What legalized cannabis in Israel could look like

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SOCIAL AFFAIRS: The marijuana drone blitz was a microcosm of sorts of the cannabis scene in Israel.

TEL AVIV residents partake in a joint in the city’s Meir Park.  (photo credit: TOMER NEUBERG/FLASH90)

TEL AVIV residents partake in a joint in the city’s Meir Park.

(photo credit: TOMER NEUBERG/FLASH90)

The marijuana drone made first contact with the people of Israel on a Thursday afternoon in the summer sky above Tel Aviv, dropping small baggies of free weed to anybody lucky enough to be passing through Rabin Square at the moment of truth.

It was the first air raid run on the city since the Egyptian Air Force strafed Tel Aviv during the 1948 war, but the goal was much more innocent. As the unnamed weed dealers who piloted the drone described their PR stunt, they were looking to spread peace and love, and show their support for the cause of cannabis legalization.

The marijuana drone blitz was a microcosm of sorts of the cannabis scene in Israel, where innovation, chutzpah and a near total saturation of the country with illegal weed has created a reality where the plant might not officially be legal, but it’s almost always floating in the air and easier than ever to buy. And if you are not yourself a customer, you can rest assured that a bunch of the other parents at your kid’s daycare are.

But what happens if and when legalization actually goes into effect? According to cannabis advocates, professionals and dealers, there will be a thriving legal marijuana scene in Israel. And it’s just a matter of when, not if.

Until then, the issue of cannabis legalization and the forging of a blue-and-white legal cannabis industry has been largely one of missed opportunities, government mismanagement, and what-ifs pondered over many a smoke-filled night.

“If we look historically, the State of Israel is absolutely brilliant at making broad, sweeping statements to the press and absolutely horrific at actually taking those statements and doing something with them,” says Saul Kaye, the founder and CEO of iCAN: Israel-Cannabis and CannaTech.

Kaye says these promises include the launch of a legal Israeli cannabis export industry, better pricing for medical cannabis patients, and organized value chains from the seed to the bong. In the meantime, though, “we still have not exported a gram, the price to the customer has gone up, and the quality has gone down.

And we’re importing to meet the demand. These, in my eyes, are failures; the fact that we’re importing is a terrible thing. That means that the local economy and the value chain that has been built and hundreds of millions of dollars that have poured into this are not meeting the local demand.”
Kaye chalks this up to “the government having too many hands in the pie” and red tape that makes the hurdles for entry into the cannabis industry difficult for all but the wealthiest investors to overcome.

He cites, for example, the fact that a cannabis grower cannot produce cannabis oil at the same facility. “That’s like saying to an olive grower you can’t make olive oil; you have to send your olives somewhere else to make olive oil. It doesn’t make sense. Too long a process, too many hands in the process, the police, the Health Ministry, all the background financial fiscal checks you have to jump through. It’s just way too complicated.”

Kaye looks at legalization as “a card that was pulled preelection. I think it’ll be a card that will be held until the next election.”

That said, while it pains Kaye to see Israel fall behind so many other countries when it comes to legalization (“We’re late adopters. Why are we slow? That’s not what Israel is about.

Israel’s about being first, and being nimble and quick enough”), he does believe that Israel can – and must – have a legal market, like in Colorado or Oregon. However, this will happen only if Israel can remove the marijuana black market, which makes billions of shekels in revenue each year, and should still flourish under legalization if the prices remain lower than the legal market.

“Do I believe it will happen? Yes, because the cat is out of the bag with cannabis,” Kaye says, adding that he’s “optimistic that it will happen, but not optimistic that it will be this year.”

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CANNABIS LEGALIZATION passed its first hurdle in June, when the Ministerial Committee on Legislation voted to advance two legalization bills that would allow the possession of up to 15 grams for personal use by anyone over the age of 21 who does not work in the security services. The legislation would also allow for the purchase of up to 15 grams of cannabis at licensed stores, potentially paving the way for the opening of legal adult-use (recreational) cannabis dispensaries, much like those already in operation in Canada and in states across the US such as California, Nevada, Colorado and Massachusetts.

