Israel's cannabis industry in a time of war

IsraelIsrael is an emerging player in the international cannabis market, and the industry is embraced by pillars of the country’s political establishment. But every aspect of Israeli society as been impacted by the horrific events of last October 7, and the ensuing war. The cannabis sector has been no exception.

Those impacts were felt immediately on Oct. 7 itself, when four workers at a cannabis farm on a kibbutz near the border with Gaza were abducted by Hamas militants and taken across the line into the Strip.

Cultivation continues at Kibbutz Nir Oz
Two of the some 240 hostages seized by militants from Gaza that day were employees of InterCure, Israel’s top medical marijuana producer. They were working at Kibbutz Nir Oz, an agricultural community less than two miles from the border with the Gaza Strip. The lands of Nir Oz produce potatoes and carrots, as well as hosting InterCure’s expansive greenhouses.

Elana Gritzewsky, a nursery manager (and a Mexican national), was released in November. Matan Zangauker, a maintenance worker, is still being held. Nearly 50 Nir Oz residents were killed in the attack, and some 70 taken hostage. A total of 37 are still being held, including a baby who was just nine months old at the time of the attack. Nir Oz was one of 20 communities in southern Israel struck by the militants that day.

Yael Marcus, who manages sales and business development for Israeli terpene company Eybna Technologies, lived at Nir Oz for three years. Speaking to Cannabis Now via Zoom, she describes it as “a paradise, idyllic, with a strong sense of community.” She says a peaceful life at the kibbutz was interrupted by the attacks. With a certain sense of betrayal, she adds, “Nobody came to save us for twelve hours.”

When the army finally arrived, they took over the entire zone near the Gaza border and evacuated the residents. Since shortly after the attack, the kibbutz residents been living in emergency housing at Kiryat Gat, some 40 miles northeast of Nir Oz.

“Residents had to get special permission to get in to Nir Oz to arrange to save the medicine,” Marcus says. But the authorities were cooperative, and in February InterCure announced that it had “begun the process of restoring the Southern Israel Site,” meaning its complex at Nir Oz.

Marcus says that workers are now going back and forth from Kiryat Gat to Nir Oz daily to keep the grow operation up and running. “Israel is a medical cannabis market, and patients need their medicine,” she says.

Impacts of October 7
Israeli agriculture generally took a hit after Oct. 7, and cannabis cultivation especially so, as it is concentrated in south and north of the country—the most impacted areas. After Hamas attacked villages in the south, Hezbollah began firing missiles on towns in the north from across the border in Lebanon, similarly leading to evacuations.

But volunteers mobilized to help in the harvest (whether of spuds or buds), filling in for the displaced residents, for migrant workers who went back home when the fighting began, or for workers who were abducted. Several Thai immigrant laborers were among those killed and abducted on Oct. 7. Eleven of those killed at Nir Oz were Thai, although they were not among InterCure’s employees.

In fact, the current crisis could be a grim, paradoxical boon to Israel’s medical cannabis industry.

Adi Rozenfeld is a partner and head of the cannabis desk at the Tel Aviv law firm Herzog, Fox & Neeman, which represents Nir Oz pro bono. “Israel after October 7 is a traumatized country,” she tells Cannabis Now. “Unfortunately, the rates of anxiety and PTSD have increased significantly both among soldiers and the general public. This means a high increase in demand for medical cannabis for these indications.”

It will take some time for the anticipated increase to register as cases wend their way through the process of diagnosis and enrollment in the program, which now has some 130,000 patients. But Rozenfeld says she is confident that the industry will “overcome everything.”

Partly in anticipation of this wartime boom, the government has instated changes in the regulations for medical cannabis, which took effect in April.

The new regs relax the licensing requirements. Under the new policy an A-plus grade for a grow facility means license renewal will only be required every three years, not annually. The Israeli Medical Cannabis Agency (IMCA), a unit of the Health Ministry, accepts the international standards known as CUMCS-GAP, for Control Union Medical Cannabis Standard-Good Agricultural Practice.

The changes are also intended to spur exports, for the first time allowing export licenses for firms not already producing for Israel’s domestic market. The first exports began in 2019, but are now anticipated to rapidly expand.

There are some 20 licensed growers in Israel, but the market has been increasingly dominated by imports since major producer Tikun Olam, seemingly bedeviled by mismanagement despite its idealistic image, closed its two major farms just over a year ago. These were at Moshav Neot HaKikar, also in the south. A moshav, like a kibbutz, is a form of cooperative agricultural community distinct to Israel, although both have started to function more like traditional capitalist enterprises in recent generations.

