Israeli cabinet approves law to allow medical cannabis exports

An employee holds packages of cigarettes filled with medical cannabis at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

JERUSALEM (Reuters) - Israel's cabinet approved on Sunday a law to allow exports of medical cannabis in a move expected to boost state revenues and the agriculture sector, and which frustrates critics who fear it could lead to more recreational use of the drug.

The bill, backed last month by parliament, allows companies approved by the health regulator and police to export medical cannabis to countries that permit its use. Israeli media said exports could start in as little as nine months.

An employee tends to a medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

"I am glad this is finally happening. It opens a very big market in Israel. The technology is here in Israel and until now we simply had to give the technology to other countries. Therefore, I am glad we can reap the profits here in Israel," said Justice Minister Ayelet Shaked.

Some lawmakers had tried to block the legislation, fearing more cultivation could push more drugs onto the streets at home.

Israeli companies - benefiting from a favorable climate and expertise in medical and agricultural technologies - are among the world's biggest producers of medical cannabis.

An employee tends to medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

The government estimates exports could raise tax revenue by 1 billion shekels ($273 million). At the same time, the bill imposes tough regulations on exporters and threatens jail terms and hefty fines for violations.

Shai Babad, director-general of the finance ministry, said Israeli technology in medical cannabis significantly improves the lives of millions of people who use it as a permanent remedy.

Babad said the new law would "lead to the development of the economy, agriculture, industry and medicine in Israel".

An employee holds a test-tube as he works in the tissue culture laboratory of Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

Eight companies cultivate cannabis in Israel, many of which have opened farms abroad to get into the international market. Dozens of business owners have requested government authorization to export.

"The Israeli market has waited a long time to receive government authorization for export and Tefen is well positioned for any related developments," said Yona Levy, chairman of Tefen, a maker of medical-grade cannabis.

Levy said that as part of its international initiatives, the firm has entered into a strategic cooperation that will assist it in penetrating the European market through Portugal.

Benjamin Halevy Rosenstein, Vice President of Reasearch and Development at Pharmocann, an Israeli medical cannabis company, speaks during his interview with Reuters, at the company's hothouse in northern Israel January 24, 2019. REUTERS/Amir Cohen

After jumping on Thursday ahead of the vote, most shares of cannabis producers were down on Sunday in Tel Aviv.

(Reporting by Steven Scheer; Additional reporting by Eli Berlzon; Editing by Mark Potter)

A medical cannabis plant is seen at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

An employee tends to a freshly-harvested medical cannabis plant at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

An employee holds a leaf of a medical cannabis plant at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

An employee holds a test-tube as he works in the tissue culture laboratory of Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

Employees cut harvested medical cannabis at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

An employee fixes cigarettes filled with medical cannabis at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

An employee fills a cigarette with medical cannabis at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

An employee packages cigarettes filled with medical cannabis at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

Cigarettes filled with medical cannabis are seen at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen

An employee tends to medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel January 24, 2019. REUTERS/Amir Cohen