cannabis trade.

9. Therapix Biosciences: Therapix Biosciences is a pharmaceutical company based in Israel that focuses on the development of cannabinoid-based therapies for neurological and psychiatric disorders. The company conducts extensive research on the potential benefits of cannabinoids for conditions such as Tourette syndrome, epilepsy, and sleep disorders, and has several clinical trials ongoing.

10. PhytoPharma International: PhytoPharma International is a leading cannabis cultivation and production company in Israel that specializes in the development of unique cannabis strains and the production of high-quality cannabis-based products. The company has a strong focus on research and development and collaborates with leading academic institutions and research centers to advance cannabis science and innovation.

Research Advancements

Israel has a long history of cannabis research and has been at the forefront of many significant advancements in cannabis science and innovation. The country has a supportive regulatory framework that allows for extensive research and development in the field of cannabis, making it a global hub for cannabis research.

One of the key areas of cannabis research in Israel is the study of the medicinal properties of cannabinoids and their potential therapeutic applications. Israeli researchers have conducted pioneering studies on the use of cannabinoids for various medical conditions, including chronic pain, cancer, epilepsy, multiple sclerosis, and psychiatric disorders. These studies have led to the development of cannabis-based pharmaceuticals and therapies that are being used in clinical settings.

Moreover, Israeli researchers have also been at the forefront of cannabis breeding and genetics research. They have developed unique cannabis strains with specific cannabinoid profiles to target different medical conditions and improve the therapeutic efficacy of cannabis-based products. These advancements in cannabis genetics have paved the way for the development of new cannabis strains with optimized medicinal properties.

In addition, Israeli researchers have made significant advancements in cannabis extraction and formulation technologies. They have developed innovative methods for extracting cannabinoids from cannabis plants and formulating them into different delivery systems, such as oils, capsules, inhalers, and topical creams. These advancements in cannabis extraction and formulation have led to the development of a wide range of cannabis-based products with standardized dosages and improved bioavailability.

Furthermore, Israel has been a pioneer in the use of cannabis for agricultural purposes. Israeli researchers have developed advanced cultivation techniques, including hydroponics, aeroponics, and vertical farming, for growing cannabis efficiently and sustainably. These advancements in cannabis cultivation have led to increased yields, improved quality, and reduced environmental impact in the cannabis industry.

Challenges Facing the Industry

Despite the significant advancements and successes in the cannabis industry in Israel, there are several challenges that the industry currently faces. These challenges include:

1. Regulatory challenges: While Israel has a supportive regulatory framework for cannabis research and development, there are still challenges in terms of regulations related to cultivation, production, and distribution of cannabis. The regulatory landscape is complex and constantly evolving, which can create uncertainties for cannabis companies in terms of compliance and licensing.

2. Export limitations: Although Israel has a well-established cannabis industry, there are limitations on the export of cannabis products. Currently, cannabis exports are allowed only for research purposes and are subject to strict regulations. This can limit the growth potential of Israeli cannabis companies, as they are unable to fully capitalize on international markets.

3. Domestic market size: Israel has a relatively small domestic market for cannabis products, as the use of recreational cannabis is still illegal and the medical cannabis market is tightly regulated. This can pose challenges for local cannabis companies in terms of market demand and competition.

4. International competition: While Israel has been a pioneer in cannabis research and innovation, other countries, such as Canada and the United States, have also developed robust cannabis industries and are competing in the global market. This can create challenges for Israeli cannabis companies in terms of international competitiveness and market share.

5. Banking and financial services: Cannabis companies in Israel, like in many other countries, face challenges in accessing banking and financial services. Many banks and financial institutions are hesitant to provide services to cannabis companies due to the legal and regulatory uncertainties surrounding the cannabis industry. This can create difficulties for cannabis companies in managing their finances, conducting transactions, and accessing capital for growth and expansion.

6. Lack of standardized regulations: While Israel has a supportive regulatory framework for cannabis research and development, there is still a lack of standardized regulations in certain areas, such as product quality control, labeling, and testing. This can create inconsistencies in the market and pose challenges for cannabis companies in terms of meeting international quality standards and ensuring product safety and efficacy.

7. Stigma and perception: Despite the growing acceptance of cannabis for medical purposes, there is still a stigma associated with cannabis in some parts of society. This can impact the perception of cannabis companies, products, and users, and create challenges in terms of social acceptance, marketing, and branding.

Future Outlook

Despite the challenges, the cannabis industry in Israel has a promising future outlook. The country's supportive regulatory framework, strong research and development capabilities, and innovative approaches to cannabis cultivation, extraction, and formulation, position it as a global leader in the cannabis industry.

