5-Hour Energy’s ‘No Crash Later’ Claim Is Disputed

The distributor of the top-selling energy “shot,” 5-Hour Energy, has long claimed on product labels, in promotions and in television advertisements that the concentrated caffeine drink produced “no crash later” — the type of letdown that consumers of energy drinks often feel when the beverages’ effects wear off.

But an advertising watchdog group said on Wednesday that it had told the company five years ago that the claim was unfounded and had urged it then to stop making it.

An executive of the group, the National Advertising Division, also said that 5-Hour Energy’s distributor, Living Essentials, had publicly misrepresented the organization’s position about the claim and that it planned to start a review that could lead to action against the company by the Federal Trade Commission.

“We recommended that the ‘no crash’ claim be discontinued because their own evidence showed there was a crash from the product,” said Andrea C. Levine, director the National Advertising Division. The organization, which is affiliated with the Council of Better Business Bureaus, reviews ad claims for accuracy.

The emerging dispute between Living Essentials and the National Advertising Division is unusual because the $10 billion energy drink industry is rife with questionable marketing. And Living Essentials, which recently cited the advertising group’s support in seeking to defend the “no crash” claim, may have opened the door to greater scrutiny.

Major producers like 5-Hour Energy, Red Bull, Monster Energy and Rockstar Energy all say their products contain proprietary blends of ingredients that provide a range of mental and physical benefits. But the companies have conducted few studies to show that the costly products provide anything more than a blast of caffeine, a stimulant found in beverages like coffee, tea or cola-flavored sodas.

The dispute over 5-Hour Energy’s claim also comes as regulatory review of the high-caffeine drinks is increasing. The Food and Drug Administration recently disclosed that it had received reports over the last four years citing the possible role of 5-Hour Energy in 13 deaths. The mention of a product in an F.D.A. report does not mean it caused a death or injury. Living Essentials says it knows of no problems related to its products.

The issue surrounding the company’s “no crash” claim dates to 2007, when National Advertising Division began reviewing all of 5-Hour Energy’s marketing claims. That same year, the company conducted a clinical trial of the energy shot that compared it to Red Bull and Monster Energy.

At the time, Living Essentials was already using the “No crash later” claim. An article on Wednesday in The New York Times reported that the study had shown that 24 percent of those who used 5-Hour Energy suffered a “moderately severe” crash hours after consuming it. The study reported higher crash rates for Red Bull and Monster Energy.

When asked how those findings squared with the company’s “no crash” claim, Elaine Lutz, a spokeswoman for Living Essentials, said the company had amended the claim after the 2007 review by the National Advertising Division. In doing so, it added an asterisklike mark after the claim on product labels and in promotions. The mark referred to additional labeling language stating that “no crash means no sugar crash.” Unlike Red Bull and Monster Energy, 5-Hour Energy does not contain sugar.

Ms. Lutz said that based on the modification, the advertising accuracy group “found all of our claims to be substantiated.”

However, Ms. Levine, the advertising group’s director, took sharp exception to that assertion, saying it mischaracterized the group’s decision. And a review of the reports suggested that Living Essentials had simply added language of its choosing to its label rather than doing what the group had recommended — drop the “no crash” claim altogether.

That review concluded that the company’s 2007 study had shown there was evidence to support a “qualified claim that 5-Hour Energy results in less of a crash than Red Bull and Monster” Energy. But it added the study, which showed that 5-Hour Energy users experienced caffeine-related crashes, was inadequate to support a “no crash” claim.

Ms. Levine said Living Essentials had apparently decided to use the parts of the group’s report that it liked and ignore others.

Companies “are not permitted to mischaracterize our decisions or misuse them for commercial purposes,” she said.

She said the group planned to notify Living Essentials that it was reopening its review of the “no crash later” claim. If the company fails to respond or provides an inadequate response, the National Advertising Division will probably refer the matter to the F.T.C., she said.

A Democratic lawmaker, Representative Edward Markey of Massachusetts, has asked that the agency review energy drink marketing claims.

Asked about the position of the National Advertising Division, Ms. Lutz, the 5-Hour Energy spokeswoman, stated in an e-mail that the “no sugar crash” language had been added to address the group’s concern.

This article has been revised to reflect the following correction:

Correction: January 2, 2013

An earlier version of this article misstated the number of deaths in which the Food and Drug Administration said 5-Hour Energy possibly played a role. The number was 13, not 15.

Read More..

5-Hour Energy’s ‘No Crash Later’ Claim Is Disputed

The distributor of the top-selling energy “shot,” 5-Hour Energy, has long claimed on product labels, in promotions and in television advertisements that the concentrated caffeine drink produced “no crash later” — the type of letdown that consumers of energy drinks often feel when the beverages’ effects wear off.

But an advertising watchdog group said on Wednesday that it had told the company five years ago that the claim was unfounded and had urged it then to stop making it.

