Israeli Marijuana Is Growing, But Exports Have Nowhere To Go

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Photo Credit: NIR ELIAS

With dozens of Israeli growers and manufacturers receiving licenses to produce medicinal cannabis, bureaucratic roadblocks and ministerial infighting could leave the marijuana to eventually rot or be sold on the black market, costing companies more than NIS 1 billion.

Last week, the cabinet hinted that it would approve exports of medicinal cannabis during the 2019 state budget vote, only to dash hopes by leaving the measure out.

The government reportedly told Israeli medicinal marijuana companies that their exports would be approved by 2018, according to industry employees. That persuaded the companies to embark on multi-billion shekel investments, some of which could now be in jeopardy.

“Now we have a big problem because it will be three months from now and [the growers] still won’t have export licenses,” said Hagit Weinstock, an attorney who represents 60 Israeli cannabis growers and producers.

With tons of marijuana being grown across Israel and potentially no option to export it, another industry-related employee threatened that the product would eventually be sold on the black market.

“They have no other choice because people are growing tons of cannabis,” Weinstock said. “What are they going to do with it? Are they going to be drug dealers?”

One major obstacle is that Public Security Minister Gilad Erdan is requesting millions of shekels for securely storing the drug at the airport, given its legal status as a controlled substance. The Treasury has yet to agree to transfer the funds, keeping the exports stuck.

“It’s a ridiculous argument,” Weinstock said. “We’re talking about billions of shekels every year. [The industry] can make billions,” but the Treasury is holding back because it wants “to save millions.”

Because of all the delays, it is likely that actual exports won’t start until 2019, said Oren Lebovitch, chairman of Ale Yarok, the political party geared toward the legalization of marijuana.

In October 2017, a government committee “adopted the conclusions of the report… [which discusses] the feasibility of exporting medical cannabis from Israel,” the Health Ministry said in a statement to The Jerusalem Post. “Health Minister Ya’acov Litzman and Finance Minister Moshe Kahlon will bring them for a cabinet decision in the near future.”

This comes on the heels of a September 2017 decision by the Agriculture Ministry to classify the medical marijuana industry as a legal farming sector. That granted cannabis growers access to government aid, grants and training.

The ministry has estimated that Israeli exports could amount to NIS 1 billion-NIS 4b. annually.

And in February 2017, a government committee took the first step toward approving medical marijuana exports. The Knesset has yet to hold a general vote on the legislation.

Despite the regulatory gridlock, Israeli cannabis firms are still meeting with companies in Germany, Canada and the Czech Republic.

“Israel is a great spot,” Weinstock said. “It’s the capital of cannabis and they’re doing clinical research. And there’s no other place in the world where you can do clinical research for your production,” she said, adding that in the United States the FDA still prohibits clinical research.

An estimated 50 Israeli medical marijuana companies work in cultivating plants or producing delivery devices such as inhalers, along with exporting cannabis cosmetics and skin-care products. In 2016, international investors poured more than $100 million into Israeli marijuana firms, according to Reuters.

An Israeli academic, Hebrew University Prof. Raphael Mechoulam, was the first person to identify the main psychoactive constituent in cannabis, THC, more than 40 years ago.

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