Easier user rules prospect boosts cannabis stocks

Yaakov Litzman  photo: Alex Kolomoisky, Yediot

Deputy Minister of Health Yaakov Litzman announced that a license would no longer be required to use cannabis for certain indications.

Last Thursday, Deputy Minister of Health Yaakov Litzman announced that he was considering the removal of cannabis from the Dangerous Drugs Ordinance for some indications. The announcement led to substantial rises yesterday in the share prices of cannabis-related companies traded on the Tel Aviv Stock exchange.

The market apparently estimates that the change could mean a significant rise in the number of medical cannabis users in Israel. Among the stocks that posted rises yesterday were Intercure (up 4%); Herodium (up 6%); WhiteSmoke (up 7%); and Together (up 8%, which was also thanks to the company's announcement of progress in its business in Germany).

If the change comes into effect, then for certain illnesses there will be no need to obtain a license to use cannabis from the Ministry of Health with police approval, but only an appropriate prescription from a doctor specializing in the disease in question. Today, every cannabis user must hold a legal license in addition to the prescription. Some doctors have been trained by the Ministry of Health to prescribe cannabis as they see fit, and they are able to produce a Ministry of Health license automatically by computer. Other doctors, who have not undergone training, have to send off documents and wait for the ministry to issue a license, at its discretion.

The medical specialties for which, according to the Ministry of Health's announcement, no license will be required are oncology; neurology (for example Parkinson's Disease and epilepsy); gastroenterology (Crone's Disease); and infectious diseases. The production and import of food supplements or preparations that contain CBD only will also be allowed, for all indications. On the other hand, it appears that for indications such as pain or post-traumatic stress there will be no automatic permit, and a license will still be required. The thinking is that such conditions are easier to fake, and thereby obtain cannabis with no genuine medical need, and even to trade in it.

The Ministry of Health said in a statement on Litzman's behalf: "I stress that this is not legalization, and that a person with no medical permit to use it will not be able to obtain the drug at a pharmacy, but this is a measure that will make bureaucratic procedures much easier for people with severe diseases."

The Ministry of Health itself has not yet decided exactly how to implement this declaration of Litzman's. The above assessments are implied by what he said and by the Ministry of Health spokesperson's statement, but they do not amount to final decisions.

Although Litzman stressed that this was not a move towards full legalization of cannabis, market players argued that it would almost impossible to avoid leakage of cannabis from patients to the consumer market in such a situation, and take the view that the Ministry of Health has taken this into account and is acting on the assumption that legalization will come sooner or later.

There are 40,000-50,000 cannabis users in Israel, who consume about ten tonnes of cannabis annually. This market is estimated to be worth hundreds of millions of dollars at the new prices of the substance, on which controls were recently removed and which have yet to stabilize. If the market does grow substantially following relaxations by the Ministry of Health, it could yield aggregate annual revenue of $600-700 million, according to market sources.

Published by Globes, Israel business news - en.globes.co.il - on May 20, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Yaakov Litzman  photo: Alex Kolomoisky, Yediot
Yaakov Litzman photo: Alex Kolomoisky, Yediot
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