Could the same apply to Australia & other markets?
The Israeli Ministry of Economy and Industry’s Trade Levies Commissioner, Danny Tal, has issued a preliminary decision on the anti-dumping investigation into medical cannabis imports from Canada.
The investigation, started on January 18, 2024, found that imported cannabis flowers were sold at dumped prices, harming the local industry. If these findings hold, a recommendation for an anti-dumping duty on Canadian cannabis imports is expected.
The final results will be published in the coming months, with companies having 30 days to submit their comments.
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Also there’s this commentary by
Israel Imposes Tariffs on Canadian Cannabis: A First Move in the Global Cannabis Trade War?
This significant decision comes after findings of substantial dumping rates ranging from 63% to 369% by Canadian producers into Israel.
The Commissioner’s investigation highlighted disparities between a factory gate price in Canada of CAD$7.86/g ($5.8), while claiming comparable products sold in Israel for as low as CAD$2.1/g ($1.5).
Based on their production costs, the Commissioner found a 63% dumping rate for Decibel, and a 112% rate for Organigram; while a price comparison of Pure Sunfarms products in Canada vs Israel found a 74% dumping rate.
According to the report, damages in the Israeli medical cannabis sector have included:
Price Plunge: Retail prices fell below $11/g led by aggressive promotions such as “buy 1, get 1 free”. LPs were forced to sell under production costs, as low as $1.4/g. Growers faced pressure to sell biomass for $0.8/g or less.
Overcapacity: Companies had to operate below capacity, halt expansion and struggle to secure capital. Inventories soared from 1.2 tonnes in 2020 to 18.7t in 2022, with destruction increasing 65% to 11.5 tonnes.
♀️ Unfair Competition: Consignment sales allow importers to pay only for sold products, flooding the market. Manufacturers pivoted to focus on importation, while distributors scaled down deals with domestic producers.
Economic Downturn: Sales decines and margin squeezes pushed many companies into severe financial distress, causing job losses and stalling further investment in the sector.
However, the Commissioner made bold assumptions, leaps of faith, and used creative math in the investigation:
Production costs (comparable to bulk exports) have been defined as 75% of the retail price in Canada, but the real figure is likely much lower.
Small packages of 1-3.5g have been used to compare retail prices, but Israel generally sells 10 gram packages.
Canadian producers argue that their products are higher quality, and their own market is flooded (they get higher margins internationally).
⏱️ The Commissioner will now finalise the report, submit it to the WTO and after a 30-day comment period recommend imposing tariffs on Canadian medical cannabis imports, based on production costs plus 8% profit.
⁉ This move could give local producers an edge, or provide opportunities to LPs from Portugal, Uruguay and South Africa.
Canadian LPs may respond by absorbing tariffs, focusing on more profitable markets, or nearshoring via third-party processors in places like Portugal.
It might inspire other global markets, such as Australia, to consider similar protectionist trade measures.
What consequences do you expect from this important decision? Let me know your opinion in the comments!
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