Tag: Israel

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

In an exclusive interview with Israel’s Cannabis Magazine, Tal doubles down on his claim that Canadian cannabis companies have been “dumping” their products into the Israeli medical cannabis market at rates below cost.

The Minister of Economy recently announced a plan to move forward with tariffs on Canadian cannabis—as high as 165%.

“When there is excess production capacity, or inventories whose validity is decreasing, the seller is willing to sell at a loss,” Tal said in the interview. “It is important to understand that this levy is not intended to protect only the local industry but the entire Israeli economy. Dumping is beneficial in the short term in terms of lowering prices, but it causes the collapse of the local industry and increases prices in the long term. This is called predatory imports: I lower prices until you collapse, and then I will do whatever I want with the prices.”

The country’s investigation into allegations that Canadian cannabis companies were “dumping” their products into the Israeli market began in January 2024 by the Ministry of Economy and Industry.

“Dumping is beneficial in the short term in terms of lowering prices, but it causes the collapse of the local industry and increases prices in the long term. This is called predatory imports: I lower prices until you collapse, and then I will do whatever I want with the prices.”

The head of trade tariffs at Israel’s Ministry of Economy, Danny Tal

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. 

These products, determined by a 2024 report, were sold at lower prices, which Tal argued do not reflect the normal course of business, and at prices that are lower than production costs or from their prices in the Israeli market, especially given the additional costs of exporting cannabis from Canada. 

Then, on April 10, Israel’s Minister of Economy and Industry 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. 

Many Canadian cannabis producers, as well as the Cannabis Council of Canada (C3), an industry association, have pushed back against these claims.

“Our members do not export final consumer-ready packaged goods to Israel, but instead export bulk raw material cannabis flower,” C3’s president, Paul McCarthy, told StratCann in 2024. “It is only once that raw material flower has arrived in Israel that local manufacturers process and package the flower for sale to pharmacies in accordance with the Israel Medical Cannabis Authority’s rules and regulations.”

In his most recent interview with Cannabis Magazine, published on April 18, Tal doubled down on these claims, calling the Canadian industry’s argument “nonsense.”

“What is sold in Canada in large packages is the leftovers from production – about 10% of the produce,” Tal is reported as having said. “They sell the most beautiful flowers to Israel – it’s the premium of the premium. They don’t sell us the same one-kilo packages that they sell there for less than a dollar, which is a loss-making price.”

If someone is trying to argue that spending 8 years investing, building and maintaining a sustainable operation in Israel is somehow nothing more than a cost-saving cannabis disposal method—that’s more than just wrong. It’s disturbing that whoever was behind this deeply flawed analysis may have a role in determining international trade policy and hurting Israeli patients.”

Mike Gorenstein, the CEO of The Cronos Group

Tal also claimed, without evidence, that it’s cheaper for Canadian cannabis companies to export cannabis to Israel than it is to destroy it. In reality, the process these companies have to go through to export cannabis can be complicated and costly. 

“In December 2023, Canada announced that it had a surplus of 53-54 million unsold packages—an amount equivalent to 5-6 months of consumption. The cost of destruction there is so high that it is cheaper for them to send it to Israel at a loss.”

Tal also told the publication that the Canadian industry’s claims that many of these sales are on consignment are false. 

“Consignment in cannabis does not really exist, because you cannot return goods to Canada. Canada does not allow this, despite all the quantities it exports here, it does not allow Israeli exporters to bring cannabis goods to Canada. It is completely unilateral.”

While Tal is correct that Canadian companies can generally not bring unsold cannabis back into the Canadian market, this does not support the claim that consignment does not exist. In fact, one Canadian cannabis company, Decibel, has mentioned a default of $1.6 million in a payment for shipments to Israel.

In the most recent interview, Tal also called out one Canadian cannabis company, The Cronos Group, by name. According to Tal, Cronos accounts for more than 75% of total imports from Canada, accusing them of being the biggest participants in the alleged “dumping” process.

Mike Gorenstein, the CEO of Cronos, tells Stratcann that such claims are unfounded. 

“The idea that Cronos is sitting on immovable inventory and shipping it to Israel because it’s ‘cheaper than destroying it’ is pure fiction—which is par for the course in the Trade Commissioner’s investigation,” says Gorenstein. “As I have said before, we are struggling to keep up with global demand, which is why we announced a 70% capacity expansion at Cronos GrowCo last year. 

“Let’s be clear: we do not sell at a loss in Israel. What is more troubling is that Cronos Israel is home to over 60 employees, with full-time offices and operating facilities. If someone is trying to argue that spending 8 years investing, building and maintaining a sustainable operation in Israel is somehow nothing more than a cost-saving cannabis disposal method—that’s more than just wrong. It’s disturbing that whoever was behind this deeply flawed analysis may have a role in determining international trade policy and hurting Israeli patients.”

In September 2024, Cronos joined a group of cannabis cultivators that had filed an administrative petition in the District Court of Jerusalem, Israel, against the Trade Levies Commissioner and certain Israeli and Canadian businesses in relation to the Israeli government’s concerns about “product dumping” into their domestic market from Canadian cannabis companies.

Cronos sells products in Israel under its Peace Naturals brand. n 2024, Cronos sold $28.4 million of cannabis into the Israeli market. 

Cannabis Magazine also notes that some of the most popular and in-demand medical cannabis in Israel is from Canadian companies, supporting the idea that the presence of these products in the Israeli market is a result of consumer demand for quality rather than price. 

In addition to industry pushback on Israel’s push to tariff Canadian cannabis, in November 2024, Jean-Pierre J. Godbout, a spokesperson for Global Affairs Canada, told StratCann that the agency was also reviewing the proposal to see if it is in compliance with WTO rules. 

“Canada is disappointed with Israel’s Commissioner of Trade Levies’ conclusion that imports of medical cannabis from Canada were dumped into Israel and caused material injury to the Israeli domestic industry. We are reviewing the Commissioner’s decision to assess its compliance with applicable WTO rules and have significant concerns with the Commissioner’s methodological choices and interpretations of the facts in the case. We will continue to closely monitor the development of this case, including the Advisory Committee review and Ministerial approval processes, and intervene alongside the implicated Canadian industry.”

The head of the economy, regulation and innovation at Israel’s Ministry of Health also has concerns about the proposal, saying it will harm Israel’s cannabis industry, questioning the report’s methodology and saying the Ministry of Health will not support the proposal.

Israel’s Competition Authority has also rejected the proposed tariffs, something Tal has dismissed as not being in their wheelhouse. 

The country’s Finance Minister is expected to make a final decision the week of April 21 on whether to veto the Ministry of Economy’s recommendation for tariffs up to 165%, reports Cannabis Magazine. If the Finance Minister does not veto it, the issue will be moved to the Knesset Finance Committee for discussion. The Knesset returns from recess in early May, with Tal saying the process could be completed as soon as early June.

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