Tariffs imposed worldwide by President Donald Trump on Wednesday are likely to increase the cost of cannabis products in the U.S., as many firms rely on products from Asia for manufacturing.
The latest tariffs, which are immediate, stack up on any duties imposed earlier on countries like China, Canada, Mexico and the EU. Items such as tins, vape hardware and specialized glass remain difficult to source domestically, and companies remain largely dependent on Asia particularly China, analysts and executives said.
“Those relying on exports from nations with tariffs, such as China, will need to take a serious look at how they might absorb the extra costs or alter partnerships,” said Bryan Gerber, CEO of Hara Supply, the world’s largest manufacturer of cones and combustibles, according to a recent report by Reuters.
Most of these tariff costs are expected to fall on consumers, which could push more of them toward the illicit market and putting even more pressure on the already-tight margins of legal marijuana businesses.
“Most cannabis businesses don’t have the margin flexibility to absorb a 10%-15% increase,” said Mike Forenza, managing partner at AE Global, which makes packaging products for cannabis firms.
“Manufacturers are passing these tariff cost down the line and it will ultimately impact our customers. We are starting to see a softening in the market and inbound order rates starting to slow,” said Brad Wasserstrom, president of Wasserstrom Co, a supply chain firm working with cannabis companies.
The ongoing North American trade dispute could make things worse. Key supplies used to grow marijuana, like compost and peat, are imported from Canada, and tariffs would drive up their prices.
“We work with a manufacturer who imports their glass from China, the wood is imported from Canada, and it’s put together in Mexico all before it’s distributed in U.S. How is that getting taxed?” said Wasserstrom. “That’s a challenge for everyone and ultimately it will come down to the consumer level.”
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