Israel has a top position in the global cannabis industry.
Even though it has not legalized adult-use marijuana just yet, it was among the first countries to start researching the plant, providing a home for notable scientists like Dr. Raphael Mechoulam, often dubbed “the father of cannabis,” who became famous in the 1960s after discovering the structure of CBD and the process to isolate and synthesize THC.
Not long ago, Israel started allowing exports of cannabis to other countries, becoming one of a handful of countries in the world to do so.
Favorable regulations, overall government support and an innovation-focused society are factors that have certainly influenced the country’s positioning as a cannabis powerhouse.
As the cannabis industry continues to grow, companies are shifting from simply growing weed and manufacturing cannabis-based products to other arenas. R&D is becoming a cornerstone of the success of such initiatives.
CannRx is a developer of proprietary, science-based, efficacy-driven medical and recreational cannabis products. The firm focuses on three pillars of technology: formulations, enhanced delivery and extraction. The company is a subsidiary of the botanical medicine company Izun Pharmaceuticals.
Benzinga sat down with CannRx founder and Chief Scientific Officer Dr. William Levine and Chief Strategy Officer Andrew Septimus to understand the role of research in developing cannabis products — and why Israel is the perfect starting point for a global cannabis company.
A Love For Plants
CannRx took the expertise its team has in botanicals and applied it to cannabis, conducting studies to identify the right formulations. Ultimately, this allowed the company to create its own vapor capture technology to maximize cannabinoid yields.
The company has developed a protein binder that allows cannabinoid active pharmaceutical ingredients to be delivered with an expected onset and consistent experience.
“My experience in botanical medicine is directly related to the cannabis industry. We have a commitment to quality standards and efficacy-driven products that we are applying to cannabis,” Levine told Benzinga.
“CannRx does not grow or sell cannabis. We provide the core foundational technology that enables companies growing flower and selling products to develop more effective products that are scientifically based, consistent and safe.”
Israel Vs. Other Cannabis Markets
CannRx operates in Israel but is looking at opportunities in the U.S. and other countries.
The market Israeli only covers medical cannabis and is relatively small: the country’s entire population is close to that of New York City.
At the same time, the regulations are more favorable: CannRx has a license for a specialized lab and can conduct experiments and trials.
Although CannRx’s research-focused business is not as affected by the small market as other plant-touching businesses, the company is still looking for opportunities globally.
“The cannabis industry is nutty, and each year is equivalent to a dog year. There is a speed that we need to run at, but we also need to be versatile at the same time,” Septimus said.
“Companies can’t stay in their old school OG ways and will need to develop their methods of operating within the legalized [and] global markets, all the while developing a balanced corporate culture.”
CannRx’s primary focus is to find the right partner, and that doesn’t necessarily mean the biggest one, the chief strategy officer said.
“Many companies are struggling to just get flower or THC-only products on shelves, which will hopefully only be a near-term issue.”
The company is of the view that federal legalization in the U.S. would help remove negative stigma, allowing more people to seek cannabis-based alternatives for their health and wellness.
“There will be a lot of people seeking more natural solutions for their everyday issues.”
CannRx views the European Union, Canada and Latin America as interesting venues for a medical cannabis company.
Aside from looking at geographic expansion, CannRx is also focusing on product development and the gathering of intellectual property, the execs told Benzinga.
This would make it a perfect partner or acquisition target for a business that is looking for access to a deeper portfolio of science-based products or a company that has the infrastructure, but has not engaged in research and IP, according to CannRx.
Being a subsidiary of Izun Pharmaceuticals has allowed CannRx to fundraise more easily.
The company intends to spin itself off and conduct a direct private raise, the execs said.
CannRx is not ruling out a potential IPO, but it’s not in the plans for the next year.