Knesset enacts medical cannabis export law


The law still requires approval by the Israeli cabinet to enable exports to go ahead.

The medical cannabis export law proposed by MK Yoav Kisch (Likud) has been approved on its second and third Knesset readings. Approval was rushed through the Knesset in order to facilitate exports before the Knesset disperses. 21 MKs voted in favor of the law, with no votes cast against.

The law budgets cannabis supervision by the Ministry of Public Security. Following passage of the law, Minister of Public Security Gilad Erdan and his ministry, the only official opposition to the law, will no longer oppose it. The other ministries involved - the Ministry of Health, Ministry of Agriculture and Rural Development, Ministry of Justice, Ministry of Finance, and Ministry of Social Equality - previously expressed support for legalizing exports and supported it on previous occasions.

The issue of exports will now be referred to the cabinet. The law regulates export procedures, but does not yet constitute official approval for exports; only a positive cabinet decision will enable exports to go ahead. Sources close to the cabinet believe that the decision will pass unless vetoed by Prime Minister Benjamin Netanyahu. If the cabinet does grant approval, actual exports can begin in 6-8 months.

Adv. Hagit Weinstock of the Weinstock Zehavi & Co. law firm, who represents medical cannabis growers, entrepreneurs, and investors, said that the question of exports would be brought to the government for discussion in the coming weeks. "I welcome the passage of the amendment to the Dangerous Drugs Ordinance on its second and third readings," she said. "This now an opportunity for the Israeli government to put an end to this saga and approve cannabis exports before the elections. We must not be forced to wait another six months for it to be brought to the next government for approval."

When the question of exports was brought before the cabinet for an official government decision last April, Prime Minister Benjamin Netanyahu rejected it and sought to convene a committee to examine the matter. Cannabis industry sources alleged at the time that Netanyahu had decided against approving exports for reasons known only to him that were not related to the opposition by the Ministry of Public Security. Among other things, it was suggested that Netanyahu's attitude was influenced by US President Donald Trump's opposition, or even by the views of Sheldon Adelson, a known opponent of legalization or medicalization of cannabis.

Kisch's law stipulates that every medical cannabis license will be contingent on a license from the Ministry of Health. Regulations were established stating that Israel Police would make a recommendation for any party requesting a license to engage in medical cannabis business: a positive recommendation, a negative one, or announcement of an exemption from a recommendation. If a foreign investor is involved, the police can say that it lacks sufficient information (as it has done hitherto). The law also states that the police must issue a recommendation within four months, or within six months for a foreign investor. In the version drawn up by Netanyahu's committee, violators of the license terms are subject to a two-year prison term or a NIS 75,000 fine.

Estimations of potential revenue from Israeli cannabis exports vary greatly from NIS 250 million, according to Prof. Avi Simhon, whom Netanyahu appointed to examine the matter, to NIS 4 billion by Minister of Agriculture and Rural Development Uri Ariel a year ago. It is clear, however, that the opportunity is dwindling as time passes without exports from Israel being approved, while other countries are developing in this direction.

Eight cannabis growing companies and a number of cannabis products production, marketing, and distribution companies currently operate in Israel. Dozens of farmers with licenses in principle to grow cannabis are waiting for a decision about exports in order to go ahead with activity in the field.

Adv. Reut Alfiah, partner and head of the cannabis department at global law firm ZAG - S&W said, "Israel has an advantage in the developing and growing of medicinal cannabis. However, regulatory constraints have thus far prevented the realization of this huge potential. Meanwhile, the train has long left the station in other countries while Israel was lagging behind. The amendment of the law will finally enable unlocking the potential of this industry in Israel. Cannabis farming will flourish, R&D will grow and foreign investors who regard Israel as the category leader will be able to invest in Israeli cannabis companies. The State coffers too will see significant revenues from this industry."

Published by Globes, Israel business news - - on December 25, 2018

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