The draft legislation also states that 27% of the entire adult population of Israel consumes cannabis and that “this proposed law is meant to provide both legal and normative regulation, just as has been done in many countries across the world where they made cannabis legal, by way of restrictions and state regulation.”

The cause of legalization also received a highly publicized boost from Prime Minister Benjamin Netanyahu, who in February tweeted that after careful examination, he decided to advance the cause of expunging records of people charged with cannabis possession, and that then-justice minister Amir Ohana was in charge of a committee to examine ways to regulate the cannabis model in Israel along the lines of the Canadian model. In the tweet – which was sent at 4:20 p.m., an apparent reference to international stoner slang – Netanyahu also mentioned that Oren Lebovitch of the Green Leaf pro-legalization party would take part in the committee.

Reached by phone last week, Lebovitch – whose Cannabis magazine also sold pro-legalization banner ads to the Likud Party ahead of the previous national election in early March – expresses great confidence that full legalization and Amsterdam-style coffee shops could open as early as 2023, unless elections are called tomorrow.

“It depends on the political climate. You have to assume that as long as there aren’t elections tomorrow, we’re in a very good place, relatively speaking,” Lebovitch says, and surmises that by the end of November the committee should issue its findings to the Justice Ministry, which will work on the specifics of the law.

“Usually, big changes in Israel happen about 10 years behind the United States, so our bet was by 2023, because in the United States it [the opening of the first recreational cannabis stores in California] was in 2013. It’s very reasonable that in the next two, three years we can see cannabis stores in Israel, but the decriminalization and ending of arrests will be much quicker, as soon as early 2021,” Lebovitch adds.

Like others, Lebovitch says that with decriminalization the black market – and the organized crime figures who are involved in the marijuana trade – will get a huge boost, so the government must work steadfastly to put a legal adult-use market in place. Ultimately, the government may find that its hand is forced, due to the fact that so many powerful, wealthy former politicians, police chiefs and security officials in Israel have gone into the legal cannabis trade, and will be sitting on surplus supplies of herb and expanding debt if they can’t move their product.

“Legalization will be in the interest of massive companies that are worth billions in the stock market, so for business and economic reasons it will happen.”

He also pictures growing support for a legal cannabis industry as Israel works to repair its pandemic-ravaged economy, and looks for new ways to attract tourists.

“There is no other sunny, warm country with legal cannabis where Europeans can come on vacation. We could be Amsterdam with sun,” he adds, describing a reality that in September 2020 still seems a pipe dream.

BUT EVEN if the day when a tourist can order a pre-rolled joint of Israeli-grown “Wedding Cake” at the Dolphinarium in Eilat seems far off, the days in which consumers no longer need to look over their shoulders for the cops could come sooner than people realize, according to attorney Ran Tager.

Tager, who also once represented the late Netanya crime boss Charlie Abutbul, is a specialist in drug cases and “making the drug case into a smaller case.” He says that with the new law, cannabis consumers won’t have to worry about getting a fine for smoking a joint, and there should be less risk that police will use it as an excuse to carry out a body search. He also believes our new reality is the result of changing taboos.

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“In the ’50s or ’60s, people who smoked [cannabis] were outlaws, hoodlums. Today? You can’t walk by a single café on Dizengoff in the middle of the day and not smell someone smoking a joint.”

Tager adds that the issue is still taboo when it comes to minors, and that the state is very intent on prosecuting anyone involved in selling drugs to minors, which can carry a penalty of up to 25 years in prison.

When it comes to cannabis, though, Tager says that while police “don’t really understand marijuana,” their default position of antagonism to the plant “is based on misinformation or misunderstanding. I don’t think they know why they’re opposed to it.”
Less than a week after Tager spoke to The Jerusalem Post, Israel’s daily count of new COVID-19 infections neared 5,000 for the first time. As the country grapples with the one of the world’s largest per capita rate of infections, and while the full scale of the pandemic’s effect on the country is yet to be seen, there is reason to believe that the cause of legalization will get a boost from politicians seeking ways to repair the economy and fill the tax coffers, according to Yona Cymerman, co-founder and chief operations officer for Can Innovations.

