Israel Pulse

How some Israelis plan to cash in with cannabis

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Article Summary
As the Knesset considers a bill to legalize exporting medical cannabis, dozens of Israeli kibbutzim are getting in on the lucrative industry.

Interest is growing in making Israel a hub for cannabis farming and medical research. Israel has already authorized the cultivation of cannabis for local medical use. On Feb. 5, the Knesset’s Ministerial Legislation Committee adopted a resolution approving the exportation of medical cannabis from the country. The bill is now awaiting approval by the Knesset.

Seeking access to the fast-growing global industry, dozens of Israeli kibbutzim have applied for permits to farm medical cannabis since July 2016. Still affected by decades of economic stagnation, these kibbutzim hope that growing medical cannabis can help them attain financial viability.

Eight licensed suppliers, two of them operating in kibbutzim, are currently supplying medical cannabis to Israelis with a prescription for it. But following a legal battle taken up by farmers wishing to join the industry, the Israeli Ministry of Health started taking applications for additional permits. Hagai Hillman, chairman of a forum of Israeli cannabis farmers, told Al-Monitor that around 40 new permits were issued in February. Many went to kibbutzim.

The prerequisites for the permits and financing work in favor of the bigger applicants. The Israeli Ministry of Agriculture and Rural Development estimates an annual expenditure for one acre of medical cannabis at about $2 million. That sort of cash might be hard to come by for small family farms, giving an edge to kibbutzim, many of which run farms of thousands of acres.

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Compared with smaller farms, the kibbutzim also typically obtain a more diverse set of land-use licenses, enabling them to set up plantations and processing facilities side by side, a major advantage in the production of medical cannabis.

The February resolution to greenlight the exportation of medical cannabis is part of a stream of other legislative reforms contemplated in Israel in recent years. The most public moves are undoubtedly efforts by mainstream Israeli politicians to decriminalize marijuana use.

This trend follows protests by disabled Israeli veterans, some suffering from post-traumatic stress syndrome, demanding the legalization and the expansion of medical cannabis. Ilya Reznik, coordinator of the Israel National Association for Medical Cannabis Research and Treatment, told Al-Monitor that the group's demands have had great impact on Israeli legislators. "Disabled veterans were the first to receive permits to use medical cannabis here," he said. "The government could not just ignore them or sidestep the issue — this is a group with a very high profile."

Another change concerns clinical trials on humans. In February 2016, Israel established a relatively permissive legal framework concerning clinical trials in general, easing trials for new cannabis plants.

Use of cannabis for recreational purposes is legally forbidden in most countries, Israel included. Medical use is increasingly dependent on supporting research that shows specific strains are effective in treating the symptoms of specific conditions. According to Noam Chehanovsky, a geneticist focusing on cannabis strains, the permissive testing framework instated in Israel offers a unique opportunity.

Chehanovsky told Al-Monitor that last month, he partnered with Kibbutz Ruhama to grow cannabis strains designed to treat specific conditions. Located nine miles (14 kilometers) east of Gaza, Ruhama is one of the dozens of kibbutzim that recently applied for governmental permits. "Our edge is in the development of strains and in the ability to conduct clinical tests," he said.

There are other factors that work to Israel's advantage. Cannabis farming in colder countries necessitates the use of artificial lights, raising production costs. Geri Kolin, a co-owner of the medical cannabis firm Agrocan Teva Adir, told Al-Monitor that abundant light and low humidity levels help cannabis plantations in Israel's Arava, an arid valley stretching from the Dead Sea to the Red Sea.

In 2010, Kolin partnered with Kibbutz Elifaz to build a cannabis plantation in the region. Located around 20 miles north of the Red Sea, the plantation now supplies medical cannabis to local pharmacies and medical institutions. It already has foreign clients, one of them a US-based organization, waiting for exportation to begin, Kolin said. 

He pointed to promising cannabis strains developed in the region, especially two called "Desert Queen" and "Royal Medic." Both these desert-compatible strains were developed by Kolin’s firm in partnership with the Israeli Agricultural Research Organization, the research arm of the Israeli Ministry of Agriculture and Rural Development. According to Kolin, several non-Israeli companies are already looking to use the strains in other desert regions, including in Nevada.

With a smile, he noted that aside from the high quality of his strains, his clearest edge when it comes to marketing outside of Israel is the origin label on the products. "They want to buy because my logo is 'Cannabis in the Holy Land,'" he said.

The Israeli-made label seems to interest many exporters. Earlier this month, during a conference in Tel Aviv, Ran Ferdman, the manager of the farming operations in Ruhama, was approached by potential foreign buyers. "They were especially interested in buying from kibbutzim. The kibbutz brand still has value, like Jaffa oranges," he said.

Ruhama, Ferdman said, is now financially stable, but still in need of more income to be able to supply adequate pensions for many of its older community members. Medical cannabis can become one of the financial pillars of the community, Ferdman added. "We don't have too many income sources, and we are good at farming. It's a pension fund for our parents that I'm talking about, after all," he said.

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Found in: medicine, agriculture, israeli economy, kibbutz, marijuana, cannabis

Orr Hirschauge is a freelance journalist. He was the first Israel-based technology journalist to become a staff reporter for The Wall Street Journal, for which he also covers Middle Eastern regional affairs. He previously edited the online technology section of TheMarker, the financial supplement of Haaretz. On Twitter: @orr_hirsch

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