Global Ganja Report

Israel's internal market for medical cannabis products is limited by the country's relatively small population, but with exports now approved by the cabinet, a multi-billion-dollar industry is foreseen. Since the announcement, share prices of cannabis companies on the Tel Aviv Stock Exchange have soared.

Since the Israeli cabinet's approval of a law to allow for the export of medical marijuana, there has been a heady feeling in the country's emerging cannabis industry.

The law, approved by the cabinet Jan. 26 after passing the Knesset in December, provides a licensing framework for Israeli companies to export cannabis and cannabis-derived products. The licenses are to be issued by the Ministry of Health, and will be drawn up in consultation with the national police force.

There are stiff penalties for those found to be in violation of the terms of a license—a fine of 75,000 New Israeli Shekels (about $20,000), or up to 24 months imprisonment. Strict regulations are to be enforced, both for quality control and to bar diversion to the illicit market. These measures were instrumental in selling the bill to the conservative government of Prime Minister Benjamin Netanyahu.

Also instrumental, of course, was the lure of NIS 1 billion ($274 million) in annual tax revenue from the industry. Israel has an ideal climate for cannabis cultivation. Companies that have for nearly a generation now been serving the country's domestic medical market are ready to go global.

Ex-prime minister rakes it in
As an indication of how thoroughly mainstream the Israeli cannabis industry has gone, one of the biggest publicly traded medical marijuana companies counts among its major shareholders former Prime Minister Ehud Barak, who governed the country from 1999 to 2001. As the daily Haaretz reports, Barak was actually appointed last September as chairman of InterCure, a holding company with a portfolio of several medical firms, including cannabis cultivator and product developer Canndoc. Barak is drawing a $10,000 a month salary for the position. He also has InterCure stock options worth more than 45 million shekels ($12.3 million).

And over the past year, as passage of the export bill looked better and better, InterCure's share price has ascended by a startling 2,400%. This was also spurred by Barak joining the company, generating a big media buzz. The company now has a market capitalization of 895 million shekels ($246 million)—the biggest on the Tel Aviv Stock Exchange for the emerging cannabis sector.

As Profit Confidential website enthuses, InterCure stock gained 100% just in January alone. The company is on track to imminently change its name to Canndoc Pharma.

Net-linked cultivation 'box'
Another very well-positioned Israeli cannabis-related enterprise is Seedo, which is traded on the NASDAQ through a shell company. Seedo is now starting to supply $5.5 million in advance orders from around the world for its new innovative product—the world's first fully automated and controlled indoor "grow device" for organic cannabis.

"We have developed a device like a box that can be put in the customer's home and connected to the Internet," Seedo CEO Zohar Levy told Israel's business website Globes. "The box contains sensors, a camera that photographs the plant, and software through which it exercises fully automatic control of the growing conditions, with no intervention by the customer. Pesticides are not needed, and computerized management saves water. All the grower has to do is occasionally replace a CO2 cartridge, a water filter, an air filter, and fertilizers."

A home box costs $2,400, and the perishable parts must be replaced twice annually at a further cost, but the company asserts that this is offset by impressive yields. "Every seedling produces 100 grams of dry flowers in 90 days. You can make at least $10 a gram in the US.," Levy said.

His company's share price has jumped 300% over the past six weeks. And Seedo also just took on a prestigious new board member. Dr. Jendayi Frazer—the former US Assistant Secretary of State for African Affairs, who became the first woman to serve as Washington's ambassador to South Africa in 2004—has just joined Seedo's board of directors.

Buds versus BDS?
An unwelcome topic that may perhaps prove inevitable for the emerging industry is the international movement to target Israel with a boycott, divestment and sanctions—BDS, as it is known. Aimed at applying pressure on Israel over its ongoing occupation of the West Bank and siege of the Gaza Strip, the idea certainly remains controversial and polarizing—especially in the US. But there is no doubt that it is fast gaining currency.

In this past November's midterm elections in the US, Ilhan Omar of Minnesota and Rashida Tlaib of Michigan became the first sitting Congressmembers to publicly endorse BDS. Tlaib is also the first Palestinian-American woman elected to Congress. Partially in response to this development, Republicans in Congress are preparing legislation that would allow states to penalize businesses that participate in boycotts of Israel.

This once again recalls the recent controversies over "pinkwashing"—pointing to Israel's good record on gay rights to distract attention from the ongoing siege and occupation of the Palestinian territories. International cannabis industry investors could be faced with similar accusations of "greenwashing" if they sink money into Israel, or praise the increasingly liberal atmosphere for the plant there.

Cross-post to Cannabis Now

Photo by WikiMedia

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