Sleepy southern Israel town seeks new highs with cannabis incubator plan

Israel to allocate some $43.2 million over five years to foster startups and entrepreneurs in medical cannabis in Yerucham, as part of push to boost tech in nation’s periphery

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

The mayor of Yerucham, Tal Ohana, hopes to draw investors and make the town a cannabis mecca in Israel. (Simon Ben Ishai)
The mayor of Yerucham, Tal Ohana, hopes to draw investors and make the town a cannabis mecca in Israel. (Simon Ben Ishai)

Israel will set up a medical cannabis incubator in the city of Yerucham, located in the south of Israel, and will allocate the initiative an estimated 150 million shekels ($43.2 million) in the coming five years, the winners of a government tender to run the incubator said.

The incubator will be run by Jerusalem based VC-fund OurCrowd, pharmaceutical maker Perrigo Co., and BOL Pharma, an Israeli medical cannabis firm. The Israel Innovation Authority and the member companies of the consortium will both invest funds in the operation of the incubator, to support the development of startup companies and to follow up on investments.

The plan calls for six startup companies with breakthrough technology in the medical cannabis field to be admitted into the incubator annually, for a total of 30 companies over the first five years of operation of the facility.

Called CanNegev, the new incubator “is positive news for Yerucham,” said Tal Ohana, the mayor of Yerucham. “We dreamed and are now realizing the vision of turning Yerucham into a research, technology and production capital for medical cannabis. The incubator will serve as an anchor for innovators from around the world.”

Director of Israel Innovation Authority, Aaron Aharon, right to left, Minister of Economy and Industry, Eli Cohen; Carmiel mayor Moshe Koninsky; mayor of Yerucham Tal Ohana; head of Bnei Shimon Regional Council, Nir Zamir (Israel Innovation Authority) at the announcement to set up three tech incubators in the periphery of Israel; December 23, 2019. (Israel Innovation Authority)

Earlier this year, some 270 entrepreneurs, including former Prime Minister Ehud Barak, came to the city to hear how Yerucham is the perfect location for cannabis research, cultivation and exports.

Israel, already known as Startup Nation, with more than 6,600 startups, is also a player in the field of medical cannabis, with the Israeli export market of the weed estimated to be between NIS 1 billion to NIS 4 billion ($282 million to $1.1 billion), according to government data.

The new incubator is part of a government push to set up tech incubators in the peripheral geography of Israel. The Economy and Industry Ministry and the Israel Innovation Authority on Monday announced the setting up of three new incubators: an industry 4.0 incubator in Carmiel and the Galilee in the North — which will foster technologies to digitalize manufacturing plants, the medical cannabis one in Yerucham, and a third, for cleantech, agritech, plastics, and advanced industry startups in the Idan haNegev Industrial park, in the northern Negev region.

“Establishing technological incubators in the periphery is a significant milestone that is expected to generate significant economic value in the local ecosystem, attracting numerous investments, industry, and human capital,” said economy minister Eli Cohen in a statement. “The establishment of these centers will result in the increase of high-tech companies opening R&D operations in the periphery, a future increase in the number of active high-tech employment centers, an increase in high yield jobs and a decrease in migration of professionals to the center of the country.”

The incubators are expected to promote setting up 130 startups during the five-year program, with a budget of up to NIS 1 million per startup, the statement said.

The incubators will support entrepreneurs from concept to market entry through the Israel Innovation Authority’s various support programs. The entrepreneurs will also enjoy the support of the incubators and their shareholders in terms of investments, experts from across the value chain, strategic partners, additional investors from Israel and abroad, and access to laboratories, production facilities and pilot programs, the statement said.

The I 4 Valley group was selected to operate an Industry 4.0 incubator in Carmiel and in the Galilee. Shareholders in the incubator are industrial firms including paint manufacturer Kusto (formerly Tambour), plastics furniture maker Keter Plastic, windows manufacturer Klil, Trellidoor, a maker of metal gates and doors, and Flying Cargo, a courier service.

The Innegev group was chosen to operate the incubator in the fields of cleantech, agritech, plastics, and advanced industry in the northern Negev. Shareholders in the incubator include investment firms Alpha Capital and Netafim Holdings Hatzerim and companies like fizzy-water maker SodaStream, Netafim a maker of drip irrigation systems, a unit of Israel Chemicals Ltd., and Dolav Plastic Products, the statement said.

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