Medical Cannabis: A major economic boost?

The TAMIM team provide a brief update on the status of medical cannabis industry globally. The potential legalisation of cannabis for export as well as a reclassification from the World Health Organisation bode well for the industry.

Over the past year the growth of the medicinal cannabis industry in Israel and globally has been significant. One major change in legislation has the potential to be a significant factor in the Israeli’s markets continued growth. Israel has long been a pioneer in the medicinal cannabis industry after legalising it in the 1990s but exports have always been forbidden. On 25 December 2018 the Israeli parliament unanimously passed the 16th Amendment to the Dangerous Drugs Ordinance, permitting international exportation of medical cannabis for medical use. 

The question is How Will Exporting Cannabis Boost Israel’s Economy?

Israel’s researchers are no strangers to the hemp plant’s cannabidiol (CBD) components for medical uses like cancer, chronic pain, and autoimmune diseases. Israel also has much experience in agriculture and this is an agricultural product that, at end of the day, is selling for $100,000 per kilo.

Israel is poised to capitalise on the industry in the form of 1bn NIS (370m AUD) in taxes alone but its success relies on the global market, in particular Canada and the United States. Ten states in the United States alone legalised recreational use and Canada recently became the second nation in the world to legalise it. Demand from Australia, Germany, Austria, and Mexico has also been noted.

It is the medicinal aspects of the super plant that promises the big wins. In fact, in the United States President Trump has signed the Farm Bill to legalise the growth of non-psychoactive hemp plants. This could be pivotal for the CBD industry. Seeing as the hemp plant grows well in Israel’s temperate climate, it only makes sense that the state will handle at least some of, if not the bulk of, the growing, harvesting, and manufacturing for the rest of the world.

Following suit, the World Health Organization is expected to reschedule cannabis at their annual meeting in March 2019. They are expected to remove marijuana from the restrictive Schedule IV and remove non-psychoactive CBD products (containing less than 0.2% THC) from drug control altogether. These are big wins for Israeli companies specialising in natural treatments!

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As always, it is important to understand what you are looking at when it comes to investing. While not 100% reliable as a source on their own, the following Wikipedia articles are well referenced and provide an excellent jumping off point and links to many good articles on the subject.

• Medical cannabis
• Cannabidiol (CBD)​

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An employee checks cannabis plants at a medical marijuana plantation in northern Israel March 21, 2017. \ NIR ELIAS/ REUTERS