Israel’s Finance Minister has now provided an official rejection of the proposed tariffs on Canadian cannabis in a letter to the Minister of Economy and Industry.

The decision is being met with cautious optimism by the head of Canada’s national cannabis industry association, who tells StratCann that the back-and-forth nature of the process in Israel, which has been ongoing for over a year, has not conveyed confidence to the global community about the Israeli government’s process. 

“For the moment, it appears it’s settled, but we have learned through this process that nothing is ever done, so we’re still watching this intently,” Paul McCarthy, the president of the Cannabis Council of Canada (C3), tells StratCann. 

McCarthy says he has been very surprised by the process, which unfolded with “zero transparency, fairness, or objectivity.” He notes that the Canadian government has been helpful and active throughout the process.  

The investigation, which was first announced in 2024, was around allegations of “product dumping” of Canadian cannabis into the Israeli market. In July 2024, the government agency released its preliminary report on the topic. In April 2025, the government said it was moving forward with 165% tariffs.

In the new eight-page letter, shared by Israel’s Cannabis Magazine on April 25, 2025, Finance Minister Bezalel Smotrich informed Economy and Industry Minister Nir Barkat of the reasoning behind his opposition to the proposed anti-dumping tariffs on Canadian cannabis at rates of up to 165%. 

The Finance Minister says the tariffs would significantly harm the growth of Israel’s cannabis industry, as well as harm access for medical cannabis patients by raising prices. 

Minister Barkat had previously rejected the Finance Minister’s opposition letter as being sufficient to halt the process, but the Finance Minister’s ruling is now being reported as being final. 

The new letter states that the size of Israel’s cannabis market is currently estimated at approximately C$420 million per year, and it is a healthy and competitive market with an expected balance of competition, leading to both successful and unsuccessful businesses. Competition from imports, the Finance Minister argues, is good for the development of this market. 

“As part of the policy that I believe should be promoted, it is of great importance to diversify the sources of capital and growth of the Israeli economy, with an emphasis on the transition from war to growth, and I believe that the medical cannabis market could be one of these sources, but without competition from imports it could become a less efficient and stagnant market, harming its ability to be a source of capital and growth in the Israeli economy. 

“Accordingly, a significant impact on imports as a result of the imposition of the levy would prevent the market’s growth potential, both domestically and globally, and would harm the diversification of the sources of capital and growth of the Israeli economy.”

You can read more on that decision here, with a direct link to the eight-page letter at the bottom of the article. 

The letter follows an announcement on April 10, in which the country’s Minister of Economy and Industry, Nir Barkat, stated that he had accepted the proposal to impose tariffs on cannabis imported into Israel by Canadian companies at rates as high as 165%.

That plan required final approval from the country’s Knesset Finance Committee and Finance Minister, and the latter has since rejected it. 

Israel’s Ministry of Health also opposed the proposal to tariff Canadian cannabis, and the proposal faced objections from Global Affairs Canada and numerous Canadian cannabis producers.

The head of trade tariffs at Israel’s Ministry of Economy, Danny Tal, had argued that the tariffs on Canadian cannabis were necessary to protect not only Israel’s medical cannabis industry but the Israeli economy in general. 

During the investigation, Israeli cannabis companies had claimed they were forced to sell products at or below cost due to competition with lower-priced Canadian cannabis. Producers also said they were forced to destroy large amounts of cannabis they could not sell, in part due to these imports.

Israel imported 78,394 kilograms of cannabis from 2020 to 2023, with 62,345 kilograms coming from Canada, or approximately 80%. Other countries of origin were Portugal, Uruguay, and Uganda. However, since 2020, the ratio of Israeli products compared to imported cannabis products has increased, with domestic cannabis eclipsing imports in 2021, 2022, and 2023. 

According to the data from the Israeli Ministry of Health, in 2020, the country imported 14,778 kilograms of cannabis and produced 13,922. By 2023, the figure had shifted to 15,950 kilograms imported (of which 14,408 kilograms were from Canada) and 51,750 produced domestically.

Featured image of Israel’s Ministry of Finance Headquarters via Wikipedia

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