New reforms could double the number of Israeli patients treated with medical cannabis

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The Israeli medical cannabis market, long considered years ahead of its European counterparts, no longer seems to be the Eden it once was.

Local media reports warning that the industry is “withering away rapidly” and “dismantling from within” are reflected in the continued stagnation in patient growth and the continued exodus of Israeli players from the stock market and the market itself.

While many point to regulatory hurdles enacted by successive administrations across the country, further measures expected in the coming months could see the industry grow rapidly.

New reforms to how cannabis is prescribed, currently being passed, will move medical cannabis entirely into the realm of national health insurance, a move that is expected to see patient numbers double.

The Israeli cannabis market

As in many markets, 2022 has been a tough year for Israeli cannabis companies, especially those listed on the stock exchange.

Of the 15 Israeli cannabis companies listed on the stock market at the start of 2022, four had left or announced their intention to leave the market before the end of the year.

This included the planned withdrawal of Panaxia, one of Israel’s largest players, from the public market and the Israeli cannabis market altogether in December.

Speaking at the time, Panaxia Labs Israel Founder and CEO Dadi Segal told BusinessCann: “Recently, given the situation in the public markets and the very strong negative sentiment towards cannabis listed on the stock exchange, we have decided that we no longer benefit from our status as a public company. »

He added that as a medical cannabis company with two large EU-GMP sites, unique products already on the market in Germany, there was a “significant advantage” for the company in the European market.

“These advantages do not materialize in the Israeli market, given the kind of particular regulatory framework available. I think Israel is in a difficult situation. Until there is a significant change in the regulatory landscape and the way the government views the cannabis sphere, I think it will be a very tough market. We saw it coming for almost two years and announced that we were going to focus on the European market. »

This sentiment is widely shared by the country’s cannabis operators, a growing number of whom are choosing to either branch out into other markets or go out of business, including Canomed, Intelicanna and Pharmacan.

Last week, CannAssure announced its departure from the Tel Aviv stock exchange, while IM Cannabis recently carried out a reverse stock split to avoid its shares being delisted from the NASDAQ stock exchange and was forced to close its operations in Canada as part of ongoing cost reduction measures. Elsewhere, Univo has earned the undeniable title of becoming the first publicly listed Israeli cannabis company of 2022 to file for bankruptcy.

Kanabo CEO Avihu Tamir recently told BusinessCann that he predicts that within two years, “more than 50% (of Israeli cannabis companies) will be bankrupt or taken over.”

“The main reason, and this is a common theme in all medical markets, is that profit margins are not pharmaceutical profit margins, but regulatory standards are pharmaceutical regulations. The standard margins are similar to consumer products, but the costs are much higher,” he explained.

He added that in Israel, a country of around 9 million citizens, there is only room for “a dozen large cannabis companies” for the market to function properly, but that currently , “there are between 50 and 60, so the market is saturated”.

A new regulatory framework for medical cannabis

These issues have been exacerbated by anemic market growth, with the number of patients only increasing by 500 in January 2023 and 200 in December 2022, according to the report. The Israeli Cannabis Magazine.

This stagnation is partly due to the arrest of seven doctors licensed to prescribe cannabis, suspected of exploiting a gray area under the current medical cannabis licensing framework which allowed them to charge patients “up to hundreds thousands of shekels.

In the coming months, all of that may be about to change, as reforms to move medical cannabis away from the private market and into the realm of the domestic healthcare industry are on the way. about to be implemented.

Currently, the approximately 120,000 Israeli patients who use cannabis for medical purposes must obtain a state license in order to legally access the drugs.

According to a first outline of these proposals published in August 2022 by the Medical Cannabis Unit of the Ministry of Health, “it involves a bureaucratic process involving a relatively small number of doctors certified to work in this field, and many patients turn to private doctors and pay large sums in order to obtain this license”.

The proposed changes, which the health minister was tasked with initiating by the new government in mid-January, would see this licensing structure replaced by a new prescription model, run by the four official health insurance organizations in the country.

Participation in a medical insurance plan with one of these four “sickness funds” is compulsory.

The project would also dramatically expand access to medical cannabis for patients, allowing any pharmacy in the country with a safe to dispense prescriptions, which could create thousands of access points.

In addition, any doctor specializing in his field will be able to prescribe medical cannabis, and a uniform payment of 720 shekels for a new prescription and 360 shekels for the renewal of an existing prescription will be established.

Mr. Tamir suggested that “the market can double now with this new shape. If roughly we have around 120,000 patients, we would have double the number of patients.”

Deputy Health Minister Moshe Arbel said: “This is a milestone that will affect tens of thousands of people and symbolizes to me the importance of providing a comprehensive response in one place – our system is based on health insurance funds as administrators of treatment – ​​and if we believe that cannabis is a therapeutic means, we must integrate it into the place where the medicine is administered. »

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