Israel has made a name for itself in recent years as an innovative technology-friendly hub, incubating businesses with tax breaks and regulatory relief and attracting billions from Western investors in return.
It has also cultivated a reputation for expertise in cannabis production, the by-product of support of the technology and medical sectors.
Where Israeli firms once bought farms abroad to serve other markets, frustrated by a domestic ban on exports from Israel itself, this is now all set to change.
The Middle East state is set to pass a law allowing exports of medicinal cannabis, the Finance Ministry said last week, as the county ramps up its attempt to woo more investment and bolster state coffers.
The bill passed its third reading in the Israel parliament in December, and is now waiting for the cabinet and Prime Minister Benjamin Netanyahu to sign it into law.
The legislation allows the export of medicinal marijuana cannabis to countries that permit its use after receiving licences from the health regulator.
“The bill is expected to open a new market for Israeli producers, which is expected to increase investment in the fields of agriculture, research and production, and create new jobs,” the ministry said.
Israel is home to several major cannabis production companies, and the laws will give further platforms for the export industry to expand. Israel is in prime position to compete in an industry tipped to reach $33bn globally in the next five years.
The government said exports could raise tax revenue by $272m a year.
Lawmakers had attempted to stall the procession of Israeli-grown cannabis going abroad, fearing the sector could also feed into a domestic black market, however intense lobbying from Israeli companies helped swing opinion.
In an effort to appease detractors, the bill contains tough regulations on exporters and threatens jail terms and hefty fines for violations.
Israeli companies are among the world’s biggest producers of medical cannabis, utilising the sunny climate and the jurisdiction’s growing reputation as a global technology hub.
At the same time as the finance ministry announcement, Israeli venture capital firm OurCrowd revealed it is partnering with Colorado-based 7thirty to form “the world’s leading global cannabis technology venture capital fund”.
The $30m fund will invest in medical and agricultural applications for cannabis technology, retail and e-commerce, and pure research It will be active in Israel, Canada and US.
“The explosive growth of the legal and medical cannabis market is quite impressive,” OurCrowd CE Jon Medved told local media. “Canada recently legalized cannabis nationwide, and Israel is in the final stages of legalizing cannabis export. This market will generate unprecedented global investment activity and returns for cannabis-focused start-ups.”
There are currently eight companies growing cannabis in Israel, and the government has said at least 12 more have applied for licenses to export.
Until the government began to reverse its position and go pro-cannabis, Israeli firms were opening farms to enter the international market. The government is offering incentives to those firms who return to Israel to open farms.
Cannbit, which has a farm in southern Israel, signed a deal with local medical cannabis supplier Tikun Olam, was considering Portugal as a jurisdiction if the new export regulations fell through.
Exports are expected to start in the summer to countries including Australia, Germany, Austria and Mexico. The laws permit the export of cannabis only to countries that require licenses from health regulators.
Israeli citizens can get a prescription for medical cannabis if their condition worsens when trying traditional drugs for one year. There are tough restriction on access to the drug, however cannabis treatment is available for the relief of chronic neuropathic pain, the symptoms of multiple sclerosis and the side-effects of chemotherapy, among other diagnoses.
Around 33,000 Israelis are prescribed medical cannabis, using an average of 34 grams of the dry substance per month.