Tobacco sales are down in the United States and Canada but cannabis use, following full legalization of marijuana in countries like Canada is on the rise. Hoping to get into the business one of the world’s largest cigarette companies Phillip Morris has taking a sharp turn toward cannabis by buying the Israeli medical cannabis inhaler and dosage device Syqe. The deal is worth $650 million.
It was no surprise that this would happen as the company invested $20 million into the medical device company in 2016. Syqe was built to dose a more accurate amount of medicine than current inhalers and dispensers in the market.
Israel’s National Insurance Institute (NII) partnered with Syqe recently to fully cover medical marijuana treatments with a metered inhaler for victims of terrorism or criminal violence. Studies suggest that medical cannabis can be effective in certain people for treating anxiety and PTSD.
The US Federal Trade Commission’s latest report on cigarette sales and marketing shows that cigarette sales by the largest US cigarette companies fell to 190.2 billion in 2021, the first time cigarette sales have fallen below 200 billion and a drop of 70% from a high of 636.5 billion in 1981. The 6.7% drop from 2020 to 2021 shows that the long decline in cigarettes sales has resumed after a small upward blip in 2020 during the Covid-19 pandemic.
The huge, continuing drop in cigarette sales reflects the enormous declines in smoking rates among both youth and adults in recent decades. It will pay off in improved health and countless lives saved for generations to come. So what’s a tobacco company to do? Cannabis of course.
According to the deal, Phillip Morris will invest $130 million to finance the process of obtaining the FDA approval for Syqe’s inhaler. The FDA is the American health authority, The Federal Drug Administration, which gives the seal of approval for medical devices and pharmaceuticals in the United States. If the process goes through Phillip Morris will acquire Syqe’s shares for $650 million.
This transaction would be run via Phillip Morris’ subsidiary Vectura, a UK company specializing in inhaler products to deliver medicines. If this deal works, it would be a first for the FDA agreeing to use raw cannabis as medicine.
Israel is the world’s first country to investigate the medicinal properties and chemistry of cannabis. Legendary cannabis research Prof. Raphael Mechoulam, while at the Weizmann Institute in Rehovot, Israel, was the first to isolate and name THC and CBD from a sample of hashish. He died this year at 92. I have personally interviewed him over the years.
Israeli-American physician Alan Shackelford, also pioneered cannabis as medicine in the United States. He consulted Mechoulam’s research on epilepsy and cannabis before dosing a child Charlotte Figi with THC and CBD in the US.
Israel has legalised cannabis for medical use but unlike Canada which has fully legalized cannabis for recreation and medicine, Israel has been slow to overcome that stage and has put a brake on what could have given Israel an edge in the market. Pioneering companies like Tikkun Olam (read our interview with them), original growers in Israel, have lost their market value from an overwhelming number of growers in the country. Its assets were up for auction recently and it merged with a Canadian real estate company. It is cheaper to grow cannabis elsewhere where there are fewer regulations and government hurdles.