An executive of the group, the National Advertising Division, also said that 5-Hour Energy’s distributor, Living Essentials, had publicly misrepresented the organization’s position about the claim and that it planned to start a review that could lead to action against the company by the Federal Trade Commission.

“We recommended that the ‘no crash’ claim be discontinued because their own evidence showed there was a crash from the product,” said Andrea C. Levine, director the National Advertising Division. The organization, which is affiliated with the Council of Better Business Bureaus, reviews ad claims for accuracy.

The emerging dispute between Living Essentials and the National Advertising Division is unusual because the $10 billion energy drink industry is rife with questionable marketing. And Living Essentials, which recently cited the advertising group’s support in seeking to defend the “no crash” claim, may have opened the door to greater scrutiny.

Major producers like 5-Hour Energy, Red Bull, Monster Energy and Rockstar Energy all say their products contain proprietary blends of ingredients that provide a range of mental and physical benefits. But the companies have conducted few studies to show that the costly products provide anything more than a blast of caffeine, a stimulant found in beverages like coffee, tea or cola-flavored sodas.

The dispute over 5-Hour Energy’s claim also comes as regulatory review of the high-caffeine drinks is increasing. The Food and Drug Administration recently disclosed that it had received reports over the last four years citing the possible role of 5-Hour Energy in 13 deaths. The mention of a product in an F.D.A. report does not mean it caused a death or injury. Living Essentials says it knows of no problems related to its products.

The issue surrounding the company’s “no crash” claim dates to 2007, when National Advertising Division began reviewing all of 5-Hour Energy’s marketing claims. That same year, the company conducted a clinical trial of the energy shot that compared it to Red Bull and Monster Energy.

At the time, Living Essentials was already using the “No crash later” claim. An article on Wednesday in The New York Times reported that the study had shown that 24 percent of those who used 5-Hour Energy suffered a “moderately severe” crash hours after consuming it. The study reported higher crash rates for Red Bull and Monster Energy.

When asked how those findings squared with the company’s “no crash” claim, Elaine Lutz, a spokeswoman for Living Essentials, said the company had amended the claim after the 2007 review by the National Advertising Division. In doing so, it added an asterisklike mark after the claim on product labels and in promotions. The mark referred to additional labeling language stating that “no crash means no sugar crash.” Unlike Red Bull and Monster Energy, 5-Hour Energy does not contain sugar.

Ms. Lutz said that based on the modification, the advertising accuracy group “found all of our claims to be substantiated.”

However, Ms. Levine, the advertising group’s director, took sharp exception to that assertion, saying it mischaracterized the group’s decision. And a review of the reports suggested that Living Essentials had simply added language of its choosing to its label rather than doing what the group had recommended — drop the “no crash” claim altogether.

That review concluded that the company’s 2007 study had shown there was evidence to support a “qualified claim that 5-Hour Energy results in less of a crash than Red Bull and Monster” Energy. But it added the study, which showed that 5-Hour Energy users experienced caffeine-related crashes, was inadequate to support a “no crash” claim.

Ms. Levine said Living Essentials had apparently decided to use the parts of the group’s report that it liked and ignore others.

Companies “are not permitted to mischaracterize our decisions or misuse them for commercial purposes,” she said.

She said the group planned to notify Living Essentials that it was reopening its review of the “no crash later” claim. If the company fails to respond or provides an inadequate response, the National Advertising Division will probably refer the matter to the F.T.C., she said.

A Democratic lawmaker, Representative Edward Markey of Massachusetts, has asked that the agency review energy drink marketing claims.

Asked about the position of the National Advertising Division, Ms. Lutz, the 5-Hour Energy spokeswoman, stated in an e-mail that the “no sugar crash” language had been added to address the group’s concern.

This article has been revised to reflect the following correction:

Correction: January 2, 2013

An earlier version of this article misstated the number of deaths in which the Food and Drug Administration said 5-Hour Energy possibly played a role. The number was 13, not 15.

Read More..

TIMESCAST: A First in Grammy Nods

January 2, 2013By Fritzie Andrade, Emily B. Hager, Krishnan Vasudevan, Pedro Rafael Rosado and Samantha Stark

TimesCast Media+Tech: Austin Wintory, Grammy-nominated composer. | Apps to help keep New Year’s resolutions. | Ben Horowitz, entrepreneur and venture capitalist.

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Central Africa on the Brink, Rebels Halt Their Advance

Ben Curtis/Associated Press

A convoy of soldiers from Chad who are fighting in support of President Francois Bozize of the Central African Republic, traveled on the road to Damara, north of the capital, Bangui, on Wednesday.

Rebel forces halted their advance on Bangui, the capital of the Central African Republic, on Wednesday and said they were prepared to enter into peace talks with the government.

The announcement, made by rebel spokesmen, heralded the possibility of a peaceful resolution to a conflict that has driven thousands of civilians from their homes and into the dense Central African forest, seeking refuge from the violence that has accompanied similar uprisings in recent years.

