Dumping levy on medical cannabis imports
According to press reports, on the eve of the Passover holiday, the Minister of Economy and Industry, Nir Barkat, decided to adopt the recommendation of the Advisory Committee on Trade Levies and impose a dumping levy on cannabis imports from Canada at a rate of up to 165% (the levy varies depending upon the manufacturer). On April 21, 2025, the Minister of Finance wrote a letter to the Minister of Economy expressing his opposition to the imposition of the levy, and the decision was put on hold.
The dumping levy is imposed pursuant to the Trade Levies Law. The purpose of the levy is to prevent “dumping” – foreign companies selling products to Israel at prices significantly lower than the prices of those same products in their local markets. As a rule, Israel’s free trade policy favors inexpensive imports to the State of Israel, even to the detriment of Israeli manufacturers, and caters to Israeli consumers, who want to purchase products at the lowest price, regardless of their country of manufacture.
The Israeli Trade Levies Law (and the World Trade Organization agreements on which it is based) recognizes that exporters sometimes engage in predatory pricing tactics (below-cost pricing) with the deliberate intention of undercutting and eliminating their Israeli competition. Once consumers take the bait and switch to the cheaper imports, the exporter will hike the prices to reflect the real price at which the product is sold in the exporter’s local market.
The law also recognizes that foreign exporters also engage in price dumping tactics in order to get rid of inventory surpluses, which adversely impacts Israeli manufacturers. It appears that the main catalyst for imposing the dumping levy was the adverse impact on the Israeli medical cannabis industry.
The dumping levy equates the imported product’s retail price in Israel to the retail price in the product’s country of manufacture. However, if the retail prices abroad are lower than the retail prices of Israeli-made products, the levy does nothing to eliminate the unfair competition that Israeli manufacturers face.
Of course, the imposition of a dumping levy means that consumers will pay significantly higher prices for imports, at least in the short term. This is exactly what Israeli importers are complaining about, as well as Israeli consumers, many of whom are prescribed medical cannabis as part of disease and war injury treatment therapies. It appears that the disagreements are not only over the facts (whether the price of Canadian medical cannabis is indeed far lower than the comparable Israeli product) but also about the forecast – what will happen to the prices of imported medical cannabis when Israeli medical cannabis manufacturers are driven out of business because they cannot compete against cheap foreign imports.
The Trade Levies Law prescribes a lengthy procedure for imposing a dumping levy and other levies intended to protect local industry from unfair competition. First, the commissioner of trade levies in the Ministry of Economy must be convinced that unfair competition and dumping indeed exists. Then the Advisory Committee on Trade Levies, which is an independent quasi-judicial body, needs to convene to examine whether or not a dumping levy should be imposed and, if so, recommend the imposing of the dumping levy and its rate to the Minister of Economy. The Minister of Economy’s decision must then be approved by the Minister of Finance. Israeli manufacturers looking to activate this procedure, or importers wanting to check whether there is a risk that a levy will be imposed on them, should seek expert legal advice in order to navigate this complex process.