Economy Ministry plans to smoke out competition in cannabis market

The Ministry of Economy in Israel is seeking to intervene in the cannabis market by proposing an anti-dumping levy on imported cannabis from Canada. The proposal, spearheaded by Danny Tal, Director of Import Administration & Commissioner of Anti-dumping Measures, suggests imposing a 175% levy to protect local cannabis growers and manufacturers. Tal’s recommendation stems from his belief that cannabis is being imported at “market-breaking” prices that are lower than the cost in Canada, potentially harming local industries.

However, the Ministry of Health has strongly opposed the measure. In a statement, they warned that the move could lead to a price increase for medical cannabis, which would harm the accessibility and quality of cannabis for patients, especially vulnerable populations. The Competition Authority has also expressed concerns about the potential damage to competition, and it is expected to submit an economic opinion to the Ministry of Economy against the levy.

The dispute centers around the claim that cannabis imported from Canada is sold at dumping prices, which refers to products being sold below their market value in the country of origin. Tal’s findings were based on data that 90% of cannabis imports in 2023 came from Canada at these discounted prices. The proposed levy, aimed at curbing the impact of these imports on the local industry, will now be reviewed by an advisory committee, which will provide its recommendations to Economy Minister Nir Barkat for a final decision.

The Ministry of Health has raised several issues with the review’s methodology. Yuval Landschaft, head of the Medical Cannabis Unit at the Ministry of Health, emphasized that the professionals responsible for overseeing the field could not support Tal’s conclusions, pointing out factual and methodological gaps in the review. Ran Ridnik, head of the Economics, Regulation, and Innovation Division, also criticized the narrow data set used and warned that the imposition of a specific levy on Canadian imports could create “bypass routes” that would allow unwanted players into the market.

Further complicating the situation, the Canadian government and cannabis companies have also questioned the methodology behind the review. Prof. Eugene Kandel, former chairman of the National Economic Council, argued that the comparison of packaged versus bulk cannabis led to inflated prices and an incorrect conclusion about dumping. He also pointed out that regulatory restrictions in Israel, rather than price differences, were a key factor hurting the local industry.

The debate comes amid a backdrop of growing concern about the cost of living in Israel. While some argue that the anti-dumping levy is necessary to protect local industries, others warn that it could disproportionately harm patients and the broader cannabis market. The Ministry of Economy’s decision on this issue will likely have significant implications for the medical cannabis industry in Israel.