Israel’s Minister of Economy and Industry has announced the nation will impose tariffs on Canadian cannabis at rates as high as 165% for the next four years. 

The decision still needs to be approved by the country’s Knesset Finance Committee and Finance Minister. 

The move, which was based on allegations of “product dumping” into the Israeli medical cannabis market by Canadian companies, was opposed by Israel’s Ministry of Health and faced objections from Global Affairs Canada and numerous Canadian cannabis producers. 

In July 2024, the Israeli government agency released its preliminary report on the topic, proposing tariffs from 63% to 369% depending on the cooperation of the companies involved. 

Then, in a report published on November 10, Israel’s Director of Import Administration and Commissioner of Anti-dumping measures at the Ministry of Economy shared the agency’s final report, which had argued for rates as high as 175%. 

In its adoption of the Minister of Economy’s Advisory Committee recommendations, the new levy tariffs will be 165% on all Canadian cannabis imported into Israel, except for Decibel (12%), Village Farms (28%), Organigram (53%), and Tilray (70%). 

Local media report that these four companies no longer ship much cannabis to Israel. 

A representative with Tilray has confirmed with StratCann that the company is not currently supplying Israel with cannabis from Canada. The company references their last shipment to Israel from Portugal in their 10Q in 2023.

A representative with Pure Sunfarms declined to offer comment.

Mark McKay, Director, Communications and Digital Strategy at Organigram, tells StratCann via email that the company is pleased their tariff rates are lower than some companies, but still feels there should be no rate at all. 

“Organigram is pleased that, due to our extensive and transparent collaboration with the Commissioner during his fact-finding mission to Canada, the tariffs levied on us were not as high as others,” says McKay. “That said, we remain of the firm belief that the investigation’s methodology and interpretations were seriously flawed and that there is no credible basis for the tariffs placed on our company. The appropriate tariff amount for Organigram is zero.”

Adam Coates, Chief Revenue Officer with Decibel Cannabis tells StratCann that the company feels it received such a low excise rate because they worked with the Ministry of Economy on the issue.  

“We provided robust and transparent information throughout the Ministry’s review process, including participating fulsomely in the Ministry’s onsite inspection, and responding to additional requests for information in a timely and thorough manner,” Coates tells StratCann. “The lower potential duty rate reflects the cooperative approach we’ve taken and the confidence in our pricing practices. Our goal is to continue supporting the Israeli market with premium cannabis and to build on our growing presence there.

“We see the proposed 12% duty as a potentially positive outcome for Decibel, particularly when compared to the significantly higher rates assigned to other exporters,” he adds. “While the decision is not yet final, it suggests confidence in both our pricing practices and the quality of our products. Decibel is known for delivering consistent, premium cannabis, and we believe that reputation is reflected in this outcome.”

In February, Decibel announced a new supply agreement in Israel for their Qwest brand. Decibel’s sales to Israel were $3.7 million and $1.9 million, respectively for the years ended December 31, 2023, and 2022. 

“While we don’t disclose market-specific volumes, Israel is an important market for Decibel,” continued Coates in an email. “Israel was the first market we launched Qwest branded flower for medical patients and we’re proud to be a trusted supplier of premium medical cannabis to Israeli patients. We remain committed to supporting the local medical cannabis community in Israel and continuing to expand our global footprint responsibly.“

Mike Gorenstein, the CEO of Cronos, a Canadian cannabis company that does extensive business with and even in Israel, including their own production footprint in the country where they employ more than 60 people, says he was shocked by the announcement, and questions the method the Israel Ministry of Economy used to come up with these rates. The current global conversations around tariffs, Gorenstein says, add even more confusion to the announcement. 

“Inventing arbitrary formulas to make tariffs is bad for consumers and worse for patients. I would have thought we just learned that in the last week”

For the three months ending September 30, 2024, $7.3 million of Cronos’ cannabis sales were in the Israeli market.

These tariff rates were based on the Ministry of Economy’s investigation into domestic pricing for cannabis in Canada. But the head of the economy, regulation and innovation at the country’s Ministry of Health, Ran Ridnik, has also previously sent a letter to the Ministry of Economy’s Dany Tal expressing his dismay at the proposed tax rates and the process that was followed to come to such a determination. 

Tal, the Director of Import Administration & Commissioner of Anti-dumping measures, Ministry of Economy, State of Israel, has led the investigation process and reports. He provided this comment recently:

“Following the economic investigation I led, which found that cannabis is being imported from Canada at dumping prices causing significant damage to the local industry, and following the recommendation of the advisory committee that approved the findings of the investigation, the Minister of Economy decided to impose an anti-dumping duty on cannabis imports from Canada,” said Tal in a post on Linkedin on April 10. 

Israel is one of a handful of countries that have seen a significant amount of cannabis imports from Canadian companies, along with Australia, Germany, and, to a lesser degree, the UK.

Note: This article has been edited to include comments from Decibel Cannabis.

h/t to calcalist and Israel’s Cannabis Magazine

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