Israel has a world leader in cannabis research and has been at the forefront of medicinal cannabis breakthroughs. Experts believe the export of medical cannabis could be worth $4 to the country.
At the end of December, Israel’s Parliament — the Knesset — gave its unanimous approval to pass a law that would allow the country to begin the export of medical marijuana. Now, one month on, the Israeli Cabinet and Prime Minister Benjamin Netanyahu have also given the bill their final approval, which is the final action needed for the bill to become law.
The Israeli government expects that allowing the export of medical marijuana will drive investment in the local cannabis industry and agricultural sectors, as Israel would become only the third country in the world, after the Netherlands and Canada, to allow the export of medical cannabis products.
Industry professionals have welcomed the effects the new legislation will have. Speaking to Marijuana Business Daily when the draft legislation was first proposed, Kfir Kachlon, the investments principal and cannabis-technology lead at the Jerusalem-based start-up platform OurCrowd, gave his endorsement to the then-bill.
“… it’s a huge leap forward for the industry.,” said Kachlon. “On the local aspect, once approved, the export [law] will allow this industry to prosper, new jobs will be created, growers and producers will be able to finally realize their true business potential, and the Israeli economy can finally unlock the full market potential that analysts believe will be around $4 billion.”
Now that the bill has been given its final approval, time will tell if these analytical forecasts come true.
Israel as a research and development hub
To those involved in the industry, it may come as no surprise to learn that Israel is a world leader in cannabis R&D — Professor Raphael Mechoulam, widely regarded as the “Father of Cannabis Research”, is himself Israeli. Professor Mechoulam, was the first scientist to isolate and synthesize the cannabinoid tetrahydrocannabinol (THC). Research groups under his leadership were also the first to elucidate the structures of the major cannabinoids, THC and cannabidiol (CBD), as well as several of the more minor cannabinoids. His work has gained him international praise and an extensive list of honors — including the Special Award for Lifetime Achievement from the International Cannabinoid Research society (who have also named an award for exceptional research in Mechoulam’s honor) and the Rothschild Prize for outstanding research in the chemical and physical sciences in Israel.
Mechoulam is still an active academic in his position as a Professor at the Hebrew University of Jerusalem, and his pioneering work has already driven Israel to the forefront of cannabis research and development. Unlike the United States, where a patchwork of more liberal state-level laws clash with a strict anti-cannabis federal position, Israel’s cannabis researchers receive strong financial support from their government — with Israel being the world’s top investor in local R&D projects. This federal financial support, coupled with the country’s nationwide legalization of medical cannabis means that Israeli researchers, and R&D firms based in Israel, face far fewer barriers to conducting their research than they might do elsewhere.
But while the country’s support for R&D might entice investment, the continued ban on cannabis material export was beginning to result in Israeli cannabis cultivators setting up shop in the European Union to avoid the export restriction.
The new cannabis export law
With the official approval of Israel’s new cannabis export law now given, licensed cannabis cultivators in the country are anticipating that they could begin exporting medical cannabis product as early as mid-2019.
Notably, the language of the bill does not state which specific forms of medical cannabis would be eligible for legal export, but industry sources are reportedly expecting only processed and finished cannabis products — such as oils, capsules, and ointments, but not dried flower — will be permitted.
A budget for the regulation of cannabis exports has been given to the country’s Interior Ministry and its police force among fears that legalizing cannabis export could lead to more cannabis material leaking into the illegal recreational drug market. The government has also said that any foreign investment of more than 5% in an Israeli cannabis company will be subject to prior regulatory approval.
Taking to the global marketplace
Oddly, though cannabis is still federally illegal there, Israeli companies may very well have America’s President Donald Trump to thank for the recent export legalization.
The United States by far Israel’s largest trading partner, and as a result, Israeli politicians take note of legislative opinions in America to ensure that no changes to import or export law in Israel could potentially jeopardize this trading relationship.
According to a story published in Israel’s Haaretz Newspaper, Israel began to lay plans to legalize cannabis export while America was still under the leadership of President Barack Obama, but following the election of Republican party nominee Donald Trump to the American presidency, Israeli politicians felt it necessary to reconsider the export plan. The Republican party has a reputation of being “hard on drugs”, and with the confirmation of the notoriously anti-cannabis politician and lawyer Jeff Sessions as the U.S. Attorney General, it was feared that pushing through further cannabis legislation in Israel could harm Israel-US relations.
When Sessions was removed from office on the orders of President Trump in early November, Israeli politicians were empowered to finally debate and pass the cannabis export law as it stands. With the current nominee for the Attorney General position, William Barr, stating that he would not use federal resources to “go after” cannabis companies complying with local state law, by extension it would seem that the Israeli cannabis industry should be free to prosper without fear of pushback from the United States.
Forbes reports that the countries of Australia, Germany, Austria, and Mexico have all expressed interest in receiving Israeli cannabis exports.
