Israel gives green light to medical cannabis exports

"I have supported the export of medical cannabis from Israel all along, and I welcome the government's approval today," says Finance Minister Moshe Kahlon.

An employee tends to a medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019 (photo credit: AMIR COHEN/REUTERS)
An employee tends to a medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019
(photo credit: AMIR COHEN/REUTERS)
The government approved exports of Israeli-grown medical cannabis to the booming worldwide legal market on Sunday in news that Israel’s pioneering cannabis producers have long awaited.
The global medical cannabis market was valued at $8.3 billion in 2017, and is projected to soar in value to $28b. by 2024, according to a recent report by Energias Market Research.
While Israel is world-renowned for pioneering cannabis cultivation and its extraction technologies, producers have been left frustrated in recent months as the government has repeatedly stalled on giving growers the green light to export.
However, a bill that was passed unanimously by the Knesset last month – providing for the export of medical cannabis and implementing regulations for the licensing of medical cannabis businesses – assured producers that the wait was nearly over.
Licenses will be exclusively granted by the Health Ministry and will require police approval.
“I have supported the export of medical cannabis from Israel all along, and I welcome the government’s approval today,” said Finance Minister Moshe Kahlon. “The export of medical cannabis will give the State of Israel a huge advantage in connecting research and development with agriculture and the cannabis industry, it will bring significant foreign currency revenues into the state and will maximize the advantages that the State of Israel possesses throughout the production chain.”
The government’s decision was based on a recommendation from the Interministerial Committee of the Finance and Health ministries in August 2017, to allow the export of cannabis for medical purposes. It estimated that the state could earn between NIS 1b.-NIS 4b. ($1.09b.) per year from such exports.
The committee cited the economic potential created by Israel’s many advantages in advanced regulation, research and development, clinical experience and unique climate that can be exploited by farmers, researchers and entrepreneurs to develop Israeli products for the international market.
“I supported the export of medical cannabis because of its economic contribution to the Israeli economy and following an agreement with the Finance Ministry to direct some of the resources to the health system,” said Deputy Health Minister Ya’acov Litzman.
“This is a dramatic step that was only approved after it passed all the necessary meticulous procedures by Israeli professionals, in full cooperation with the relevant government ministries,” he added.
Agriculture Minister Uri Ariel said the export approval constituted a “historic message to farmers of Israel, young farmers, to patients and the Israeli economy.”
There are currently eight companies cultivating cannabis for medical purposes in Israel, and dozens more have applied for approval to commence work in the field.
Shares of cannabis producers on the Tel Aviv Stock Exchange were buoyed by the announcement, and company executives welcomed the government’s decision, although some did so cautiously.
“We are thrilled by the government approval of medical cannabis exports from Israel,” said Cannassure Therapeutics chairman Nir Peles.
“We think our experienced management team together with a strategic collaborative agreement with a Hadassah hospital subsidiary – which includes distribution – places us at the forefront of the Israeli cannabis industry to seize business opportunities that will further benefit Cannassure Therapeutics and its shareholders,” Peles said.
Cann10 Chairman Yossi Bornstein said Israel’s success in approving exports does not end with the government’s decision.
“The great test is the time that will pass between the decision to write the regulations and the actual production,” he said.
“We hope that, contrary to the nature of Israeli bureaucracy, this won’t be a long process. Otherwise, the State of Israel will lose more precious time on its way to becoming an important player in the global industry.”
Another company hoping to benefit from the export approval is InterCure, a medical cannabis company chaired by former prime minister Ehud Barak.
“We welcome the decision to approve the export of medical cannabis and are convinced that this is positive news for the State of Israel,” said Barak. “InterCure, through Canndoc, is ready to export high-quality, pharma-grade medical cannabis to countries around the world and is pleased to accelerate production at its Israeli facilities to 100 tons.”
Adv. Hagit Weinstock of Tel Aviv-based Weinstock Zehavi & Co., a law firm that represents a range of Israeli and international investors and companies in the field, expects to see the first Israeli exports in three to four months.
“The primary market for Israeli exports will be in Europe, the biggest market in the world for medical cannabis,” Weinstock told The Jerusalem Post, highlighting Germany as a potential customer.
“Exports will be on the basis of contracts between companies in Israel, who require export permits, and European companies, who need import permits. We are dealing with drugs so everything is tightly regulated, but they want Israeli products because the regulations here are very strict, and they believe in Israel’s pharmaceutical and agriculture knowledge.”
According to Adv. Noam Goodman, a partner at DLA Piper Canada specializing in cannabinoids regulation, Israeli exporters could even hold an advantage over leading Canadian export firms in the key European cannabis market.
“Israel can export medical cannabis to European countries at a lower cost,” said Goodman. 
“There are a couple reasons for this: the ability to grow, develop and process the product all in the same place, along with the geographical proximity between Israel and Europe. This sets Canada at a disadvantage, as Israel becomes one of the strongest exporters in the world.”