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 Since 2014, U.S. firms have invested about $50 million in
licensing Israeli medical marijuana patents, cannabis agro-tech
startups and firms developing delivery devices such as inhalers,
said Saul Kaye, CEO of iCAN, a private cannabis research hub.
"I expect it to grow to $100 million in the coming year," Kaye said
at iCAN's CannaTech conference in Tel Aviv this month, one of the
largest gatherings of medical marijuana experts.
Scientists say strict rules, some set by the Drug Enforcement
Administration, limit cannabis studies in the United States, where
the legal marijuana market is valued at $5.7 billion and expected to
grow to $23 billion by 2020.
"In the United States it's easier to study heroin than marijuana,"
said U.S. psychiatrist Suzanne Sisley, who has researched the
effects of cannabis as a treatment for American military veterans
suffering from Post Traumatic Stress Disorder.
"With marijuana you have to go through added layers of government
red tape. It highlights the way marijuana research is being shackled
by politics," said Sisley, Director of Medicinal Plant Research at
Heliospectra.
 While scientific exploration may be restricted, 23 U.S. states now
permit medical cannabis, and recreational use is allowed in four
states and Washington D.C. This is despite the fact that at the
federal level, marijuana is still classified as a dangerous narcotic
with no medicinal value.
In Israel, marijuana is an illegal drug and only 23,000 people have
Health Ministry permits to purchase medical cannabis from nine
licensed suppliers, creating a market of $15 million to $20 million
at most.
But Israeli authorities are liberal when it comes to research.
Growers work with scientific institutions in clinical trials and
development of strains that treat a variety of illnesses and
disorders.
Israeli Health Minister Yakov Litzman, an ultra-Orthodox Jew,
supports medical cannabis usage and has introduced steps to ease its
prescription and sale.
Israel is far from alone in the market, however. Britain's GW
Pharmaceuticals is licensed to grow cannabis for medicine and in
2013 opted for a dual listing on Nasdaq, where it raised nearly $500
million from U.S. investors.
This month, GW announced its cannabis-based medicine Epidiolex had
successfully treated children with a rare form of epilepsy. Its
share price doubled as a result.
Medical cannabis is developing fast. Patients can smoke marijuana
cigarettes, use inhalers, ingest oil extracts or even consume
cookies containing marijuana extracts. GW has a multiple sclerosis
treatment which is sprayed under the tongue.
PAIN RELIEF
In a clinic in Tel Aviv, 65-year-old Noa lights a joint. She suffers
from fibromyalgia, a chronic pain disorder, and explains how six
months of smoking medical cannabis has transformed her life.
"I can function again. Most importantly, I'm a grandma, I can roll
around on the floor with the kids," she said as she discussed with a
nurse what strain would best alleviate her symptoms.
The clinic belongs to Tikum Olam, Israel's largest medical marijuana
supplier, which partnered this year with a private U.S. investment
group to grow medical marijuana in four U.S. states.
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Tikun Olam is taking part in clinical trials on epilepsy, Crohn's
disease, spasticity and tinnitus, said Zvi Bentowich, its chief
scientist.
Professor Raphael Mechoulam of the Hebrew University in Jerusalem,
whose landmark studies in the 1960s paved the way for cannabis
research by isolating and synthesizing THC, the main psychoactive
ingredient of marijuana, praised the Israeli government's open
approach to the research.
"Cannabinoid research was and still is viewed positively by
government committees," he said, adding that law enforcement was not
involved in study approval.
Jeffrey Friedland, CEO of private U.S. investment firm Friedland
Global Capital, has invested in two agro-tech companies and a
pharmaceutical firm in Israel.
"Israel is a leader in agriculture, take that and couple it with
research - you have the two sides, plant science and pharmaceutical
development," Friedland said.
"If you're in California or Colorado, you're getting medical
marijuana in a lot of cases from someone who did not graduate
high-school - there's no science."
It was only in October that California drafted its first
comprehensive regulations on medical marijuana, two decades after
legalization fueled a grey market in cultivation.
Seth Yakatan, CEO of California-based Kalytera Therapeutics, said
the level of capital efficiency in Israel was high.
"What you would spend half a million dollars on in the U.S. you
could easily get for 125 or 150 thousand dollars in Israel and it's
going to be done efficiently and on time. The quality of research is
world-class and the arbitrage of value is good."
A Hebrew University and Tel Aviv University study, findings of which
were published in May 2015 in the Journal of Bone and Mineral
Research, showed cannabis constituent Cannabidiol, or CBD, helped
heal bone fractures in rats.
Based on that study and others, Kalytera has licensed two compounds
from the Hebrew University's Technology and Transfer company Yissum.
They are synthetic cannabis derivatives that the firm eventually
hopes to use in treating osteoporosis, bone fractures and other
diseases.
(Additional reporting by Lianne Back in Tel Aviv and Jilian Mincer
in New York; Editing by Jeffrey Heller and Giles Elgood)
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