Canadian medical cannabis imports in Israel could now face tariffs of up to 175% amid the latest escalation of a dispute over allegations of ‘product dumping’.
In July, Business of Cannabis reported that Israel had come to a ‘preliminary decision’ to tax Canadian cannabis imports, after the Israeli Ministry of Economy launched an investigation into the market in January, following numerous complaints from local producers.
The publication of preliminary findings on July 10 reportedly found a significant over-importation of medical cannabis from Canada, with rates reaching up to 369%.
It found that Canadian cannabis imports have been sold in Israel at prices lower than those in the country of origin, a practice known as ‘overflow imports’, causing a sharp drop in competing Israeli cannabis companies revenues.
As such, the Ministry has opted to refrain from imposing immediate levies on Canadian imports, and instead said it would wait until the final findings are published.
Following a subsequent public comment period, this final report has now been published by the ministry.
According to Stratcann, the commissioner initially recommended a floating levy or tariff of 63% for Decibel, 74% for Pure Sunfarms, 112% for Organigram, and 369% for all other producers.
However, in a new 126-page final report, published on November 10, fees starting as low as 2% for Decibel cannabis, 33% for Village Farms (Pure Sunfarms), 39% for Organigram, and 77% for Tilray have been proposed. All other companies would face a levy of up to 175%.
According to government data, Israel imported 78,394 kilograms of cannabis from 2020 to 2023, with 80% (62,345 kg) coming from Canada. However, domestic production has been on the rise, surpassing imports since 2021. In 2023, Israel produced 51,750 kilograms of cannabis, compared to 15,950 kilograms imported.
Canadian cannabis companies have been relying on export sales to countries like Israel to command better prices and clear inventory backlogs. Despite higher export costs, producers often prefer the export market due to more favorable payment terms, compared to selling domestically where payments can take weeks or months.
The Cannabis Council of Canada (C3) and other stakeholders have disputed the claim that Canadian producers sell at lower prices in Israel than in Canada, and the Ministry of Economy will submit its findings to the World Trade Organisation.
A final ruling on the proposed levies is now pending.
