Cannabis-Tech Transforms Israel from a Start-Up Nation into an AgTech Nation

Recently, PlantEXT, the Israeli Medical Cannabis-Tech company that developed cannabis-based drugs for the treatment of inflammatory bowel diseases, announced that it will go public in Canada on the TSX Venture Exchange (Toronto Stock Exchange). PlantEXT is not alone, Medical Cannabis-Tech is an increasingly crowded space in Israel.  The trend is clear – the Cannabis-Tech and the AgTech industry helped restore agriculture to its rightful place at the center of public discourse – both in Israel and abroad.

Looking back at the history of the Zionist movement, in the early years of the State of Israel, agriculture enjoyed a unique status compared to other industrial sectors. Working the land was of supreme national importance, highly appreciated, was considered prestigious and enjoyed a broad financial institutional support. With the passage of time though, agriculture, so it seems, ceased to be so desirable. Nowadays, the agriculture industry accounts for a small percentage of the labor force both in Israel and the United States. Farmers are aging and the younger generation seeks other career opportunities, for example, in high-tech.

However, we have reached a turning point with the emerging of the smart farming. High-tech, computer science, AI, machine learning, IOT and medical innovation – all these disciplines are joining now forces in revolutionizing agriculture as we know it. The adoption of smart, efficient and sustainable farming practices and solutions not only helps improve global food security by ensuring higher quality and yield, but also increase farmers’ profitability.

Israel is a world-leader in the agriculture technologies. Twelve of Israel’s leading AgTech companies were founded even before the inception of Israel and long before the “Start-Up Nation” era.  As evident by the number of AgTech companies in Israel, this is a rapidly growing industry. According to a study by Start-Up Nation Central and AgFunder, there are currently approx. 700 AgTech and FoodTech start-ups in Israel.  Also according to the study, between 2014 and 2018, approx.  800 million dollars were invested in AgTech and FoodTech companies in Israel, and in 2017, Israeli companies raised more money than China (187 million dollars) in upstream technological developments, advanced tools for farmers in the operation and management of farms.

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The Israeli innovators seem to always be looking for the next big idea, trying to stay ahead of the curve and tap into potentially growing industries. In the recent years, one of those industries have been the Medical Cannabis-Tech.

Israel is a Medical Cannabis-Tech powerhouse and is at the forefront of medical cannabis research. It is home to Prof. Raphael Mechoulam, a scientist at the Hebrew University of Jerusalem, who among others, decades ago, first isolated and identified the cannabis compound tetrahydrocannabinol (THC), a psychotropic cannabinoid best known for its mind-altering effects. The results of the decades-long clinical trials conducted in Israel have a tremendous global impact and contribution. The recent authorization by the Israeli government for the export of medical cannabis is undoubtedly a very important step in advancing the Medical Cannabis-Tech industry, and reinforcing Israel’s position as a global agricultural (and technological) leader. A report submitted by the joint committee that examined the issue, estimated Israel’s economic potential for exports would range between 1 to 4 billion NIS per year. Moreover, the global cannabis market was estimated at approx.  8.3 billion dollars in 2017, and some expert predict it would reach more than 25 billion dollars by 2024.

The cannabis crop is increasingly generating interest among decision-makers in Israel and around the world. In December of last year, President Trump signed into law the 2018 Farm Bill which, among others, legalizes industrial hemp, a strain of the Cannabis stiva plant species, by removing the crop from Schedule 1 of the Controlled Substances Act, subject to certain regulatory restrictions and limitations. Among others, Cannabis plants must contain less than 0.3 percent THC in order to be classified as hemp.  At the same time, this legislation, combined with the millions of NIS invested each year in the AgTech and FoodTech industries, is a great opportunity for Israeli companies that provide innovative agricultural solutions in areas such as smart farming, harvesting, breeding, precision agriculture, irrigation, plant nutrition and fertilizers .

It all boils down to one conclusion: there is currently a global opportunity in an area where Israeli companies hold the knowledge and experience to excel.  Politicians both in Israel and the U.S. have not overlooked this opportunity either.  Many of the Democratic presidential candidates in the U.S. and also the recent Israeli election candidates – all have been rallying around legalizing cannabis. From Medical Cannabis-Tech to AgTech and FoodTech, the Startup Nation companies have an old-new market to explore in the U.S. and position Israel as also the AgTech Nation.

About the Author
Meital Stavinsky is a Miami and Washington D.C. attorney, member of Holland & Knight's Public Policy & Regulation Group and Co-Chair of the firm's Israel Practice. Meital focuses her practice on business, public policy and regulation, with a particular emphasis on Israeli emerging and advanced technologies companies in the areas of AgriTech, FoodTech, CleanTech and Advanced Transpiration Technologies. Meital assists Israeli companies seeking to enter the U.S. market and expand their operations in the U.S. She has successfully advocated on behalf of leading innovative Israeli AgriTech companies in raising their profile and advancing their goals before the U.S. Congress and key U.S. federal agencies, most recently in connection with the 2018 Farm Bill.
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