International law firms – and the Israeli medical cannabis market

Why international law firms should pay close attention to the development of the Israeli medical cannabis market.

Medicinal Cannabis has become a global economic market and as a result, the benefits of its usage and the knowledge behind this has greatly developed . The international market for medicinal cannabis was worth approximately $11 billion in 2015, and is expected to reach $56 billion by 2025, and Israel – is one of the leading players in the field of legitimate medical marijuana research.

The country legalized the usage of medical marijuana in 1992, and since then it has become an international pioneer in the field. It has allocated substantial resources in creating extensive data and analysis surrounding cannabis and its medical advantages.  

On the 25th December 2018, The Knesset (Israeli parliament) passed an amendment to the Dangerous Drugs Ordinance. This legislation lifted the last bureaucratic red tape that restricted the exportation of medicinal cannabis. It allows for Israeli companies to export medical cannabis and to participate in the international market. This is an extremely lucrative industry with huge financial opportunities. It is estimated that Israel could earn from around NIS 1 billion to NIS 4 billion annually from medical marijuana exportation. Thus, this new law could have a major impact on the economy and will increase the number of jobs, manufacturers and investors in the field. It is expected to become one of the leading nations in the exportation of medical marijuana.

Due to the rapid growth of this industry, there are many parties that stand to gain from this bill, in particular; lawyers. The exportation of medical marijuana is a relatively new venture, with only two other countries (Canada and the Netherlands) who are legally allowed to send their supplies overseas. Therefore, many different parties are going to require legal advice and clarification on the procedures and laws that govern this budding industry. This analysis will focus on three main sectors requiring legal services, namely; assisting local companies to become registered international suppliers, navigating the specific international laws of medicinal cannabis and lastly, assisting foreign investors.

Firstly, it is important to note that there are currently only eight approved companies operating as medical cannabis suppliers in Israel. It is clear that this is not enough to cater to the local and international market. Therefore, with the obvious increase in demand for medical cannabis so to will there be an increase in the emergence of new companies.

These companies will require a lot of legal assistance in order to establish legitimate businesses. Furthermore, all companies (old and new) will need guidance when interpreting the laws surrounding exportation. This new legislation gives a clear outline, stating how companies wishing to operate may participate, for example; a license is only issued to companies who abide by very strict regulations. These regulations include; clear repercussions if one should violate the terms, such as, hefty fines and jail terms.

Furthermore, the legislation stipulates strict guidelines with regards to safety and sanitary production methods, including severe security rules for the products quality. Lawyers will be vital in dealing with these protocols, either by advocating for their clients or regulating their clients businesses.

The medical marijuana market is also potentially extremely competitive – especially with the increase in demand. New companies will emerge and new ideas will be implemented. A competitive market always leads to clashes and consequently lawsuits. Companies with thus rely on legal services throughout their business proceedings.

Managing the international market is a whole other playing field. Lawyers will need to supply services ranging from international law enforcement issues to financial advice. The laws of medical marijuana in other countries are sometimes murky and complicated, especially due to the unfavorable world view on marijuana as a whole.

The United States of America is a good example of a complicated international market. The reason for this is that firstly understanding, and thereafter navigating their federal law on marijuana, is a nightmare. There has recently been a landmark case in which Canada successfully and legally shipped medical marijuana products to the United States. Tilray (a Canadian medical marijuana products company) received approval, in September 2018, from the U.S federal government to ship a product of theirs for clinical trial in California. This is a highly specialized scenario, and it is unsure whether it will change U.S policy. Medical marijuana is currently legal in 30 states, however federally it is still illegal. It is therefore unclear whether Israel will be able to export medical cannabis products to the United States. This is just a scenario that depicts one of the countless roadblocks Israeli companies will face when dealing with foreign policy. Lawyers will be a vital source in navigating and advocating within this uncertainty.

I also believe that lawyers will be needed as advisors and mediators for global investors. There has been a substantial rise in investment in the industry, with marijuana stocks sky rocketing on the Tel Aviv Stock Exchange after The Knesset’s decision. Foreign investors have realized the value and potential that Israeli companies hold – and the prospects for partaking in this industry have become increasingly apparent. Cannbit, a medical marijuana company stated, (before the export bill was approved) that if the new regulations were not enforced, it would invest in Portugal. However, now, due to the bill being implemented, Israeli companies stand to gain their business. This is an example of how the legislation will greatly benefit Israel’s economy through foreign profits. The new legislation also specifies that any international investment of more than five percent in an Israeli company will require regulatory approval. Investors will thus require legal advice and guidance with regards to navigating the laws and regulations surrounding this process.

In conclusion, the new legislation that authorizes Israeli companies to participate in the exportation of medical cannabis is a groundbreaking decision. This new law will not only bring in foreign investments and grow the Israeli economy, but also lead to a huge increase in the need for legal services. These services can range from legal advice, mediation, negotiations and cases.