My home, Europe, is not in a good shape. Germany’s economy nearly missed recession in the last 3 months of 2019, due to a slowdown across consumption, business investment and exports. A looming Brexit and populist governments in continent’s South and East persist. How can Europeans prevent a tip-toe? And is there a way to do this without a perfect combination of bold economic reforms, healthy industrial fabric, robust innovation engine and resilient entrepreneurs with access to ample venture funding?
An ancient flower may hold the answer. A small country in Latin America, praised by The Economist as the country of the year in 2013, has laid a path by fully legalizing cannabis in 2014.
Global legalization: no flowers on the road
When Spanish brought cannabis to the Americas in the 1500s, it was used for more practical purposes like rope or clothes. Ironically, Uruguay became the first country in the modern era to legalize cannabis, allowing households to harvest it. As of 2018, Uruguay’s 8,750 registered individual growers are allowed to harvest up to 480 grams. Today 147,000 or 5% of 3.5 million Uruguayans between the ages of 18 and 65 consume marijuana, with about a third of them using it weekly. 5% is hardly a picture of drug-addicted nation, especially compared with 12% of Europe’s population being “irregular” or “intensive” users and 1 in 7 US adults being users last year. Yet, cannabis has been illegal in the US and the UK since 1930, amounting to losses of tax revenues which are hard to value. Is there anything at stake even higher than foregone tax revenues?
The US cannabis industry is expected to outpace manufacturing job creation by 2020, and cannabis sales are set to exceed both liquor and wine markets in Canada in 2019. France, once Europe’s innovation leader, is already one of the highest cannabis consuming and hemp producing nations in the world. Prohibition Partners put the French medicinal cannabis market at €9.5 billion by 2028, making it the largest EU market. Health Minister Agnés Buzyn recently indicated she is “not against” the legalization of medical cannabis cigarettes, provided this is deemed the best drug delivery system. While most of us may be aware that cannabis can be used as an alternative for other pain therapies, there is still a popular misunderstanding of the subject.
Of the 57 million deaths worldwide in 2016, more than half were due to their top 10 causes. Ischaemic heart disease, caused by atherosclerosis and stroke are the world’s biggest killers, accounting for 15 million deaths. Chronic obstructive pulmonary disease claimed 3 million lives, while lung cancer (along with trachea and bronchus cancers) caused 1.7 million deaths. Diabetes killed 1.6 million people. Deaths due to dementias more than doubled between 2000 and 2016, making it the 5th leading cause of global deaths.
Can cannabis become a solution?
Yes, and this is sending shivers throughout the the pharmaceutical industry, a key beneficiary of decease proliferation. The National Institutes of Health (NIH) has acknowledged on its website (Cancer.gov) that marijuana kills cancer and other sources point that CBD may benefit heart health in several ways, including by reducing blood pressure and preventing heart damage. There is evidence that cannabinoids found in cannabis can help prevent atherosclerosis. The correlation between marijuana and diabetes prevention is still largely inconclusive but a 2012 study published in BMJ Open found a 58% reduced risk of developing diabetes associated with marijuana use. More research is necessary to evidence that cannabis is useful for the treatment or prevention of Alzheimer’s disease. Cannabis use has been reported to increase risk of ischemic stroke, particularly in the healthy young patients. This, however, poses a unique business opportunity to tobacco companies like Philip Morris, which has pioneered eliminating tar from smoking with the IQOS. What is left, is to supply consumers with a credible and easy to use device, enabling them to know the potency and impact of what they smoke. One of Neo Venture’s portfolio companies, GemmaCert is leveraging Israel’s innovation to do just that.
A voyager with a vision
So how did cannabis end up in Europe and made it to Latin America? Marco Polo is believed to have brought the first medical reports on psychoactive cannabis to mainland Europe in the late 1200s. By the 19th century, cannabis medical use was widely discussed by academics and physicians, as cannabis based medical formulations became widely available. Europe’s population is more than twice the size of the US and Canada’s combined, suggesting the potential of a considerably larger cannabis market that could be cultivated. Around 12% of the continent’s population being “irregular” or “intensive” users, a fully legal and regulated cannabis market would be worth north of €56 billion annually. Currently, only Germany, Italy, Austria, the Czech Republic, Finland, Portugal, Poland and Spain allow marijuana’s use for medicinal purposes. 28 US states and the District of Columbia also allow medical marijuana.
A millennial reborn
The Ebers Papyrus (c. 1550 BC) from Ancient Egypt describes medical cannabis, used by ancient Egyptians in suppositories for relieving the pain of hemorrhoids. Around 2,000 BCE, the ancient Egyptians used cannabis to treat sore eyes. However, the early Chinese surgeon Hua Tuo (c. 140-208) is credited with being the first recorded person to use cannabis as an anesthetic. He reduced the plant to powder and mixed it with wine for administration prior to conducting surgery. Surviving texts from ancient India confirm that cannabis’ psychoactive properties were recognized, and doctors used it for treating a variety of illnesses and ailments. These included insomnia, headaches, a whole host of gastrointestinal disorders, and pain: cannabis was frequently used to relieve the pain of childbirth. An Irish physician, William Brooke O’Shaughnessy, is credited with introducing the therapeutic use of cannabis to Western medicine with a a cannabis experiment in the 1830s.
UK, Germany or France can swing it?
Sativex, legal in France, is an extract of cannabis curing multiple sclerosis. The drug is marketed by UK’s GW Pharmaceuticals whose shares soared 46.6% in January. The first promoter of this drug was Solvay Pharmaceuticals. There are also Marinol, sold by Abbvie and, a 5 year old Swiss company, used for cancer treatment, AIDS, multiple sclerosis. The third drug is Cesamet, a synthetic cannabinoid similar to THC used for cancer treatment and manufactured by Valeant Canada LP in Canada for Meda Pharmaceuticals.
A 99 year old policy revisited
In March 2017, the German parliament voted for the legalization of cannabis for medicinal purposes. As Germany is one of the largest economies in Europe, other countries can also see the positive impact this legalization process has had on its economy and its patient community. The French National Agency for the Safety of Medicine and Health Products (ANSM) set up a committee to evaluate, ‘the relevance and feasibility of the provision of medical cannabis in France’. Two months ago the committee found that it is “pertinent to authorise the use of medical cannabis” for patients with certain specified conditions. In its centennial history of controversy and hope, one of Europe’s leaders is bound to deliver its citizens what Marco Polo’s had in his pocket.