Is Ag-Tech Turning Israel Into a Medical Cannabis Powerhouse?

Israel grows medicinal marijuana in Safed

Legal marijuana is the fastest-growing industry in the U.S., with all 50 states considering some form of legalization. The U.S. market for legal cannabis grew 74 percent in 2014 to $2.7 billion from $1.5 billion the previous year. At current growth rates, the cannabis sector will soon be larger than the organic food industry, according to The ArcView Group, an Oakland, California-based cannabis industry investment and research firm.

Within Israel’s startup ecosystem, innovators are taking advantage of many years of ag-tech advances, including research in seeds, grow-media, hydroponics, drip irrigation and the science of cannabinoids, to create a sector that will revolutionize growing and end-user consumption for the burgeoning legal retail and medicinal markets.

Serious scientific research has been conducted by Israeli academics since the early 1960s. Medical cannabis use was first approved in Israel in 1992. In 2007, the Ministry of Health established a broad medical cannabis program; more than 20,000 patients legally use cannabis today, with 30,000 patients expected to be approved by next year. Israelis suffering from a range of ills — from Parkinson’s disease to carcinoma, psoriasis,  multiple sclerosis — are using cannabis treatments.

As noted on Seeking Alpha in October, “most areas of the world that could afford to use a cannabinoid drug are moving towards doing so.” It remains to be seen if the cannabinoid drug industry can flourish without the okay from the U.S. Food and Drug Administration. With the world, and particularly the U.S., headed for broader legalization of both recreational and medicinal cannabis products, the potential of the product sector is evident. Finding the companies to reach that potential is the challenge.Israel has “been at the vanguard of research into the medicinal properties of cannabis for decades” and the number of patient permits for medical cannabis issued by Israeli authorities has increased from 400 in 2009 to more than 11,000 today, according to a report by the comptroller of the City of New York. That report called for further academic collaboration between Israel and New York City-based researchers as part of efforts to legalize medical cannabis use in the city.

Analytika Research has produced a report to provide investors with insights into some of Israel’s entries in this sector, including several pre-IPO and listed companies. Two additional businesses with affinities in the cannabis sector — Flux and EdenShield — will be covered in our upcoming Israel AgTech industry focus report. Note: Company reference in this report does not imply an investment recommendation or endorsement.

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