The budding cannabis industry has entered yet another stormy phase as Israel, one of the world’s most progressive medical cannabis markets, launches an investigation into Canadian medical cannabis imports.
Amid allegations of ‘dumping’—selling goods in a foreign market at lower prices than domestic ones and raising anti-competitive concerns—industry professionals across the globe are witnessing the unfolding of a pivotal trade dispute. This high-stakes scenario could redefine the dynamics of the medicinal cannabis trade globally, potentially shaking up one of Canada’s key cannabis export outlets.
The Israel-Canada cannabis trade issue is more than a prolonged bout of finger-pointing. At its core lies the charged allegations of “dumping.” An accusation of this nature, especially in a fledgling market like Israel, could have both immediate and long-term implications. Canadian cannabis companies are now under intense scrutiny as Israel’s Ministry of Economy opens an “anti-dumping” investigation, signaling its resolve to protect local industry interests.
The Case Against Importing Canadian Cannabis
The investigation was triggered by what Israeli Cannabis Magazine first reported: several Israeli cannabis companies claiming financial losses directly linked to imported Canadian cannabis. The economics of “dumping” suggests that Israeli cannabis producers are unable to compete with the prices of imported Canadian products, adversely affecting the domestic industry’s financial health.
The situation has prompted a thorough examination of the import practices of the identified Canadian cannabis companies, potentially redefining the parameters of fair trade in the international cannabis market.
Amid the burgeoning imports from Canada, local Israeli growers and manufacturers are witnessing a David-versus-Goliath struggle. Reports surface with claims of up to 30% revenue losses.
“From 2021 until today, instead of an increase in revenues, we experienced a sharp decrease of 30% in a total amount of millions of shekels, which is an existential threat to the company. In our opinion, there is a direct connection between the decrease in income and the increase in the amount of imports. The Israeli growers employ and provide for thousands of families, and the import harms them and causes them to close.” says The Kanaraba company
Distressing sell-offs, and challenges in directly competing with imports. The impact seems far-reaching, potentially leading to closures of local farms and harm to thousands of families employed by the Israeli cannabis industry. The industry’s distress signals have not gone unnoticed, effectively catalyzing the investigation into the alleged market manipulation.
Navigating the Complexities of the Cannabis Import Investigation
As this investigation unfolds, clarity on the legitimacy of the complaints against Canadian cannabis imports is essential. The process involves meticulous fact-finding, with a focus on ascertaining whether imported cannabis is indeed being sold at prices significantly lower than those in the Canadian domestic market. The timeline for the investigation and the evidence that surfaces will be critical in validating the claims against Canadian exporters.
Director of Import Administration at the Ministry of Economy and Industry, Danny Tal, has assumed a pivotal role in this inquiry. Charged with overseeing the investigation, his mandate stretches from assessing market conditions to establishing causal links between imports and damage to local industry interests.
In a letter to the chief commercial counselor for the Embassy of Canada in Israel, Michael Mancini, he writes: “I wish to inform you that after I found that special circumstances exist, I have decided to initiate an Anti-Dumping investigation concerning the importation of medical cannabis from Canada.”
“Our findings, regarding whether there is dumping, consequent injury and the duty required, will be determined on the basis of best information available. It is therefore important that every interested party will submit information, evidence, their arguments and an answered questionnaire.”
Upon the investigation’s conclusion, the focus will shift to the evidence that Canadian cannabis companies present. For Israel to take substantial action against these imports, there must be irrefutable proof of the alleged dumping practices. The potential for tariffs on imported Canadian cannabis hinges on the solidity of the evidence presented, the impact on local industry, and the perceived fairness of Canadian exporters’ practices.
There are 10 cannabis companies in Canada that Israel is investigating for “dumping” they are: Village Farms International, Cronos Group, The Green Organic Dutchman, Tilray Canada, Hexo Corp (owned by Tilray), Auxly Cannabis Group, Organigram Holdings, Canopy Growth Corporation, Decibel Cannabis, and SNDL.
The accused companies have 30 days to fill out a rather lengthy questionnaire, the periods of investigation outlined by the questionnaire are from January 1, 2023, to December 31, 2023
Israel looking into Canadian cannabis imports is like a glimpse into the bigger picture of challenges in global cannabis trade. The results will impact how countries handle cannabis trade and economic protection at home.
The resolution of this dispute could serve as a benchmark for the integrity of trade practices in the emerging global cannabis market. If Israel determines that Canadian exports are indeed ‘dumped’ products, it could set a precedent for other countries to safeguard their local cannabis industries against unfair competition.
This investigation encapsulates the tension between stimulating domestic cannabis sectors while balancing the benefits of global trade. The decision Israel makes will not only safeguard its domestic market but also influence the trajectory of future international cannabis trading—paving the way for fairer competition and potentially reducing global disruptions in cannabis export-import norms.
