Together Pharma, a recently-incorporated Israeli medical-marijuana firm, announced on Sunday that it would relocate part of its cultivation outside of the country, amid regulatory uncertainty over whether exports would eventually be permitted.
The government reportedly told medicinal marijuana companies that their cannabis exports would be approved by 2018, according to industry employees. That persuaded the companies to embark on multi-billion-shekel investments, many of which could now be in jeopardy.
Not taking any chances, Together Pharma has now signed a memorandum of understanding with a foreign firm to establish a marijuana farm abroad, the company told the Tel Aviv Stock Exchange in a financial filing.
“Together Pharma is not dependent on [Prime Minister Benjamin] Netanyahu,” CEO and co-founder Nissim Bracha told The Jerusalem Post, alluding to how the prime minister is reportedly holding up the export plan despite ministerial approval.
Bracha added: “Now, we’re depending on ourselves, and we can do whatever we want from another country. 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.”
Israeli media reported that US President Donald Trump called Netanyahu in early February to object to the planned medical cannabis exports; his objection could not be independently confirmed.
Together Pharma plans to spend NIS 4 million to construct a foreign greenhouse on 100 dunam (25 acres) of land. The site will initially grow 15 tons of marijuana annually, with up to 60 tons in total if Israeli export options do not materialize.
Bracha declined to specify the country, but said that the farm 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 around $5 dollars, Bracha projects $75 million in sales for the first year, growing eventually to $300 million in revenue.
Operating a farm in Ashkelon, Together Pharma is possibly 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 medicinal 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 between NIS 1 billion to NIS 4b. ($290m. to $1.16b.) in revenue annually.
The Public Security Ministry was previously holding up the export plan, demanding millions more in funding to securely hold and process the drug at Ben-Gurion airport.
Because of all the delays, actual exports are likely not to start in earnest until 2019.
Despite the regulatory gridlock, Israeli cannabis firms are still meeting with companies to export their crop to Germany, Canada and the Czech Republic, said Hagit Weinstock, an attorney who represents dozens of growers in a legal appeal to the High Court.
Amid news of the foreign operations, Together Pharma stock was up some 16.66% on the Tel Aviv Stock Exchange as of closing. The company was created after a recent merger between Together Startup Network and Globus Pharma.
“We still want to grow and we are growing marijuana in Israel, even if there are no exports from Israel,” Bracha said, ending on an optimistic note. “We still believe that there will be exports from Israel, maybe in one year.”