President François Bozizé has in recent days declared his willingness to negotiate, and peace talks are already being planned in nearby Gabon, though the government gave no official response to the rebels’ negotiation offer. In a separate development, Mr. Bozizé announced in a radio address on Wednesday that he had fired his son from his post as defense minister and would fill that position himself. Mr. Bozizé has criticized the army for failing to contain the rebel uprising.

As a precondition to talks, the rebels have demanded that government forces stop arresting members of the Gula tribe, from which many rebels hail, said Col. Djouma Narkoyo, a rebel spokesman. In negotiations, the rebels would insist upon the departure of Mr. Bozizé, another spokesman said.

The rebels were refusing peace talks just a few days ago. Their decision to change course may be linked to the arrival in the Central African Republic of additional troops from a coalition of neighboring countries, sent as reinforcements for Central African government forces.

The rebels of the Seleka Coalition, an alliance of several factions mostly from the country’s north, have overrun and occupied several northern cities in a drive toward Bangui, in the south, that gathered speed last month, seeking to depose Mr. Bozizé. A military officer who seized power in 2003, Mr. Bozizé has since been elected president twice; the rebels say he has not given the north a voice in government and has failed to live up to the terms of peace agreements signed with rebels beginning in 2007.

Confronted by a growing multinational African force outside Damara, the final strategic city on the road to the capital, the rebels halted their advance, according to news reports. A contingent of about 700 soldiers was deployed to the city on Wednesday, including soldiers from Chad, Gabon, Cameroon and Angola.

“I have asked our forces not to move their positions starting today because we want to enter talks in Libreville for a political solution,” said another rebel spokesman, Eric Neris-Massi, referring to the Gabonese capital, Reuters reported. He said the rebels continued to demand that President Bozizé step down “because we doubt his sincerity,” according to Agence France-Presse. He could not be reached for further comment.

Should the rebels press on with their offensive, they risk setting off a regional conflict, according to the commander of the multinational African force in the country, which operates under the aegis of the Economic Community of Central African States.

“If the rebels attack Damara, it’s a declaration of war” against the 10 member states, said Jean-Félix Akaga, the Gabonese general leading the coalition force. “Damara is the red line that the rebels cannot cross.”

Coalition forces are preventing Central African soldiers from advancing north of Damara as well, General Akaga told journalists.

In Bangui, residents have stockpiled food and water. Clusters of soldiers and police officers are stationed throughout the city, and a curfew is in effect from 7 p.m. to 5 a.m.

France, the former colonial power, has deployed about 600 French soldiers to Bangui to protect French assets and citizens in the Central African Republic. President François Hollande has insisted that France will not use its military to defend Mr. Bozizé’s government, as it has in the past.

Hippolyte Marboua contributed reporting from Bangui, Central African Republic.

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Case Study: A Start-Up’s Dilemma: A Lack of Capital, or Lack of Control

Eatwhatever is a two-step, breath-freshening product created four years ago by a then-26-year-old Australian expatriate named Jacqui Rosshandler. Starting with $60,000 in capital, contracting out production and working solo from her New York apartment, Ms. Rosshandler and her company, Jacquii L.L.C., managed to grab a promising but tenuous toehold in the billion-dollar breath-freshening industry.

THE CHALLENGE Running low on inventory early in 2011 and lacking the money for another production run to fulfill orders to her Web site and restock her Manhattan retail accounts, Ms. Rosshandler feared she would have to shut down her start-up. She had been rejected by bank after bank (some citing her lack of American citizenship). She had decided against asking friends for money — or her parents, who had already helped at the outset — and she had come up dry with venture capitalists. As her prospects dimmed, she started interviewing for jobs.

THE BACKGROUND Ms. Rosshandler was working at a Manhattan events and interior design company when, on New Year’s Day in 2007, she decided that like her father, a successful plastics industry entrepreneur in Australia, she would prefer to work for herself. Her idea: to improve upon a South African product called Odor-Go that she had seen in her native country but nowhere in the United States. Her product would have gel caps to be swallowed, similar to Odor-Go, but it would package them with follow-up mints to be sucked. Plus, her breath-freshening duo would be gluten-free and vegan. “I wanted to be able to take my own product,” she said, explaining that most gel caps are made using meat byproducts. She filed to trademark the name Eatwhatever.

It was her understanding that the way to vanquish bad breath caused by oniony, garlicky foods was to go to the source of the problem, the stomach. Having studied acting and law, not chemistry, Ms. Rosshandler left the product formulation to a contract manufacturer. “Parsley has been used for generations to freshen breath,” she said. “People know, just from everyday life, that freshening the mouth only — especially after consuming pungent foods — doesn’t get rid of the smell that comes from within the stomach. We found that the combination of concentrated organic peppermint and parsley oils, when dissolved in the stomach, provides this fresh feeling from within. Your breath actually smells good, from deep inside, not just superficially from the mouth.”