As the global acceptance of cannabis continues to grow, and more countries legalize cannabis for medical and recreational use, there is a potential for increased demand for cannabis products, including medical cannabis, in Israel and globally. Israeli cannabis companies are well-positioned to leverage their research advancements, technology expertise, and international partnerships to capitalize on the growing market opportunities.

Moreover, with ongoing research and clinical trials, there is a potential for the development of new cannabis-based pharmaceuticals and therapies for various medical conditions, which can further drive the growth of the cannabis industry in Israel. Additionally, advancements in cannabis genetics, cultivation techniques, and extraction technologies can lead to the development of novel cannabis strains and products with improved therapeutic properties, enhanced quality, and sustainability.

Furthermore, as the regulatory landscape continues to evolve, there is a possibility of more favorable regulations related to cannabis cultivation, production, and export in Israel, which can further boost the growth of the cannabis industry in the country. The government's recent decision to allow cannabis exports for medical purposes can also open up new opportunities for Israeli cannabis companies to tap into international markets and increase their global presence.

The cannabis industry in Israel has shown significant advancements in research, innovation, and cultivation practices, making it a global hub for cannabis research and development. The country's supportive regulatory framework, skilled workforce, and technology expertise have positioned it as a leader in the cannabis industry. Israeli cannabis companies have made notable achievements in the areas of medical cannabis research, cultivation techniques, and product development, which have garnered attention and investment from international partners.

Looking ahead, the future outlook for the cannabis industry in Israel remains positive, with several opportunities for growth and expansion. The continued focus on research and development, advancements in cannabis genetics, cultivation techniques, and extraction technologies, and the potential for favorable regulatory changes related to cannabis export and production, all contribute to a favorable outlook for the industry.

One of the key areas of growth in the Israeli cannabis industry is the medical cannabis market. With the increasing acceptance of cannabis as a viable treatment option for various medical conditions, there is a growing demand for medical cannabis products globally. Israeli cannabis companies, with their expertise in cannabis research and product development, are well-positioned to cater to this demand. Ongoing research and clinical trials in Israel are exploring the potential of cannabis-based pharmaceuticals and therapies for conditions such as chronic pain, cancer, epilepsy, and other neurological disorders. The development of novel cannabis strains and products with enhanced therapeutic properties can further boost the demand for medical cannabis products from Israel.

In addition to the medical cannabis market, there are also opportunities in other segments of the cannabis industry. The growing acceptance of recreational cannabis in various countries presents opportunities for Israeli cannabis companies to enter the recreational cannabis market, either domestically or internationally, if regulations permit. The expansion of cannabis use beyond traditional smoking methods, such as through edibles, topicals, and other innovative delivery methods, also opens up new product development opportunities for Israeli cannabis companies.

Furthermore, Israel's expertise in cannabis research and development can also be leveraged in other industries, such as the pharmaceutical, nutraceutical, and cosmetic industries. Cannabis-derived compounds, such as CBD (cannabidiol), have gained popularity in these industries for their potential health and wellness benefits. Israeli cannabis companies can explore collaborations and partnerships with companies in these industries to develop innovative cannabis-based products for a wider range of applications.

Another area of opportunity for the Israeli cannabis industry is international expansion. Despite the challenges related to cannabis export, Israeli cannabis companies have already established partnerships and collaborations with companies in other countries, including the United States, Canada, Europe, and Australia. These collaborations provide opportunities for Israeli cannabis companies to expand their reach in international markets, access new customers, and gain valuable insights into different regulatory environments and consumer preferences.

Moreover, Israel's expertise in cannabis research and development can also attract foreign investments into the country's cannabis industry. International investors seeking opportunities in the cannabis industry are drawn to Israel's supportive regulatory framework, skilled workforce, and technology expertise. The influx of foreign investments can provide additional capital for Israeli cannabis companies to expand their operations, invest in research and development, and strengthen their position in the global cannabis market.

In conclusion, the country's supportive regulatory framework, research expertise, and technology-driven approach have positioned it as a hub for cannabis research and development. Despite challenges related to regulations, export limitations, and domestic market size, the future outlook for the cannabis industry in Israel remains positive, with opportunities for growth and expansion in the medical cannabis market, recreational cannabis market, product development, international expansion, and foreign investments. With ongoing advancements and innovations, the Israeli cannabis industry is poised to continue its upward trajectory and contribute to the global cannabis landscape.