MB 669 seif koton 17 says in the name of the Levush that the custom is that the Kohanim do not bless the people at Mussaf on Simchas Torah because there is a likelihood that the kohanim may be intoxicated. MB quotes the custom in Prague based on the Elyoh Raboh that the Kohanim do bless the people on Simchas Torah.
The likelihood of intoxication is present, I suggest, in Eretz Yisroel on Shmini Atzeres. The custom in Israel is that the Kohanim do bless the people at Mussaf on Shmini Atzeres/Simchas Torah as long as they have not drunk a shiur of intoxicating beverage. Is the custom in Israel an extension of the Elyoh Raboh’s position or are there other sources?