The Promised Land of Pot

Israeli entrepreneurs are hawking everything from cannabis-infused olive oil to vaporizers -- and hoping to get a slice of the lucrative U.S. marijuana market.


TEL AVIVThe men wore khakis and polo shirts and badges on lanyards, the standard-issue uniform of business conventions from San Francisco to Shanghai. An aging doctor took the stage to a rapturous standing ovation and outlined his research into unpronounceable chemical compounds like arachidonoyl ethanolamide. Presenters clicked through PowerPoint presentations full of clip art and marketing jargon: “Israel has C for Chutzpah!”

It was only when attendees left the conference hall to promote their products that things started to get a little strange. In a leafy, tented garden in an otherwise grim part of Tel Aviv, vendors from Israel and dozens of foreign countries hawked products such as Aunt Zelda’s cannabis-infused olive oil, a WeedWheel app for comparing strains of pot with names like AK-47, and something called Magic Butter.

This Tel Aviv conference, called Cannatech, seemed a bit like something cooked up during a bong session at AIPAC, marrying Israel’s vaunted high-tech industry with its penchant for pot. But it’s a natural product of the country’s long history of researching marijuana. The doctor who made the rock-star entrance, Raphael Mechoulam, is responsible for discovering THC, the drug’s main psychoactive ingredient, in an Israeli laboratory in 1964.

The past few years have seen a major shift in public opinion toward marijuana in the United States. A majority of Americans now support legalizing the drug, with ballot initiatives for legalization cropping up across the country. Four states and the District of Columbia have legalized recreational cannabis, while about half of the country allows it for medical use.

Although recreational use of marijuana is still technically illegal in Israel, that may surprise visitors to Tel Aviv, where people light up freely outside bars and restaurants. The organizers of the Tel Aviv conference, meanwhile, warned everyone that it was a “non-consumption event” — though that rule was quickly discarded during the first coffee break.

Now, Israel is hoping to get in on the ground floor of the lucrative U.S. market. Legal pot sales in the United States reached $5.4 billion last year, and analysts believe the market could grow fourfold during the next five years, to $21.8 billion. It is, as one Israeli businessman told me, “the only new market with an existing user base.”

Israeli researchers are working on everything from grow lights to irrigation systems, which they hope to sell to budding American cannabis growers. Medical research is also expanding, as doctors with impressive credentials are touting the plant as a sort of wonder drug, for everything from Crohn’s disease to cancer.

“It’s shifting, but you still have a lot of the old guard in the U.S., people walking around in tie-dye shirts looking for freebies,” said Rick Gilchrist, a co-founder of New Frontier, a Washington, D.C.-based firm that analyzes the cannabis industry. “The level of sophistication here [at the convention], the fact that everyone wants to be successful, that’s what the industry has been missing.”

Israel itself has a mixed relationship with marijuana. Police occasionally make a show of busting dealers, sometimes with comic results. During the 2014 Gaza war, one enterprising resident of Kiryat Gat turned a public bomb shelter into a grow room.

Lawmakers have tried several times to legalize the drug; a bill introduced last year was perhaps the only thing that the ultranationalist Yisrael Beiteinu party and the Joint List, which represents Arab citizens of Israel, could agree on. But they haven’t succeeded yet; the bill fell short of a majority, and then its author resigned amid a swirl of sexual harassment charges.

“We’re still a bit old-fashioned in this country. There’s a lot of orthodoxy at the highest levels of the government about cannabis,” said Omri Krikeb, a graduate student who dropped by the conference to look for a job.

Krikeb, like many millennials in Israel, wanted to found a high-tech start-up. “But then I had to do four years in the army, and I missed the high-tech wave,” he said. So he found himself studying agriculture, where he worked on a lighting system for growing apples, which belong to the same genetic order as cannabis. “Monsanto will probably find a way to make THC-infused apples,” he joked, referring to the American biotechnology company.

The kind of “ancillary products” being hawked at the convention will likely become a billion-dollar industry in their own right, given the growing U.S. movement for legalization. One firm has invented a dehumidifier to keep the plants dry; another makes a metered vaporizer for hospitals.

But medical research may provide the biggest payoff. The Israeli government has long allowed doctors to study marijuana: Mechoulam, a professor at Hebrew University, got his first five kilos from the police in the 1960s. Medical marijuana was legalized in 1992 and today there is growing consensus about the drug’s efficacy. Earlier this year, Israel’s ultra-Orthodox health minister released a plan to greatly expand the availability of medical marijuana.

Since THC was discovered, Israeli researchers have filed more than 20,000 cannabis-related patents, many of them related to the plant’s medical uses. “There is no other [drug] system for which we can say it is involved in all diseases involving humans,” Mechoulam said.

A preliminary study conducted last year by Israel’s prestigious Technion, a science and engineering university in Haifa, found that cannabis could be a useful treatment for brain and breast cancers. Another study suggested it could help with multiple sclerosis. This kind of research could have an immediate impact on the U.S. market, because the Food and Drug Administration accepts Israeli standards for clinical trials.

“The work at the upper echelons of this industry, it’s very different than what the general population thinks. It’s real science,” said Garyn Angel, the CEO of Tampa, Florida-based Magic Butter (they also make THC-infused gummy bears).

Researchers agree, though they admit they still struggle with “the old guard,” as Gilchrist called the industry’s less corporate pioneers. David Meiri, the Technion scientist who led the cancer study, found his work stalled by an unexpected problem. He studied 10 types of cannabis and found certain ones more effective in treating various forms of cancer — but he couldn’t explain why, because his suppliers had no idea what was in their strains.

“You get strains that are named Scooby Doo. What the hell is Scooby Doo? What are you putting in these cells?” he recalled. “It’s great that Mickey Mouse is better than Scooby Doo, but as a scientist I can’t do anything with that.”

Photo credit: JACK GUEZ/AFP/Getty Images

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