Much of Israel’s medical cannabis is now coming in from Canada, South Africa and Uruguay. Israel’s Economy Ministry earlier this year opened an investigation into claims that Canadian cannabis companies are “dumping” cheap product on the country so as to undermine its domestic industry.

But with the Israeli reputation for cutting-edge agrotech, industry leaders hope to both make the country self-sufficient and even a major world supplier.

The new regs will also mean changes for patients. They introduce a prescription-based model rather than the previous license-based model for conditions including cancer, AIDS, multiple sclerosis, Parkinson’s, epilepsy, autism and dementia. This means patients will be able to receive prescriptions from their HMOs rather than having to get a license for use from the Health Ministry. The mandate that cannabis be only a “last resort treatment” for many of these conditions is eliminated.

“In my opinion the new medical regulations will ease both patients and operators and will lead to the opening of the market in a much larger scale,” says Rozenfeld. “Therefore, there is optimism and a sense that something positive is happening. Although the immediate impact may not be apparent, we should see significant changes within the next year or two.”

Ophir Nevo of the Israel Cannabis Association, a trade group founded four years ago, echoes this assessment. “Around the war, the cannabis space will grow, not be disrupted,” he predicts.

Advances for decrim
Cannabis is widely used and generally tolerated in Israel—not only by enrolled medical patients. A decriminalization policy that was passed by the Knesset on a provisional basis in 2018 (the project of then lawmaker and Public Security minister and now UN ambassador Gilad Erdan) was made permanent in April 2022. Personal use of up to 15 grams is no longer criminal offense, and the fine is capped at 500 shekels (about $130). This is a larger personal quantity and a lower fine than under the 2018 law—which decriminalized only up to five grams, and capped the fine at 2,000 shekels (about $540).

“This is the beginning of a recreational market in Israel,” Ophir Nevo says optimistically.

In a manifestation of the tolerant atmosphere, a Holy Flower Cup was held this April 20 (420, of course) at the Kuli Alma, a music and art venue in Tel Aviv. The judges were all registered medical users, tasting 15 strains from five licensed growers.

There are some voices of dissent to the new medical regulations—from activists who intransigently advocate full legalization.

Nir “the Angel” Youftaro became what the Israeli media called a “countercultural folk hero” when was arrested for producing and distributing his homemade cannabis oil in 2018. He was busted with 15 kilos of spent flower (post-extraction) on March 31 of that year—the eve of Passover, which he spent in jail. The recipients of his oil were hundreds of chronic pain sufferers who didn’t want to have to try opioid pain-relievers first, as then required for enrolled cannabis patients. He was also providing it to cancer sufferers, following the example of his inspiration, Canadian cannabis-oil proselytizer Rick Simpson.

Youftaro pleaded not guilty, challenging the legitimacy of the law. Convicted and sentenced to two years in prison—despite much supportive testimony from his patients—he appealed. Just this May, his sentence was reduced by an appellate court to 350 hours of community service.

Youftaro tells Cannabis Now that the reform of the medical regs is not in the interests of patients. “You used to go to the Medical Cannabis Unit in the Ministry of Health; now we go to the medical cannabis unit in the HMO. It’s the same process for the patients. But nobody has taught the doctors about cannabis, it’s not in the medical schools.”

Youftaro wants all doctors to be able to prescribe cannabis, and for patients to be able to buy it from any pharmacy, “like any other drug.” Currently, there are a limited number of doctors (generally affiliated with HMOs) authorized to prescribe cannabis, and a limited number of pharmacies authorized to sell it.

He also complains that the cannabis companies are not providing enough variety in strains to treat different ailments, and that there is insufficient quantity on the medical market to meet demand. “Patients can’t get enough from the medical program, and have to buy the rest on the black market—or, as I call it, the free market.”

Youftaro says he testified before the Knesset when the decrim expansion was pending in 2022. “I told them that two million people use cannabis in Israel. You can’t chase after all of them.”

As an immediate move especially mandated by the post-October trauma, Youftaro wants CBD to be freely available. “It’s still not legal for those outside the medical program, and limited to 60 milligrams per day for those in the program, which is insufficient,” he says. “It should be in every shop in Israel.”

The cannabis establishment
Youftaro blames the industry’s corporate model for what he finds to be an inferior product.

“If you’re going to grow with pesticides and use radiation, sell it on the free market,” he says. “What’s on the medical market should be no pesticides or radiation. Radiation allows poorer standards because bugs can be killed before it goes to market. Medical cannabis should be clean.”

Despite such criticisms, radiation is a widespread practice in the industry worldwide. Most Israeli medical cannabis is irradiated at Sor-Van’s facility in the central town of Yavne.

