Some months ago I wrote about Israel’s potential rise as a cannabis superpower and recent news suggest the country is living up to its reputation as a leader in medical cannabis.

In January the government announced plans to open the local medical marijuana market to new farms and sellers.

Adding to the developments on a governmental level, Israeli startups are utilizing cannabis for medical and technological advancements all the while working their way around regulations and other hurdles.

Today only eight farms are allowed to grow cannabis for medical purposes in Israel and to change this, the country’s Health Ministry announced a plan to open the medical marijuana market to new players. This means that anyone who meets specific safety and quality requirements is eligible to grow and sell cannabis.

“Even today there are pharmacies giving out all kinds of other medicines such as morphine. We will also sort out cannabis. There will be registration and we will supervise it,” Yaakov Litzman, Israel’s minister of health told a local newspaper.

Problematic Reform

Although the announcement is good news for farms looking to become certified growers and sellers, several questions remain. Instead of opting for a full liberalization of growing cannabis, Israeli government is looking to take full control of the market.

What’s more, the current proposal seems to suggest that the government is looking to prevent the distribution of cannabis for smoking purposes while giving preferential treatment to inhalers and capsules.

Indeed, the health ministry’s might create more problems than it attempts to solve.

“The plan is more complicated than it looks. It seems that the health ministry is going for full-control. Although the headlines about deregulation are promising, the small details claim the opposite.

The government will prefer importing and for smoking alternatives like capsules and such, which eliminates 95% of the current strains,” said Oren Lebovitch, the chief editor of Cannabis, Israel’s leading cannabis publication.

There are currently 25,000 patients in Israel who receive cannabis for medical reasons. The patients are supplied by eight government mandated growers. The real questions is: if the patient-end of the equation is not reformed, why does Israel need more growers?

“Only two of the companies currently growing cannabis are profitable, so there’s no incentive for other growers to join until there are more patients – so what is the reform for?,” asked Lebovtich.

“What’s more, the reform will eliminate specific strains — most of which are used in studies that are showing great outcomes,” said Lebovitch. “In the new reform patients won’t be able to choose the strains they are using today but only based on groups of only three cannabinoids (THC, CBD, CBN), ignoring other tens or hundreds of other cannabinoids and terpenes, which are important for the “Entourage Effect” (the interaction of various compounds in marijuana).”

This decision might also be the one that will make the whole reform to collapse since patients will probably turn to the high-court because they’re breaking their current treatment, Lebovitch added.

Since the current reform is tailored for domestic purposes and having more growers would only be meaningful if countries were allowed to export cannabis.

This might change as optimists believe that the UN will overturn its ban from 1988.

However, while the proposal does little to address Israel’s capability to export cannabis, its focus on the local market might serve country well in the future. What’s more Israeli cannabis research is lightyears ahead of Europe and the US.

“Israel is 10 years ahead of Europe and the US in medical research as it’s quite easy for companies to run clinical trials and research on cannabis. The new proposal by the MInistry of Health — placing emphasis on medical research, will enable us to maintain our competitive advantage. It will infuse more investment and entrepreneurship,” says Dr. Tamir Gedo from BOL Pharma.

Dr. Gedo admits that the proposal has some problem areas, but believes it will do more good than harm.

“One of the ideas put forth in the proposal is to increase the number of physicians who are eligible to prescribe medical cannabis – this would increase the number of patients.”

In Startups We Trust

While the government is deliberating new reforms to expand Israel’s cannabis industry, it’s likely that the so-called reforms will cause more problems than they will solve, as is often the case with government meddling. The proposal will also have to pass several committees before it’s voted on in the Knesset (Israel’s parliament).

Luckily, Israeli startups know better than to wait for the government to act. In January, Cigarette conglomerate Philip Morris International announced that it will invest $20 million in Syqe Medical, an Israeli start-up that developed the world’s first precision metered dose inhaler for medical use, according to Israeli news site Calcalist.

In January, Eybna, a local cannabis startup announced that has developed natural terpene based cannabis flavors, free of illegal traces, ​with the intention of selling them as a branded component to product manufacturers around the world. Terpenes are the aromatic compounds that give each cannabis strain its unique smell and flavor

According to Nadav Eyal, CEO and cofounder of Eybna, the company’s proprietary technology is a game-changer.

“Until today all methods of isolating cannabis terpenes left traces of other illegal compounds found in cannabis like THC in the final product, but now Eybna’s proprietary technology enables the creation of natural strain-specific cannabis terpenes that are 100% free of illegal traces, meaning that using our technology, brands can now create cannabis flavored and scented products legally worldwide.”

Israel’s cannabis industry is booming, but the government needs to do a better catching up. While the government has woken up to the needs of the industry, it will take a while before Israeli legislation will be modified to meet the needs of the country’s dynamic cannabis research and startup ecosystems.