Israel is likely to permit exports of medicinal marijuana by the end of the year after draft legislation passed a first reading in the Knesset.

Exports are currently banned as it was feared that an increase in production would lead to an increase in the domestic black market. However, several big Israeli firms are decamping to Europe to set up their cultivation operations and that has prompted a volte-face from the Israeli government.

In November a draft bill passed through Yoav Kish’s Internal Affairs Committee and it now has to clear various hurdles in parliament. The first one was cleared this week and Kish, a senior MP who chairs the committee, said he aims to complete the legislation by the end of 2018.

It’s forecasted that Israel could gain 1 billion shekels ($265 million) per year through tax on marijuana exports.

He said the Israeli government considers marijuana to be an important medicine, and that it appreciates the potential of cannabis to boost its economy. He forecasts that Israel could gain a further 1 billion shekels ($265 million) per year through tax on exports.

Israeli producer Pharma recently sold a 10% stake of the business to Namaste of Canada in order to drive exports. It has orders it needs to fulfil from Canada, which is scrambling to meet domestic demand after rolling out a commercial cannabis industry earlier this year, and it is in the process of moving operations to Europe to produce cannabis for export markets.

Now fellow producer Cannbit is threatening to move to Portugal so that it can become a true global player in the flourishing medicinal marijuana industry. It is these sorts of firms that the Israeli government hopes to woo back by changing its laws. Rather than seeing them take their operations abroad, they can pay tax, create jobs, and boost the economy in Israel.

There are currently eight producers licensed to cultivate cannabis in Israel and many more are awaiting authorization. One leading producer, InterCure, hit headlines in September by hiring former Israeli Prime Minister Ehud Barak as chairman, shortly after snapping up rival Canndoc. It is planning to list on Nasdaq by mid-2019, illustrating the global outlook of producers in Israel. Foreign investors are likely to reignite their interest in the country as it proves it understands the opportunities that lie in becoming a leader in the global medicinal marijuana trade.