There are other prominent voices in Israel’s cannabis community who are critical of the existing model. Gil Kitay, popularly known as “Q,” is the chairperson of Israel’s Green Leaf Party, or Ale Yarok by its Hebrew name.

“We’ve never had an elected official, but we’ve delivered more for our supporters than many parties,” he says, pointing to Ale Yarok’s lobbying of the Knesset to expand access to cannabis.

Ale Yarok is currently launching a class action lawsuit accusing the industry of illegal advertising, and seeking a court order to stop it. Officially, advertising is barred, but Kitay says colorful and splashy packaging and websites constitute de facto advertising. “We want the advertising to stop until it is brought under regulation, and payments to a fund for educating consumers on correct cannabis use,” he explains.

For a more longterm goal, the party seeks a sweeping legalization. “We want to remove the word ‘cannabis’ from the law, making use or possession not a criminal act. But if you are producing it commercially, there needs to be regulation.” He would move this oversight from the Heath Ministry to the Agriculture Ministry.

Hets-David Ben am Israel, legal counsel for Ale Yarok, emphasizes how thoroughly Israel’s commercial cannabis sector is ensconced in the country’s political establishment. “The cannabis industry in Israel is led by former elite officials,” he says.

InterCure (which operates under the brand name Canndoc) is led by Ehud Barak, the former prime minister and minister of defense.

Together Pharma is led by Yohanan Danino, former chief of the Israel Police, the country’s national force.

Cann10 Ltd, which recently acquired Seach Medical Group in major consolidation of top industry players, is lead by Tamir Pardo—the former head of Mossad, Israel’s intelligence agency.

Ben am Israel portrays an overlapping matrix between the industry and the regulatory and enforcement bureaucracy that allows bad practices to continue. He also charges that it holds back a general legalization so as to preserve the status quo. “The Israeli state-corporation complex is corrupt to the core,” he says.

The question of sanctions
There is still a thriving illicit market in Israel that has traditionally been served by imports of hashish from Lebanon and Morocco. But in February, five months into Israel’s bombardment of the Gaza Strip, Moroccan hash suppliers announced they would boycott Israeli dealers over the Gaza war.

“Why is it possible for Israelis to make a living selling Moroccan hashish when our Palestinian brothers are suffering from hunger and living in inhumane conditions?” one supplier in Morocco’s Rif Mountains was quoted rhetorically asking Israel’s News 12. “We no longer sell hashish to Israelis. Before the war, we did business here with Israelis... merchants came here and made good money. Now that’s the end of it.”

The account also quoted Israeli dealers who confirmed that supply was indeed starting to dry up.

The unrelenting horror of the Gaza bombardment, with some 35,000 now dead, has shocked the world. Israel is accused of genocide in cases now pending before both the International Court of Justice (ICJ) and International Criminal Court (ICC). ICC prosecutor Karim AA Khan announced May 20 that he has applied for arrest warrants against Israeli Prime Minister Benjamin Netanyahu and Defense Minister Yoav Gallant, as well as senior Hamas leaders, for crimes committed during the ongoing war. The officials face charges of war crimes and crimes against humanity.

The long Israeli siege of the Gaza Strip since Hamas seized power there in 2007 gave a certain sense of inevitability to the Oct. 7 attacks. Israel has also been accused by international human rights groups of “apartheid” in its 57-year military occupation of the West Bank, and settlement of the territory in defiance of international law.

Even the ex-Mossad chief Tamir Pardo said last September, just before everything exploded, that Israel is enforcing an apartheid system in the West Bank. “There is an apartheid state here,” he said in an interview with the Associated Press. “In a territory where two people are judged under two legal systems, that is an apartheid state.”

The international outrage may also have implications for the legal cannabis sector in which Pardo is a key player. The BDS Movement is a global campaign for boycotts, divestment and sanctions against Israel, aimed at ending the occupation of the West Bank and siege of Gaza, as well as what it calls systematic discrimination against Palestinian citizens of Israel. It draws inspiration from the similar movement that helped put an end to South African apartheid in the 1980s and early ‘90s.

When asked about whether the campaign applies to the cannabis sector, the BDS Movement offered this seemingly generic comment from the organization’s general coordinator Mahmoud Nawajaa: “The BDS Movement calls for a full boycott of apartheid Israel and of all companies that are complicit in its grave violations of Palestinian human rights, particularly in this time of its livestreamed genocide against 2.3 million Palestinians in the besieged and occupied Gaza Strip.”

When reminded that the Israeli cannabis industry is actually a part of the medical sector, the BDS Movement said that the phrase “unless there are no viable alternatives” can be appended to the quote.

When asked if this caveat might explicitly apply to medical cannabis, the organization did not reply.

Cross-post to Cannabis Now

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