She hired a package designer and prominently displayed the tagline: 2 Steps to Kissable Breath. Also on the packaging was a cheeky instructional mash-up of the two operative steps (swallow and suck). She was, after all, seeking a young demographic. “I had no idea what I was doing,” said Ms. Rosshandler, laughing.

She began her sales efforts in 2008 by walking into the C.O. Bigelow flagship apothecary store in Manhattan and asking, “Who does the buying here?” She left with a sale. A month or so after Eatwhatever’s debut, a friend in public relations helped her get a mention on DailyCandy’s main page. That brought $20,000 worth of orders to her Web site in 12 hours and generated plenty of buzz. With the help of a distributor, Eatwhatever soon cracked New York retail outlets like Ricky’s, Joe Coffee and Zitomer, a specialty department store; Ms. Rosshandler even opened retail beachheads in Paris and Sydney.

But lacking contracts with mass merchants, sales volume remained low. The company’s annual revenue failed to top $40,000 in 2008, 2009 and 2010. Squeezed for cash, Ms. Rosshandler could not pay for marketing or, eventually, even for her next production run. That is when she interviewed for a job selling high-fashion hair accessories.

THE OPTIONS And then in rode her white knight. Or was he? She had networked her way to Arthur T. Shorin, an investor and former chief executive of the Topps Company, a confectionary company known for its baseball trading cards, who promised candy industry expertise and contacts and an immediate infusion of $250,000, with more to come if justified. But Mr. Shorin’s nonnegotiable terms were stark. In return, he wanted 75 percent of the enterprise. Ms. Rosshandler would retain 25 percent with the opportunity to earn back another 15 percent should certain benchmarks be met. The offer included a salaried job in Mr. Shorin’s New York company, Artuitive, an incubator for start-ups.

Friends advised Ms. Rosshandler against the deal, citing the tough terms, even if she were to rebuild her stake to 40 percent. But Mr. Shorin had impressed her in their exploratory meetings, and she asked herself this question: Isn’t 25 percent of something better than 100 percent of nothing?

WHAT OTHERS SAY Steve Schuster, founder of Schuster Products in Milwaukee, maker of Blitz mints: “Ms. Rosshandler finds herself in a precarious cash-flow position and — typical of many start-up entrepreneurs — may not completely grasp how much money she actually will need to grow her brand to a reasonable level of distribution. Arthur Shorin presents a very shrewd and unique proposition. Basically, he is her lifeline. Shorin, who made a staggering amount of money selling Topps to Michael Eisner’s private equity company, has great knowledge of the candy industry. It is imperative for Ms. Rosshandler to move forward with this proposition.” 

Josh Kopelman, a partner at First Round Capital, Philadelphia: “I believe that entrepreneurs, not investors, create great companies. In my experience, if a founder doesn’t retain meaningful equity at the seed stage, it greatly reduces their motivation and creates a real misalignment between investor and entrepreneur. I’d encourage Ms. Rosshandler to keep looking for alternatives, including the possibility of raising money from her friends. If she believes the company is going to create value and be successful, then she is actually doing her friends a favor by letting them invest — assuming she is candid about the extreme level of risk and that they don’t invest money they aren’t prepared to lose. I’d encourage her to consider tweaking the branding to make it more PG-13 than R-rated, as it might reduce some investor’s unease. I know it’s hard to turn down money — especially when a company really needs it.”

Adeo Ressi, founding member of TheFunded and head of The Founder Institute, an early stage business accelerator based in Silicon Valley: “Ms. Rosshandler should definitely not take this deal. First, she loses complete control of the company, and she can be removed or wiped out of her equity at any moment without notice. Second, the deal is very unusual, so she will never be able to attract other investors again. Third, the round values the operating business under $75,000, around two times revenue. As the terms indicate, she will be an employee of Artuitive, so this deal resembles a generous employment offer rather than a viable investment. This is an angel investment opportunity, and there are the largest number of angel investors in history. The volume of investors is both good and bad. On the positive side, if Ms. Rosshandler dedicates four months and meets with a lot of angels, she will raise $500,000 with a seven-figure valuation. On the negative side, she will need to meet with over 150 angels and waste a lot of time pitching to people that will try to take advantage of her, like Arthur Shorin.”

THE RESULTS Offer your thoughts on the You’re the Boss blog at nytimes.com/boss. Next week, on the blog and on this page, we will give an update on what Jacqui Rosshandler decided to do.

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Safed Journal: New Insights on Marijuana in Israel, Where It’s Illegal

Baz Ratner/Reuters

Tikkun Olam, a medical marijuana farm in Israel, blends the high-tech and the spiritual.

SAFED, Israel — Among the rows of plants growing at a government-approved medical marijuana farm in the Galilee hills in northern Israel, one strain is said to have the strongest psychoactive effect of any cannabis in the world. Another, rich in anti-inflammatory properties, will not get you high at all.

