The report goes on to say
Too many legal barriers remain compounded by weak, directionless companies discouraging investments in U.S. marijuana companies.
Risk takers itching to seed start-ups can consider Israel-based medical marijuana publicly traded companies but they are very risky too.
Israel offers an environment encouraging innovation, scientific R&D, and attracts worldwide investors for start-up risk taking adding gravitas to companies in a growth industry.
In the last article in a series I wrote for Seeking Alpha about investing in marijuana companies, I caution investors “not quite yet.” Despite a growing market spurred by state legislatures desperate for new tax revenue sources, I discourage investors from investing just yet in marijuana companies. Investors with an itch to get in might best consider three Israel-based companies.
Barriers keeping the U.S. private sector from capitalizing on and gaining traction for a legal privatized marijuana industry include:
- Too many government obstacles remain in place including a skittish banking industry.
- States are incrementally legalizing medical marijuana (MMJ), but widespread fundamental social resistance continues.
- Cartels flood the market with cheap, illegal but untaxed pot available anywhere at anytime where buyers can preserve their anonymity.
In Israel, MMJ is researched and developed with the same rigorous R&D of pharmaceuticals. Plants are grown and extracts designed for pain relief and treatment of specific ailments and illnesses. In Israel, the meme is pride in technology innovation as the Start-Up Nation, economic sagacity, agricultural novelty, cutting-edge medical advances, and a frisson for relief from pain and suffering.
Israel’s latest sobriquet is the “Spark-Up” Nation. In the past sixteen months, I count some two-dozen articles in The Jerusalem Post, Israel’s largest English-language newspaper with worldwide circulation, about legalizing cannabis, MMJ, and Israeli tech companies involved in R&D of cannabis products for medical care. The headline of one story addresses the kosher certification of MMJ for use by religious Jews, because “using medical cannabis products recommended by a physician…(is not viewed) a sinful act, but rather as mitzvah, an imperative, a commandment.”
Professor Raphael Mechoulam of the Hebrew University Faculty of Medicine isolated and synthesized THC in the 1960s, the primary psychoactive compound in cannabis. Follow-up research is uncovering cannabis benefitsincluding anti-inflammatory, anti-anxiety and benefits to digestion, treating infections, pain treatment, and recovery after heart attacks. Israeli MMJ companies are, as one expert puts it, 10 years ahead of European and American companies in MMJ R&D.
There are safer and riskier ways to invest. OurCrowd is a well-established, respected, crowdfunding Israel-based firm led by serial entrepreneur John Medved. OurCrowd’s focus is investing in “the next wave of innovation.” Firms are pre-vetted; single investors put in money along with venture capital and angel investors, and have assurance that OurCrowd is actively involved in management.
OurCrowd highlights the work of Syqe Medical producing “the world’s first medical-grade metered-dosed cannabis inhaler, giving physicians the assurances needed to prescribe cannabis as a standardized drug.” In January 2016 Phillip Morris International (NYSE: PM) announced it is investing $20m in 5-year-old, Tel Aviv-based Syqe Medical to “help reduce health risks associated with smoking,” because their work on MMJ is adaptable to work with other medicinal plants.
Three other spark-up, young, Israel-based publicly traded companies also are working on R&D adapting their technologies to broader endeavors. BreedIT Corp (OTCQB: BRDT) has a $1.8m market cap. Share price is down from a 52-week-high of seven cents to two cents. BRDT announced in January 2016 its patented agricultural seed breeding software is in a venture with agriculture chemicals Vilmorin & Cie SA. BRDT is also working on advanced molecular technology research producing high quality hybrid tomato seeds, and other vegetable and field crop seeds. BRDT is producing designer medical cannabis strains, and awaiting their registration with Israel’s Ministry of Agriculture.
Cannabics Pharmaceuticals (OTCQB: CNBX) is off from a high of thirty cents per share to eight cents. It has rebounded from a low of two cents per share. Its market cap is $8.1m. The cancer treatment pharmaceuticals company expects to be profitable in 2017 with sales rising from $750,000 annually to more than $80m; it is engaged in raising $4m for its work in cancer and molecular biology that evaluates biopsies using a cannabis-based active ingredient.
The third publicly traded company is One World Cannabis (OTCQB: OWCP).OWCP was founded in 2014 out of an Israeli company conducting R&D on cannabis-based pharmaceuticals and treatments for a wide variety of medical issues. They recently completed a reverse merger with an American company called Dynamic Applications. One World Cannabis filed a request to change its name to OWC Pharmaceuticals. In its first few months of stock trading, the company raised $2 million through private investors in Israel, the United States and Singapore.
OWCP shares currently trade for ten cents, down from a high of thirty cents in about May 2015. There are seldom more than 1,000 shares traded per day. In January 2016, the company announced a $750,000 equity purchase agreement with Kodiak Capital Group of Newport Beach, California. Kodiak invests a great deal of funds in life sciences. The funds are being used to “facilitate completion of safety trials for the company’s proprietary cannabis delivery system for multiple myeloma and other planned studies.”