The commissioner of trade levies at the Ministry of Economy and Industry, Danny Tal, published a preliminary decision regarding the investigation of the overspill in the import of cannabis from Canada. According to this, the import of cannabis flowers from Canada has been carried out in recent years at the overspill prices, which have caused real damage to the local cannabis industry.
The investigation was opened on 18.01.2024 and its final findings are expected to be published in the coming months. If there is no significant change in the preliminary findings of the investigation, the final findings are expected to include a recommendation to impose a floating levy on the import of cannabis flowers from Canada.
In recent years, billions of shekels have been invested in the medical cannabis industry in Israel in cultivation, production, research, and development of the industry. This includes the establishment of advanced facilities and factories using advanced and strict standards in the cultivation, production, and marketing processes. Many of these investments went down the drain and many manufacturing companies closed alongside the dramatic increase in imports. Now it turns out that the imported cannabis, most of which comes from Canada, is imported to Israel at inflated prices.
The floating prices exist when the foreign producer exports the goods at prices lower than their production costs or their price in the country of origin. Such imports are defined in the World Trade Organization as unfair trade. According to the WTO's Export Convention, the country may protect its domestic market in such cases by imposing an export levy, which compares the import price to the price that reflects fair competition.
Sales at floating prices may arise in cases where the foreign manufacturer suffers from excess inventory that is not sold in his local market alongside a limited validity of the goods that affects his ability to store unsold production surpluses. Or in cases where he wishes to capture market share in the importing country even at the cost of a continuous damage to his profitability due to long-term considerations. Range of penetration and establishment of its activity in foreign markets.
The overflow rates found for the Canadian companies are as follows:
- Decibel Company - 63%
- Village Farms Company - 74%
- Organiram company - 112%
- The other Canadian companies - 369%
Despite the findings on the existence of imports at inflated prices causing damage to the local industry, the commissioner decided at this stage to refrain from imposing a temporary guarantee. He will wait with his recommendations on the matter until the stage of submitting the final findings of the investigation.
The parties to the investigation were given a period of 30 days to submit their comments and supplementary arguments in accordance with the findings of the decision before the publication of the final findings.
For more information:
Ministry of Economy and Industry
www.gov.il