Marijuana is illegal in Israel, but farms like this one, at a secret location near the city of Safed, are at the cutting edge of the debate on the legality, benefits and risks of medicinal cannabis. Its staff members wear white lab coats, its growing facilities are fitted with state-of-the-art equipment for controlling light and humidity, and its grounds are protected by security cameras and guards.

But in addition to the high-tech atmosphere, there is a spiritual one. The plantation, Israel’s largest and most established medical marijuana farm — and now a thriving commercial enterprise — is imbued with a higher sense of purpose, reflected by the aura of Safed, an age-old center of Jewish mysticism, as well as by its name, Tikkun Olam, a reference to the Jewish concept of repairing or healing the world.

There is an on-site synagogue in a trailer, a sweet aroma of freshly harvested cannabis that infuses the atmosphere and, halfway up a wooded hillside overlooking the farm, a blue-domed tomb of a rabbinic sage and his wife.

In the United States, medical marijuana programs exist in 18 states but remain illegal under federal law. In Israel, the law defines marijuana as an illegal and dangerous drug, and there is still no legislation regulating its use for medicinal purposes.

Yet Israel’s Ministry of Health issues special licenses that allow thousands of patients to receive medical marijuana, and some government officials are now promoting the country’s advances in the field as an example of its pioneering and innovation.

“I hope we will overcome the legal obstacles for Tikkun Olam and other companies,” Yuli Edelstein, the minister of public diplomacy and diaspora affairs, told journalists during a recent government-sponsored tour of the farm, part of Israel’s effort to brand itself as something beyond a conflict zone. In addition to helping the sick, he said, the effort “could be helpful for explaining what we are about in this country.”

Israelis have been at the vanguard of research into the medicinal properties of cannabis for decades.

In the 1960s, Prof. Raphael Mechoulam and his colleague Yechiel Gaoni at the Weizmann Institute of Science isolated, analyzed and synthesized the main psychoactive ingredient in the cannabis plant, tetrahydrocannabinol, or THC. Later, Professor Mechoulam deciphered the cannabinoids native to the brain. Ruth Gallily, a professor emerita of immunology at the Hebrew University of Jerusalem, has studied another main constituent of cannabis — cannabidiol, or CBD — considered a powerful anti-inflammatory and anti-anxiety agent.

When Zach Klein, a former filmmaker, made a documentary on medical marijuana that was broadcast on Israeli television in 2009, about 400 Israelis were licensed to receive the substance. Today, the number has risen to about 11,000.

Mr. Klein became devoted to the subject and went to work for Tikkun Olam in research and development. “Cannabis was used as medicine for centuries,” he said. “Now science is telling us how it works.”

Israeli researchers say cannabis can be beneficial for a variety of illnesses and conditions, from helping cancer patients relieve pain and ease loss of appetite to improving the quality of life for people with post-traumatic stress disorder and neuropsychological conditions. The natural ingredients in the plant, they say, can help with digestive function, infections and recovery after a heart attack.

The marijuana harvest, from plants that can grow over six feet tall, is processed into bags of flowers and ready-rolled cigarettes. There are also cannabis-laced cakes, cookies, candy, gum, honey, ointments and oil drops. The strain known as Eran Almog, which has the highest concentration of THC, is recommended for severe pain. Avidekel, a strain rich in CBD and with hardly any psychoactive ingredient, allows patients to benefit from the drug while being able to drive and to function at work.

Working with Hebrew University researchers, the farm has also developed a version in capsule form, which would make exporting the drug more practical, should the law allow it.

Read More..

Safed Journal: New Insights on Marijuana in Israel, Where It’s Illegal

Baz Ratner/Reuters

Tikkun Olam, a medical marijuana farm in Israel, blends the high-tech and the spiritual.

SAFED, Israel — Among the rows of plants growing at a government-approved medical marijuana farm in the Galilee hills in northern Israel, one strain is said to have the strongest psychoactive effect of any cannabis in the world. Another, rich in anti-inflammatory properties, will not get you high at all.

Marijuana is illegal in Israel, but farms like this one, at a secret location near the city of Safed, are at the cutting edge of the debate on the legality, benefits and risks of medicinal cannabis. Its staff members wear white lab coats, its growing facilities are fitted with state-of-the-art equipment for controlling light and humidity, and its grounds are protected by security cameras and guards.

But in addition to the high-tech atmosphere, there is a spiritual one. The plantation, Israel’s largest and most established medical marijuana farm — and now a thriving commercial enterprise — is imbued with a higher sense of purpose, reflected by the aura of Safed, an age-old center of Jewish mysticism, as well as by its name, Tikkun Olam, a reference to the Jewish concept of repairing or healing the world.

