In Europe's cannabis market, Morocco faces stiff competition from Israel

Israel's Health Ministry announcement in August to liberalize its laws on the use of medical cannabis will significantly widen the drug's use in a health-care setting, as well as boost exports of the product to foreign markets and with that the rivalry with Morocco.

While the drug has been legal for medical use since the early 1990s, the new proposals, which are due to come into force in December, grant cannabis access to patients with a broad range of health conditions including epilepsy, dementia and autism without a license  — they will simply need to obtain a prescription. The Israeli Health Ministry has said that cannabis will be seen as a “first line treatment” rather than a “last resort.” The export process has also been simplified for shipments to Europe, bringing Israeli regulations more in line with Europe’s Good Manufacturing Practices.

One of Israel’s regional peers, Morocco, has also taken steps to promote the production and exportation of medical cannabis. In 2021, the Moroccan parliament passed a law that allows for the production of cannabis for medical, cosmetic and industrial purposes. In October 2022, Rabat issued the first 10 permits to produce cannabis products, and in March 2023, construction began on the first formal cannabis laboratory in the Chefchaouen region.

The Moroccan government has explicitly stated its ambition of contributing at least 10% of the European medical cannabis market by 2028 — worth $4.2 billion out of an estimated $42 billion market, according to Morocco's state news agency MAP. But with Israel now expressing the same ambition, the two countries appear to be headed for direct competition.

Long history

Daniel Levinson, a Jerusalem-based consultant in the medical cannabis industry, told Al-Monitor that Israel has a "very long history with medical cannabis” and that the sophisticated industry that has developed will be a factor in its competitiveness.

“Cannabis in Israel is grown up to stringent medical standards. We have a whole R&D side of the industry where specific strains have been tested for effectiveness for specific ailments and have gone through different studies,” Levinson said. “There’s a high-quality process for clinical validation of these products as part of a 20-year-plus industry that’s evolved.”

While Morocco is the world’s second-largest producer of cannabis, farmers there are still mostly producing for the black market. While they could shift to service the new legal markets, authorized pharmaceutical products involve strict guidelines and often expensive infrastructure.

It is not clear if and how farmers in remote rural areas of Morocco would be able to meet these standards. Damon Booth, founder of the cannabis research company Melabis, previously told Al-Monitor that he doubted the export market in Morocco will be successful given these high barriers to entry.

“There’s a lot that goes into growing medical cannabis as opposed to growing it for recreational purposes,” Levinson told Al-Monitor. “Other countries that don’t have a history of doing this might struggle with the standards and red tape that you have to work through. Established pharmaceutical and medical cannabis companies are used to this, but if you’re not, abiding by these regulations is definitely a tough ask.”

Levinson also noted that Israel’s standards are almost identical to those set by the European Union — another factor that puts the country at an advantage in competing for European business. “There are some differences, but they’re very minute differences — mainly technicalities in the cultivation and growing processes,” he explained. This regulatory alignment with Europe could allow Israeli companies to export to the continent with less friction than their Moroccan counterparts, which are only just beginning the process of establishing medical-grade standards.

Can Morocco improve its standards?

The founder of a medical cannabis company in Morocco’s Chefchaouen region anonymously told Al-Monitor that Morocco has the potential to become a strong player in the global cannabis markets, but that standards will need to be dramatically improved.

“The new law legalizing medical cannabis is encouraging, but the problem is that there is so much illegal production in Morocco,” the founder said. “Sixty thousand hectares in Morocco are used to produce illegal cannabis. This year about 200 hectares will be used for legal production. Of course this is only the first year, but it’s very difficult to challenge the mentality of those people who have worked all this time with illegal cannabis.”

He is optimistic that this situation could change with time, partially thanks to the foreign investment that he believes the legal Moroccan industry is attracting. While specific figures are not yet available, he noted, “At the moment, most producers don’t have the resources to dedicate more time and money to higher-quality processes, but there are a lot of investors coming in from all over the world.”

“We have seen Moroccan companies sign contracts with Spanish, French, English, Canadian companies and more,” he added. “Moroccan cannabis has a good image with foreign investors [Moroccan cannabis is considered high quality]. We have a huge amount of space in which to grow cannabis and lots of experience with the product. We don’t have much experience yet with the new legal forms of cannabis — that’s why I think the industry might start small, but it could grow strongly.” 

With its longer history in medical cannabis, Israeli firms are likely to make a quicker and more seamless entry into European markets than Morocco. Several Israeli firms involved with the industry have strengthened on the Tel Aviv Stock Exchange since the Health Ministry’s announcement in early August. Seach Medical Group is up over 13% in August, while the share price of Tikun Olam Cannbit Pharmaceuticals has increased by over 20% in the last month alone.

Morocco certainly has potential to emerge as a strong player over the mid- to long term, but that will mostly depend on whether those servicing the illicit market have enough incentive to shift production toward legal products. In the Moroccan founder’s words, “Morocco needs to change its culture surrounding cannabis.”

“Cannabis has been illegal in Morocco for over 50 years. It’s very difficult for the government to change attitudes. But we need to create a new culture to promote the legal medical cannabis industry.”