Israeli medical marijuana grower to shift to the EU amid red tape

JULY 1, 2018 20:06

Updated: JULY 2, 2018 15:18

Marijuana plants (photo credit: REUTERS) — Marijuana plants

(photo credit: REUTERS)

If the bureaucratic morass continues, other Israeli firms could also relocate their operations abroad.

Recently incorporated medical-cannabis grower Together Pharma is moving some of its greenhouses to the EU amid Israeli red tape that is threatening to strangle the budding industry.

Together Pharma announced on Sunday that it signed a memorandum of understanding (MOU) with an unnamed European Union country to set up a 30,000 sq.m. greenhouse.

The government reportedly told medical marijuana companies that their cannabis exports would be approved by 2018, according to industry employees. That persuaded the companies to embark on multi-million-shekel investments, some of which could now be in jeopardy.

“Everyone would be happier if there wasn’t such a delay and such confusion,” Together Pharma Managing Director Nir Sosinsky told The Jerusalem Post, referring to the bureaucratic morass that has held up Israeli medical-marijuana exports.

“The delay affects the money and the business,” Sosinsky said. “We don’t know what the government policy is – we can only guess.”

Not taking any chances, Together Pharma is signing multiple MOUs with foreign firms to establish marijuana farms abroad, the company informed the Tel Aviv Stock Exchange in financial filings.

Together Pharma is already constructing and developing a marijuana farm in Africa. Sosinsky declined to specify which countries they are working with in the EU and Africa, so that other cannabis competitors in Israel won’t apply for licenses in the same locales.

Locally, the firm is constructing a sprawling, 20 dunam (7.5 acre) greenhouse on a moshav near the southern city of Ashkelon, some five miles from the Gaza border.

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The greenhouse will cost approximately NIS 10 million, with another plan in the works to build a NIS 10 million factory for preparing the final medicinal product.

“We believe that the government will eventually approve all the exports from Israel,” Sosinsky said. “If we didn’t believe it, we wouldn’t build 20 dunam in Israel – because we believe it’ll be enacted eventually, a couple of months from now.”

Together Pharma is likely the first Israeli company to sign an agreement for cultivating and exporting medical cannabis from another country.

If the bureaucratic morass continues, other Israeli firms could also relocate their operations abroad.

With nearly 300 growers, entrepreneurs and manufacturers receiving licenses to produce cannabis, Israel has been leading the world in medical marijuana research and development. The country is one of the only places in the world where it’s possible to do clinical research on cannabis production.

Yet bureaucratic roadblocks are undermining the country’s position, bottle-necking lucrative exports.

The Health and Finance ministries project that marijuana exports could bring in between NIS 1 billion and NIS 4b. ($290m. to $1.16b.) worth of revenue annually.

The Public Security Ministry has been holding up the export plan, demanding millions more in funding to securely hold and process the cannabis products at Ben-Gurion airport.

And Israeli media reported that US President Donald Trump called Prime Minister Benjamin Netanyahu in early February to object to the planned medical cannabis exports; his objection could not be independently confirmed.

Because of all the ministerial infighting, actual exports are likely not to start in earnest until 2019.

Together Pharma’s farms could start growing marijuana abroad in as little as six months, with the first harvest planned for the first quarter of 2019.

Given that 1 gram of medical marijuana will sell for up to five dollars, Sosinsky projects $75 million in sales for the first year, growing eventually to $300 million in revenue.

In March, CEO and co-founder Nissim Bracha criticized the government’s intransigence on the issue, adding that it was forcing the company to relocate abroad.

“Together Pharma is not dependent on Netanyahu,” Bracha told the Post at the time. “Now, we’re depending on ourselves, and we can do whatever we want from another country.”

Bracha added: If we can do this from Israel, we’d be very happy – we love the country… But if there won’t be exports allowed from Israel, our company will earn money from another country.”