There is an on-site synagogue in a trailer, a sweet aroma of freshly harvested cannabis that infuses the atmosphere and, halfway up a wooded hillside overlooking the farm, a blue-domed tomb of a rabbinic sage and his wife.

In the United States, medical marijuana programs exist in 18 states but remain illegal under federal law. In Israel, the law defines marijuana as an illegal and dangerous drug, and there is still no legislation regulating its use for medicinal purposes.

Yet Israel’s Ministry of Health issues special licenses that allow thousands of patients to receive medical marijuana, and some government officials are now promoting the country’s advances in the field as an example of its pioneering and innovation.

“I hope we will overcome the legal obstacles for Tikkun Olam and other companies,” Yuli Edelstein, the minister of public diplomacy and diaspora affairs, told journalists during a recent government-sponsored tour of the farm, part of Israel’s effort to brand itself as something beyond a conflict zone. In addition to helping the sick, he said, the effort “could be helpful for explaining what we are about in this country.”

Israelis have been at the vanguard of research into the medicinal properties of cannabis for decades.

In the 1960s, Prof. Raphael Mechoulam and his colleague Yechiel Gaoni at the Weizmann Institute of Science isolated, analyzed and synthesized the main psychoactive ingredient in the cannabis plant, tetrahydrocannabinol, or THC. Later, Professor Mechoulam deciphered the cannabinoids native to the brain. Ruth Gallily, a professor emerita of immunology at the Hebrew University of Jerusalem, has studied another main constituent of cannabis — cannabidiol, or CBD — considered a powerful anti-inflammatory and anti-anxiety agent.

When Zach Klein, a former filmmaker, made a documentary on medical marijuana that was broadcast on Israeli television in 2009, about 400 Israelis were licensed to receive the substance. Today, the number has risen to about 11,000.

Mr. Klein became devoted to the subject and went to work for Tikkun Olam in research and development. “Cannabis was used as medicine for centuries,” he said. “Now science is telling us how it works.”

Israeli researchers say cannabis can be beneficial for a variety of illnesses and conditions, from helping cancer patients relieve pain and ease loss of appetite to improving the quality of life for people with post-traumatic stress disorder and neuropsychological conditions. The natural ingredients in the plant, they say, can help with digestive function, infections and recovery after a heart attack.

The marijuana harvest, from plants that can grow over six feet tall, is processed into bags of flowers and ready-rolled cigarettes. There are also cannabis-laced cakes, cookies, candy, gum, honey, ointments and oil drops. The strain known as Eran Almog, which has the highest concentration of THC, is recommended for severe pain. Avidekel, a strain rich in CBD and with hardly any psychoactive ingredient, allows patients to benefit from the drug while being able to drive and to function at work.

Working with Hebrew University researchers, the farm has also developed a version in capsule form, which would make exporting the drug more practical, should the law allow it.

Read More..

Tech Giants, Learning the Ways of Washington, Brace for More Scrutiny

Mario Tama/Getty Images

Nadine Wolf demonstrated against online piracy legislation a year ago in New York. The measures were defeated.

SAN FRANCISCO — Silicon Valley lobbied hard in Washington in 2012, and despite some friction with regulators, fared fairly well. In 2013, though, government scrutiny is likely to grow. And with this scrutiny will come even greater efforts by the tech industry to press its case in the nation’s capital and overseas.

In 2012, among other victories, the industry staved off calls for federal consumer privacy legislation and successfully pushed for a revamp of an obscure law that had placed strict privacy protections on Americans’ video rental records. It also helped achieve a stalemate on a proposed global effort to let Web users limit behavioral tracking online, using Do Not Track browser settings.

But this year is likely to put that issue in the spotlight again, and bring intense negotiations between industry and consumer rights groups over whether and how to allow consumers to limit tracking.

Congress is likely to revisit online security legislation — meant to safeguard critical infrastructure from attack — that failed last year. And a looming question for Web giants will be who takes the reins of the Federal Trade Commission, the industry’s main regulator, this year. David C. Vladeck, the director of the commission’s Bureau of Consumer Protection, has resigned, and there have been suggestions that its chairman, Jon Leibowitz, would step down.

The agency is investigating Google over possible antitrust violations and will subject Facebook to audits of its privacy policy for the next 20 years. Its next steps could serve as a bellwether of how aggressively the commission will take on Web companies in the second Obama administration.

“Now that the election is over, Silicon Valley companies each are thinking through their strategy for the second Obama administration,” said Peter Swire, a law professor at Ohio State University and a former White House privacy official. “The F.T.C. will have a new Democratic chairman. A priority for tech companies will be to discern the new chair’s own priorities.”

In early 2012, an unusual burst of lobbying by tech companies helped defeat antipiracy bills, which had been backed by the entertainment industry. Silicon Valley giants like Facebook and Google feared that the bills would force them to police the Internet.

At the end of the year, Silicon Valley also got its way when the Obama administration stood up against a proposed global treaty that would have given government authorities greater control over the Web.

