The decriminalization of cannabis in Israel, endorsed Thursday by the public security minister, will help boost medical cannabis research and technologies, said Saul Kaye, a co-founder of ICAN: Israel Cannabis, a private equity fund with a focus on the weed.

“It will help in the general story of de-stigmatizing cannabis,” Kaye said. “Today’s news will help open the door to larger players, including the big pharma companies, seed growers and genetic researchers, who realize this is going to be big.”

In a move seen as paving the way for marijuana to be decriminalized, Public Security Minister Gilad Erdan said Thursday he plans to dramatically change the way the Israeli penal code treats private, recreational use of the drug.

Speaking at a press conference to announce his decision, Erdan said he will be accepting a proposal put forward by the Anti-Drug Authority recommending the adoption of the “Portugal Model,” in which possession and use of the drug would be decriminalized and treated largely as a health issue.

Public Security Minister Gilad Erdan announcing new measures to decriminalize marijuana use, January 26, 2017. (Tomer Neuberg/Flash90

Public Security Minister Gilad Erdan announcing new measures to decriminalize marijuana use, January 26, 2017. (Tomer Neuberg/Flash90

“This would mean moving to administrative fines, and criminal prosecution would only be a last resort,” Erdan said.

The new tack will need to clear the cabinet, but with many lawmakers backing decriminalization, the move is seen as likely to gain ministerial approval.

Israel is well-known as a pioneer in medical cannabis. Last summer, the government approved a Health Ministry plan to relax some of the medical cannabis requirements. The plan aims to expand the number of doctors who can issue cannabis prescriptions, remove limits on the number of marijuana growers, make cannabis available at approved pharmacies, and possibly eliminate the requirement for a permit from the Health Ministry so that just a doctor’s prescription will be sufficient. Earlier this week Israel’s Ministry of Agriculture and Rural Development said it will finance research in the field of medical cannabis.

“Once the government gets on board, the industry will follow, and it has a lot of money to spend,” said Kaye.”The industry today in Israel is worth a few hundreds of million of dollars. I believe we will see $1 billion invested in startups, R&D and technologies in Israel over the next 24 months.”

ICAN's Saul Kaye, left, and Prof. Raphael Mechoulam, who is credited as the father of medical cannabis research (Courtesy)

ICAN’s Saul Kaye, left, and Prof. Raphael Mechoulam, who is credited as the father of medical cannabis research (Courtesy)

Global funding for the cannabis industry has surged in the past four years with 2015 hitting a high of over $220 million in equity financing to private companies, according to New York-based data company CB Insights. The funding declined 9 percent to $205 million in 2016. The rise in funding has grown in parallel with the loosening of marijuana restrictions. As of 2016, 28 states and the District of Columbia had legalized medical marijuana in some form, and nine of them have also approved the use, and in some cases sale, of recreational marijuana.

“Decriminalization of medical cannabis will encourage the professionalization of the industry,” said Joe Wyse, a partner and head of the patent department at attorneys Dr. Eyal Bressler & Co. in Ramat Gan. “It is another important step toward normalizing medical cannabis as part of the orthodox medical arsenal. Clinical trials will be encouraged, research will benefit, higher quality evidence-based data will be generated. The supply chain from lab to doctor to patient will be mainstreamed and regularized, and there will be more investment from the business community.”

The law firm is witnessing a rapid increase in patent applications and transactions of medical cannabis innovations every month, he said.

“There are lots of stakeholders jostling for a position in this field, rushing to get licenses and register their patents,” Wyse said. “They have recognized that the field will be lucrative. As there will be more and more successes, there will also be more and more competitors. Israel has a leading position today but it is not a given. We have a small advantage because of our universities and our startup mentality and money is flowing. But we must make sure that we maintain our professionalism, and we must know that if we want to stay in this new game we must strive to get clinical data to back up our products and register patents. This is going to require planning and investment.”

Professor Raphael Mechoulam, previously at the Weizmann Institute and now at Hebrew University, is largely credited as the father of medical cannabis for identifying and identifying tetrahydrocannabinol (commonly known as THC) in 1964. THC is the active compound in marijuana that produces the “high” sought after by recreational users. Another main active compound in marijuana is cannabidiol (CBD), which has medical benefits, including anti-inflammatory properties.