Global Affairs Canada and the Canadian Cannabis Council say they are dismayed by the recent preliminary decision from the Israeli government to consider imposing import fees on Canadian cannabis products. 

The Israeli Commissioner for Trade Levies at the Ministry of Economy and Industry, Danny Tal, recently posted the decision following an investigation that began in January of this year.  

According to the report, the preliminary findings determined a fair price and profit margin for Canadian companies selling cannabis into the Israeli market. A final version, with finalized recommendations, is expected later this year.  

In the course of the investigation, it was determined that the large volume of cannabis sold into the Israeli medical market from Canada was having a significant impact on both the local market and domestic companies’ ability to compete. 

According to Tal’s report, these products were sold at lower prices that, he argues, do not reflect the normal course of business and are lower than production costs or prices in the Israeli market, especially given the additional cost of exporting cannabis from Canada. 

Based on investigations into Canadian production costs, including packaging and shipping, as well as additional export costs, the commissioner’s preliminary report recommends a floating levy or tariff on Canadian cannabis products, ranging from 63% to 369%. 

These figures are based on the commissioner’s investigation into production costs and market rates for domestic sales of cannabis in Canada. 

Paul McCarthy, the President of the Cannabis Council of Canada (C3), says the organization is “severely disappointed” that the Israeli government’s anti-dumping investigation completely disregarded the concerns C3 put forward in their response for feedback to the Ministry.

C3 has previously highlighted its concerns that the Israeli government’s investigation leaned on pricing in the “Canada Spot Index” provided by a private, third-party agency, which they say does not represent all of the factors that add to the cost of cannabis exports from Canada.

“This process has been flawed from the beginning,” McCarthy tells StratCann. “The Canada Spot Index is not representative of a domestic whole price for cannabis, nor is it an appropriate comparison with Israeli wholesale prices for bulk product: it includes various mark-up fees that do not belong to producers, packaging costs that are specific to individualized products, and federal and provincial cannabis excise taxes (all of which we pointed out in our response).”

“Investigators failed to assess domestic market conditions correctly,” he continues. “The root data on which this decision was based was fundamentally incorrect, making the decision unreliable. We object to the process Israel has taken in this investigation. Any government or jurisdiction following should look closely here and not make the same mistakes.”

A representative from Global Affairs Canada also tells StratCann that they were let down by Israel’s preliminary decision. Global Affairs Canada manages Canada’s diplomatic and consular relations, promotes Canadian international trade, and leads Canada’s international development and humanitarian assistance.

“We are disappointed with Israel’s preliminary determination in its self-initiated investigation on alleged dumping of imports of medical cannabis from Canada. We are in contact with Canadian industry and we are reviewing the details of Israel’s preliminary determination, and we will continue to closely monitor Israel’s investigation to ensure that it is conducted in accordance with all applicable WTO rules.”

The preliminary report states that the commission will also submit a report on its findings to the World Trade Organization.

The floating prices exist, explains a notice by the commissioner (Translated), “when the foreign producer exports the goods at prices lower than their production costs or their price in the country of origin. Such imports are defined in the World Trade Organization as “unfair trade,” and according to the WTO’s Export Convention, the country may protect its domestic market in such cases by imposing an export levy, which compares the import price to the price that reflects fair competition.”

The World Trade Organization defines such imports as “unfair trade.” According to the WTO’s Export Convention, a country may protect its domestic market in such cases by imposing an export levy, which compares the import price to the price that reflects fair competition.

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