The key to the industry’s successes in 2012 was simple: it expanded its footprint in Washington just as Washington began to pay closer attention to how technology companies affect consumers. “Privacy and security became top-tier important policy issues in Washington in 2012,” said David A. Hoffman, director of security policy and global privacy officer at Intel.

“Industry has realized it is important to be engaged,” he continued, “to make sure government stakeholders are fully informed and educated about the role that new technology plays and to make sure any action taken doesn’t unnecessarily burden the innovation economy while still protecting individual trust in new technology.”

At the end of 2012, tech companies were on track to have spent record amounts on lobbying for the year. In the first three quarters, they spent close to $100 million, which meant that they were likely to surpass the $127 million they spent on lobbying in 2011, according to an analysis by the Center for Responsive Politics, a Washington-based nonpartisan group that tracks corporate spending. Even the venture capital firm Andreessen Horowitz hired a lobbyist in Washington: Adrian Fenty, a former mayor of the city.

Technology executives and investors also made generous contributions in the 2012 presidential race, luring both President Obama and Mitt Romney to Northern California for fund-raisers and nudging them to speak out on issues like immigration overhaul and lower tax rates.

In a blog post in November, the center said Silicon Valley’s lobbying expenditures have ballooned in recent years, even as spending by other industries has fallen.

Read More..

In Hong Kong, Rival Protests Are Divided Over Leader

HONG KONG — Thousands of demonstrators in rival marches crowded through Hong Kong’s main shopping district on Tuesday to praise or condemn the city’s chief executive, who appears to retain the confidence of leaders in Beijing despite facing criticism here over a series of actions.

The New Year’s Day marches underlined deep political divisions in Hong Kong, a semiautonomous territory that Britain returned to Chinese rule in 1997.

Critics of the chief executive, Leung Chun-ying, accuse him of misleading the public on a controversial real estate issue, and of being a puppet installed by Beijing. Many of his critics also favor greater democracy for Hong Kong, where the chief executive is now chosen by a 1,200-member panel packed with Beijing loyalists; the general public elects half the legislature, while the other half is chosen by business leaders and other groups that also tend to follow Beijing’s wishes.

Mr. Leung’s backers, mainly organized by groups with lavish financial support from Beijing, contend that he is beginning to address deep-seated social issues here. They also tend to suggest that democracy is a Western concept that may not be compatible with local culture or with rapid economic development.

Supporters of Mr. Leung roughed up two local journalists at a separate rally on Sunday; many Beijing loyalists accuse Hong Kong journalists of being biased in favor of democracy.

But the events on Tuesday were largely peaceful. Organizers of two follow-up rallies in favor of Mr. Leung gave crowd estimates totaling 62,500, while a police spokeswoman put the figure at 8,560. Demonstrators seeking Mr. Leung’s resignation were more numerous, with rival groups of organizers providing estimates for a march and a separate rally totaling 142,000 people, while police estimates totaled 28,500.

The police announced on Wednesday morning than nine protesters against Mr. Leung had been arrested for disorderly conduct and unlawful assembly the previous night after they tried to cross police lines to protest at the front gate of Mr. Leung’s official residence.

 Mr. Leung, who took office as chief executive on July 1, has faced heavy criticism for concealing during last winter’s election campaign that he had secretly expanded his $64 million home without receiving government planning permission or paying real estate fees due on the expansion.

Mr. Leung has been widely accused of hypocrisy because he won the election partly by criticizing his opponent, Henry Tang, for the unauthorized construction of a huge basement under a villa owned by Mr. Tang’s wife. That construction was also done without government planning permission, which is difficult to obtain, and without making a large payment to the government, which owns virtually all the land in Hong Kong and collects hefty lease payments based mainly on the square footage of developments.

Mr. Leung apologized this autumn for concealing his construction — he even built a false wall to hide his extension right before running for the territory’s top office. But he pointed out that he had not addressed his own compliance with Hong Kong real estate laws during the campaign.

“In fact, in my memory, I did not say I had no illegal structure,” he told the legislature.

Many Hong Kong residents blame growing immigration and tourism from mainland China for driving housing prices to unaffordable levels, for causing overcrowding in local schools and for making it harder for young people to find jobs. Mr. Leung has addressed these issues in his first six months in office by imposing steep taxes this autumn on short-term real estate investments by anyone who is not a permanent resident. He has also banned local hospitals, starting on New Year’s Day, from scheduling any more births for mainland mothers.

Continued support for Mr. Leung from Beijing makes it likely that he will remain in office. When the legislature took up a no-confidence measure three weeks ago, a majority of the lawmakers elected by the general public voted against Mr. Leung, but a majority of lawmakers representing business leaders and other social groups supported him. To pass, a majority of both groups was required.

