Israeli bigwigs profit from cannabis legalization | Economic news
By ILAN BEN ZION, Associated Press
ASHKELON, Israel (AP) — Not so long ago, Ehud Olmert was trying to lead Israel to a historic peace accord. These days, the former Israeli prime minister is pushing a different message: legalize marijuana.
Olmert is among a group of former Israeli leaders and security chiefs who have found new careers in the country’s tightly controlled medical cannabis industry. They hope not only to take advantage of the local market, but also to pave the way for the export of the main producers of marijuana in the country.
“Everything will change drastically overnight if there is legalization,” Olmert, an adviser to start-up Univo, told The Associated Press. In Israel alone, he said, “the market would be unlimited. It would be huge.
Israel is one of the world leaders in the use of medical cannabis and possession of marijuana is decriminalized. Yet strict regulations govern the research, cultivation, processing, distribution and sale of cannabis. These tight restrictions, many believe, have prevented domestic production from being turned into an important cash crop.
More than 100,000 Israelis have permits to use medical cannabis, according to the Health Ministry, a 16-fold increase over the past decade. The boom is largely due to a reform that took effect in 2019 that makes it easier for doctors to prescribe cannabis to people with chronic pain, cancer, PTSD, epilepsy and other conditions.
Consumption of medical cannabis in Israel rose to 43 metric tons last year, from 28.5 million tons in 2020, according to the Health Ministry. Israel’s medicinal cannabis market was valued at around $264 million in 2021, about $7 million less than all of Europe, according to Prohibition Partners, an industry analyst firm.
Despite the many Israeli companies producing medical marijuana, Israel imports more than half of its supply.
Golan Bitton, managing director of Univo, said much of the locally grown supply is of poor quality and does not meet the expectations of Israeli consumers.
“The Israeli consumer is very, very selective,” said Bitton, a retired commando.
Last year, he said his company had to incinerate about 600 kilograms (1,300 pounds) of cannabis that did not meet the grade. Univo has started importing marijuana from Canadian cannabis titan Tilray to take over.
Univo is one of the few companies in Israel to have full vertical integration from farm to pharmacy. His company’s facilities are housed in a nondescript warehouse in the industrial zone of the southern city of Ashkelon. The clean rooms where the buds are processed are heavy with a resinous pungency.
Bitton said the facility is capable of testing, processing and packaging up to 80 tonnes per year. But due to bureaucracy last year, it only handled about six tonnes, some of which was imported. Like other companies in Israel’s cannabis industry, he said Univo is ready for when regulations change.
This is where Olmert and his counterparts come in. Olmert spent decades as mayor of Jerusalem, member of parliament, cabinet minister and prime minister from 2006 to 2009 before a corruption conviction set him back. sent to prison for 16 months. The company hopes Olmert’s public profile and intimate knowledge of Israeli bureaucracy can improve the business atmosphere.
“I really think there’s no reason, except for some fears and obsessions and prejudices, that’s holding the full legalization of cannabis (far) away,” Olmert said.
Ehud Barak, another former prime minister, former foreign minister Tzipi Livni, former police commissioner Yohanan Danino and retired Shin Bet security agency director Yaakov Peri are all consultants and investors in Israeli cannabis companies.
“It’s a multi-hundred-million-dollar market just in the medical field, and it’s growing very rapidly in Israel,” said Barak, who became president of cannabis maker Intercure in 2018. expect that once it is legalized, we will see a flourishing of the market for premium extreme products.”
Livni and Peri’s offices did not return messages, and Danino declined interview requests.
Israel has been at the forefront of medical cannabis research since the 1960s, when Hebrew University chemist Raphael Mechoulam first isolated THC, the main psychoactive compound in marijuana. Israeli scientists and entrepreneurs continue to develop new strains of cannabis, cultivation methods – such as generating THC-laden cells inside a sterile bioreactor – and medical applications for the cannabinoids.
There are more than 110 cannabis-related companies in Israel that have raised $348 million in investments since 2015, according to figures from Start-Up Nation Central, a nonprofit that promotes the local tech sector.
But Israel maintains strict restrictions on exports, especially to major markets in Europe and North America. Israel exported 663 kilograms (1,462 pounds) of cannabis last year, according to the Health Ministry.
As more countries liberalize cannabis policies, Israel’s advantage is gradually receding.
Lilac Mandeles, Israeli CEO of cannabis accelerator TechforCann Europe, said that although Israel is a leader in research, the business climate is “not optimal” for products and services.
She started her business in Malta last year after finding the island nation offered a friendly business environment, €2.5m in funds under a cannabis start-up scheme and a doorway. essential entry point to European markets.
“Supporting early-stage initiatives is a challenge in Israel in general,” and cannabis is no exception, Mandeles said.
Lawmakers are now working to pass legislation that could loosen regulations they say would benefit both businesses and consumers.
Sharren Haskel, a coalition MP with the New Hope party, defended the decriminalization of cannabis. She leads a parliamentary committee working to streamline regulations that she says will “put Israel back at the forefront” of the industry.
The reforms are expected to remove bureaucratic hurdles for scientists studying cannabinoids, ease export restrictions and allow the commercialization of CBD – a cannabis-derived compound legal in much of the United States.
She said bureaucracy “has suffocated the whole market” and pushed businesses overseas. “It’s almost impossible to have clinical research here in Israel,” she said.
It remains unclear whether Haskel’s reforms will be approved. But Saul Kaye, an Israeli cannabis entrepreneur who runs a chain of dispensaries, said he remains hopeful.
“I think Israel has a lot of magic in its cannabis industry, we’re just lost right now,” he said.
Copyright 2022 The Associated press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.