A sweeping new round of tariffs announced by President Donald Trump on Wednesday is set to rattle the U.S. cannabis market, with industry leaders warning of rising costs, supply chain disruptions, and an increased risk of consumers turning back to the illicit market.
The tariffs target a broad range of imports from countries including China, Canada, Mexico, and the European Union—nations critical to the cannabis supply infrastructure. While the plant itself is cultivated domestically, much of the hardware, packaging, and accessories required to support the legal market are sourced abroad, particularly from Asia.
“Companies relying on international components—especially from China—need to rethink their models or brace for thinner margins,” said Bryan Gerber, CEO of Hara Supply, the world’s largest producer of cones and combustible accessories. “We’re already seeing the squeeze.”
Key items such as vape cartridges, metal tins, custom packaging, and specialized glass components are difficult and costly to manufacture within the U.S. As a result, most cannabis businesses remain heavily reliant on overseas supply chains. With tariff rates climbing by 10% to 15% on certain imports, firms across the sector are warning that they simply can’t absorb the added costs.
Mike Forenza, managing partner at AE Global, a cannabis packaging firm, echoed the concern: “Margins in this space are already tight. The added tariff burden will be passed downstream—to retailers and ultimately, consumers.”
Investors responded swiftly. On Thursday, shares of major cannabis companies including Tilray Brands, Canopy Growth, Organigram, and Terrascend dropped between 5% and 10%.
Industry experts caution that consumers, now faced with rising prices at dispensaries, may increasingly return to the illicit market, undercutting legal operators and state tax revenues. “We’re seeing a softening in the market already,” said Brad Wasserstrom, president of the supply chain management firm Wasserstrom Co. “Inbound orders are slowing. Everyone’s trying to adjust.”
The implications extend beyond hardware and packaging. Agricultural inputs like peat and compost—critical for growing cannabis—are imported largely from Canada, and will also become more expensive under the current tariff regime.
Wasserstrom offered an example of just how complex the situation has become: “One of our partners uses glass from China, wood from Canada, assembles in Mexico, and distributes in the U.S. Every step of that supply chain is now taxed. The cost structure is breaking down.”
As the cannabis industry scrambles to adapt, the broader question looms: Can a federally fractured market survive under the weight of global trade wars? For now, operators are bracing for impact, hoping for either relief or innovation before the margins disappear altogether.
H/T: Dabbin-Dad Newsroom
Trump’s New Tariffs Put Pressure on U.S. Cannabis Industry, Fueling Price Hikes and Market Uncertainty
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