“Every country is going to be looking for new sources of tax revenue, and legalizing cannabis is a huge way of doing that, because it will be taxed very high,” says Cymerman.

Cymerman, whose company networks between Israeli tech innovators and players in the North American cannabis industry to develop go-to-market strategies, predicts that medical marijuana patients will continue to receive their cannabis at pharmacies even after legalization goes into effect in Israel. But she expects that adult recreational users will buy their marijuana at legal dispensaries or Amsterdam-style coffee shops, and she already knows of professional colleagues who are taking steps to lay the groundwork for such businesses when the day comes.

Cymerman says that two years ago Israel “had an amazing opportunity to be one of the leading suppliers of cannabis grown in the Mediterranean basin,” but the country dragged its feet, allowing other countries such as Spain, Malta and Portugal to fill the vacuum. And now, Israel is today the world’s largest importer of cannabis, and the product produced in the country is of lower quality than the cannabis produced in legal markets in North America or Europe.

But while the government may have sandbagged Israel’s legal cannabis industry with red tape, the illegal cannabis market in Israel has thrived in a major way.

“The question is can legal cannabis companies compete with the black market, and the only way they can is through price and ease and availability of use,” Cymerman says, adding that with thousands of online encrypted cannabis markets, the infrastructure and client base is already there in Israel – it just isn’t legal.

“There are so many black market avenues in Israel that are incredibly organized. They have thousands of users; it’s all on WhatsApp. The ordering is done on a safe online form, and curbside delivery is available three times a day across the country. It’s all there, so legalizing it should cause these organizations to come to the forefront and set themselves up so they can be legitimate businesses.”

But no matter what steps the government and the regulators take to destroy the black market, the streets will still have their say about things.

“The legal market can’t compete with the free [illegal] market,” says “Israel,” the CEO of “The Mahteret” (the underground), a members-only illegal marijuana delivery service which may be the largest of its type in the country.

“Israel,” whose group boasts more than 15,000 members, says that the black market can provide more options at better prices, and is not going anywhere even with legalization. This is a reality that would be familiar to people living in legal cannabis markets like California or Canada, where legalization has failed to put a serious dent in the underground cannabis trade that has had about a century or so head start on the legal market.

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Israel “is a country of stoners; everyone from professors to doctors to students, parents and grandparents, people from every sector of society and all ages, smoke. To us, cannabis is the national plant of the country,” says “Israel,” positing that when legalization does happen in Israel, it will be freer and more expansive than what’s on the books in the Netherlands or legal adult-use cannabis states in the US like Colorado or California.

But the real game changer, according to “Israel,” would be legal home cultivation, which is not allowed under the current draft law on legalization.

“The moment that growing weed is no longer a crime, the free market will be 50% cheaper than the legal market because you won’t have the risk,” says “Israel.”

He adds that running such a high-risk enterprise has very high overhead, and if The Mahteret sells a gram of cannabis for NIS 80, it can expect to make maybe NIS 8 profit after all the expenses are factored in. And while a 10% profit margin would be great in food service or hospitality, it can seem pretty slim if you’re punching a clock at a job that could see you do time in a state prison.

When asked if he expects Israel’s illegal weed dealers to try to go legit once legalization is passed, “Israel” is quick to note that the marijuana business is not one for sweeping generalizations.

“The black market in Israel is not homogeneous; there isn’t a single profile for a telegram weed dealer. Some are actual criminals making easy money, some are people who do it for the love of it. But the black market isn’t going anywhere, even if they legalize it right now.”

But like others, he is certain in his optimism and confident that even if the wheels seem to be falling off almost everything else in pandemic-era Israel, cannabis legalization is coming.

“I don’t think legalization will happen really soon – we can’t even get to where we have a functioning government – but it will happen, for sure.”

The author is the senior writer for The Cannigma, a website that covers cannabis from a scientific perspective.

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