THE Israeli medical cannabis market, long considered to be years ahead of its European counterparts, no longer appears to be the haven it once was.
Reports in local media warning that the industry is ‘fast withering’ and ‘dismantling itself from within’ are being reflected in continued stagnation of patient growth and the ongoing exodus of Israeli players from both the stock exchange and market itself.
While many point the finger at stifling regulatory hurdles enacted by the country’s successive administrations, new measures expected to be brought in over the next few months could see the industry rapidly expand.
New reforms on how cannabis is prescribed, currently being pushed through as a priority for the newly instated government, will move medical cannabis entirely into the realm of national health insurance, a move expected to see patient numbers double.
The Israeli market
Like in many markets, 2022 was a tough year for Israeli cannabis firms, particularly publicly listed ones.
Of the 15 Israeli cannabis companies publicly traded on the stock exchange at the beginning of 2022, four had either left or announced their intention to leave by the end of the year.
This included the planned withdrawal of Panaxia, one of the most prominent players in Israel, from the public market and Israeli cannabis market altogether in December.
Speaking at the time, Panaxia Labs Israel’s Founder and CEO Dadi Segal told BusinessCann: “Recently, given the situation in the public markets and very strong negative sentiment towards publicly traded cannabis companies, we’ve decided that we are no longer benefiting from being a public company.”
He added that as a medical cannabis company with two large EU GMP sites, unique products already marketed in Germany, there was a ‘significant advantage’ for the company in the European market.
“Those advantages don’t come into effect in the Israeli market, given the kind of particular regulatory framework available. I think Israel is in a tough situation. Until there is significant change in the regulatory landscape and the way the government sees the cannabis sphere, I think it will continue to be a very difficult market. We’ve seen that coming for almost two years and have announced that we will be focusing on the European market.”
This sentiment is shared widely among the country’s cannabis operators, increasing numbers of which are choosing either to diversify into other markets or shut shop altogether, including Canomed, Intelicanna, and Pharmacan.
Last week CannAssure announced its departure from the Tel Aviv Stock Exchange, while IM Cannabis recently underwent a share consolidation to prevent its shares being delisted from the NASDAQ Stock Exchange and has been forced to close its operations in Canada amid ongoing cost-cutting measures. Elsewhere, Univo earned the undeniable title of becoming the first publicly listed Israeli cannabis company of 2022 to file for bankruptcy.
Kanabo’s CEO Avihu Tamir recently told BusinessCann that he predicts within two years, ‘more than 50% (of Israeli cannabis companies) will be out of business or acquired’.
“The main reason, and this is a theme across any medical market, is that the profit margins are not pharmaceutical profit margins, but the regulation standards are pharmaceutical regulations. Standard margins are similar to consumer products, but costs are much higher,” he explained.
He added that in Israel, a country with around 9m citizens, there is only room for ‘around 10 big cannabis companies’ for the market to operate correctly, but right now ‘you have roughly between 50 and 60, so it’s saturated’.
A new framework
These issues have been exacerbated by anaemic growth in the market, with patient numbers growing by just 500 in January 2023 and 200 in December 2022, according to reporting from The Israeli Cannabis Magazine.
This stagnation is in part due to the arrest of seven doctors licensed to prescribe cannabis, who are suspected of exploiting a grey area in the current medical cannabis licence framework which allowed them to charge patients ‘up to hundreds of thousands of shekels’.
Over the coming months, this could all be about to change, as reforms aimed at moving medical cannabis away from the private market and into the realm of the national healthcare industry make their way to implementation.
Currently, Israel’s roughly 120k medical cannabis patients are required to secure a licence from the state to access medication legally.
According to an early outline of these proposals published in August 2022 by the Medical Cannabis Unit of the Ministry of Health, ‘this involves a bureaucratic process involving a relatively small number of doctors who are certified to work in this area, and many patients turn to private doctors and pay large sums in order to obtain this licence’.
The proposed changes, which the Minister of Health was instructed to initiate by the new government in mid-January this year, would see this problematic licence structure replaced by a new prescription model, handled by the country’s four official health insurance organisations.
Participation in a medical insurance plan with one of these four ‘sick funds’ is compulsory.
It would also dramatically expand access to medical cannabis for patients, allowing any pharmacy in the country with a safe to dispense prescriptions, potentially creating thousands of access points.
Furthermore, any doctor who specialises in their field will be able to prescribe medical cannabis, and a uniform payment of ₪720 for a new prescription and ₪360 for renewing an existing prescription will be established.
Mr Tamir suggested that ‘the market can double now with this newer form. If roughly we have around 120k, we would have double the amount of patients.’
Deputy Health Minister Moshe Arbel stated: “This is a step that will affect tens of thousands of people and symbolises in my eyes the importance of providing a comprehensive response in one place – our system is based on the health insurance funds as the administrators of the treatment – and if we believe that cannabis is a therapeutic means, we need to integrate it in the place where the medicine is given.”