Israeli cannabis growers threaten to move elsewhere

Approved in August 2017 then suspended in February 2018 under pressure from Donald Trump, Israeli medical cannabis exports were supposed to resume according to Interior Minister Gilad Erdan in April. However, a new legislative framework was to be put in place, with the help of funds allocated by the Ministry of Finance, to regulate them.

Nevertheless, nothing has been done since to boost exports, and the cannabis industry is growing impatient with the scale of its unprofitable investments. Faced with slow bureaucracy, Israeli companies are threatening to relocate their operations.

Losses for the cannabis industry

Without progress on export market regulations, the Interior Minister's reauthorization remains a dead letter, and, as Nir Sosinky, the company's Director of Management, explains Together Pharma,at Jerusalem Post, we don't know what the government's policy is, we can only guess«.

Yet the government had assured them that exports would be authorized again during 2018, prompting them to invest considerable sums that are now in jeopardy. Together Pharma has already built greenhouses covering more than 3 hectares in the south of the country at a cost of around 10 million shekels (2.5 million euros) and a factory at the same price to produce the final drug.

These delays are being blamed on the Israeli Ministry of Public Security, which is demanding millions of shekels to set up an airport security system. Given the lack of interministerial coordination, it is unlikely that exports will begin before 2019. However, by relocating, farmers' first harvest would already be mature by then, and could bring in between $75 and $300 million a year.

Losses for the Israeli economy

To remedy this situation of uncertainty, Together Pharma plans to relocate some of its activities to Europe and Africa, and is in the process of signing contracts to set up operations abroad. The group announced on Sunday that it had signed a contract with a European country for the cultivation of 30,000m² of cannabis, and is already developing operations in Africa, but refuses to specify where so as not to attract competition.

In the face of government inaction, this strategy risks spreading to other groups and costing the Israeli state dearly. The Ministries of Health and Finance estimate export revenues at between $290 million and $1.16 billion a year. The cost is also symbolic: by driving away medical cannabis companies, Israel risks losing its position as leader in the field. Unless the Israeli government reacts quickly.