In separate meetings with Mr. Leung nearly two weeks ago in Beijing, President Hu Jintao of China and Xi Jinping, who became the general secretary of the ruling Communist Party in November and is slated to become China’s next president in March, each said separately that they support Mr. Leung and his administration.

“You have a heavy workload and it is exhausting,” Mr. Xi said. “The central government affirms your work.”

Sprinkled among the protesters against Mr. Leung were a few people carrying the colonial Hong Kong flag that flew over the city during British rule. Beijing officials have asked Hong Kong residents not to display the flag, which they regard as a symbol of past foreign domination and humiliation of China.

Steveny Chan, a young woman who identified herself only as an office worker and carried a roughly 3-foot-by-2-foot colonial flag, said that she did not favor the return of Hong Kong to British rule. She said that she was displaying the flag as a nostalgic symbol of a time when the Hong Kong economy seemed to offer more opportunities for young people, and when Britain, before the return to China, was granting the people of Hong Kong growing autonomy.

“We’re missing the golden old days of Hong Kong,” she said.

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Senate Passes Tax Increases on Wealthy Americans

Alex Brandon/Associated Press

Vice President Joseph R. Biden Jr. on Monday after a meeting with Senate Democrats on the fiscal negotiations.

WASHINGTON — The Senate, in a predawn vote two hours after the deadline passed to avert automatic tax increases, overwhelmingly approved legislation on Tuesday that would allow tax rates to rise only on affluent Americans while temporarily suspending sweeping, across-the-board spending cuts.

The deal, worked out in furious negotiations between Vice President Joseph R. Biden Jr. and the Republican Senate leader, Mitch McConnell, passed 89 to 8, with just three Democrats and five Republicans voting no. Although it lost the support of some of the Senate’s most conservative members, the broad coalition that pushed the accord across the finish line could portend swift House passage as early as New Year’s Day.

Quick passage before the markets reopen on Wednesday would be likely to negate any economic damage from Tuesday’s breach of the “fiscal cliff” and largely spare the nation’s economy from the one-two punch of large tax increases and across-the-board military and domestic spending cuts in the New Year.

“This shouldn’t be the model for how to do things around here,” Mr. McConnell said just after 1:30 a.m. “But I think we can say we’ve done some good for the country.”

Mr. Biden, after a late New Year’s Eve meeting with leery Senate Democrats to sell the accord, said: “You surely shouldn’t predict how the House is going to vote. But I feel very, very good.”

The eight senators who voted no included Marco Rubio, Republican of Florida and a potential presidential candidate in 2016, two of the Senate’s most ardent small-government Republicans, Rand Paul of Kentucky and Mike Lee of Utah, and Senator Charles E. Grassley of Iowa, who as a former Finance Committee chairman helped secure passage of the Bush-era tax cuts, then opposed making almost all of them permanent on Tuesday. Two moderate Democrats, Thomas R. Carper of Delaware and Michael Bennet of Colorado, also voted no, as did the liberal Democrat Tom Harkin, who said the White House had given away too much in the compromise. Senator Richard C. Shelby, Republican of Alabama, also voted no.

The House Speaker, John A. Boehner, and the Republican House leadership said the House would “honor its commitment to consider the Senate agreement.” But, they added, “decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members — and the American people — have been able to review the legislation.”

Even with that cautious assessment, Republican House aides said a vote Tuesday was possible.

Under the agreement, tax rates would jump to 39.6 percent from 35 percent for individual incomes over $400,000 and couples over $450,000, while tax deductions and credits would start phasing out on incomes as low as $250,000, a clear victory for President Obama, who ran for re-election vowing to impose taxes on the wealthy.

Just after the vote, Mr. Obama called for quick House passage of the legislation.

“While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay,” he said.

Democrats also secured a full year’s extension of unemployment insurance without strings attached and without offsetting spending cuts, a $30 billion cost. But the two-percentage point cut to the payroll tax that the president secured in late 2010 lapsed at midnight and will not be renewed.

In one final piece of the puzzle, negotiators agreed to put off $110 billion in across-the-board cuts to military and domestic programs for two months while broader deficit-reduction talks continue. Those cuts begin to go into force on Wednesday, and that deadline, too, might be missed before Congress approves the legislation.

To secure votes, Senator Harry Reid, the Senate Democratic leader, also told Democrats the legislation would cancel a pending Congressional pay raise — putting opponents in the politically difficult position of supporting a raise — and extend an expiring dairy policy that would have seen the price of milk double in some parts of the country.

The nature of the deal ensured that the running war between the White House and Congressional Republicans on spending and taxes would continue at least until the spring. Treasury Secretary Timothy F. Geithner formally notified Congress that the government reached its statutory borrowing limit on New Year’s Eve. Through some creative accounting tricks, the Treasury Department can put off action for perhaps two months, but Congress must act to keep the government from defaulting just when the “pause” on pending cuts is up. Then in late March, a law financing the government expires.

Jennifer Steinhauer and Robert Pear contributed reporting.

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